Ethanol in Brasil: a model to follow or to avoid? (Latin America mini-series 3 of 4) Dario Gaeta

Transcrição

1 Ethanol in Brasil: a model to follow or to avoid? (Latin America mini-series 3 of 4) Dario Gaeta

2 Objectives Understand the Ethanol economic environment in Brazil: past, present and future Know how a Sugarcane mill works Evaluate the recent milestones of the Ethanol Program Keep asking

3 AGENDA Milestones of the Ethanol in Brazil Basics about Sugarcane Ethanol Comparison between Ethanol and Gasoline Feasibility of the Ethanol as biofuel Future of the Bio feedstock end of Oil era? Futurology Q&A

4 Milestones for Sugarcane Ethanol in Brazil Early 70 s launched the Ethanol Program by Military Government Late 70 s Ethanol car developed, production grew 6 fold 80 s second oil crisis, ethanol supply crisis Late 90 s blend increased to 22% 2003 FFC launched ethanol booming ethanol blowing 2016 ethanol Phoenix program

5 Source: UNICA SUGARCANE MILL and BASICS UNICA PRESENTATION mill/video new/virtual mill.htm

6 KEY NUMBERS Sugarcane mill 5MM t of sugarcane p.y employees 24/7 260 days > 800 vehicles 40 MM USD maintenance cost every year ha replant every year 300 MM l Ethanol 250 Th t Sugar

7 SUGARCANE PRODUCTS: STEP BY STEP Current technology Sugar Drop in fuels (Diesel, jet fuel, gasoline) Source: UNICA Technology under development Cane stalks Cane juice (Sucrose) Detergents & solvents Sugarcane Ethanol Cosmetics Bagasse Biopolymers (bioplastics, isoprene, etc) Lubricants Straw (Leaves) Bioelectricity Flavors and Fragrances Food

8 KEY NUMBERS BRAZILIAN SUGARCANE SECTOR Number of mills: ~ 400 Sugarcane growers: 70,000 Direct employment: 1.2 million Sector annual revenue: US$ 48 billion Foreign Revenue (Exports): US$ 15 billion 1st SUGAR PRODUCER IN THE WORLD (2011) 22% of world production 45% of world exports (50% in 2010) 2nd ETHANOL PRODUCER IN THE WORLD (2011) 22% of world production 22% of world exports (2012 estimate: 38%) Sources: LMC, F.O.Licht s, Secex, UNICA and Rais.

9 SUGARCANE PRODUCTION IN BRAZIL: AN OVERVIEW OF THE LAST DECADE Sources: UNICA and MAPA. Note: * forecast 1.World financial crisis acquisitions involving affected companies 2. Weather problems in three consecutive harvests 3. Loss of domestic competitiveness for ethanol compared to gasoline 700 Stagnation 600 Sugarcane Million Tonnes of /01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13

10 MORE EFFICIENT PRODUCTION PROCESSES Expansion of mechanized harvestinginsouth Central Brazil (in thousands of hectares) 1 Mechanized harvesting Manual harvesting Source: CTC and Conab. Elaboration: CTC.

11 Manual Harvesting

12 Mechanized Harvesting

13 Brazilian fleet by fuel (Otto cicle) Number of vehicles Year Total fleet Flex fuel Gasoline Ethanol Electric , Jan/ Nota: Ciclo Otto não inclui os veículos movidos a diesel. Veículos elétricos abrangem as versões elétrico/fonte externa, elétrico/fonte interna e híbrido (combustível líquido/elétrico).

14 WHAT COMES NEXT? ETHANOL: ACCELERATED GROWTH OF THE FLEX FLEET Estimate of the Brazilian fleet of light vehicles (Otto cycle) Fleet of motorcycles: 53% of bikes sold, in the first half of this year, were flex 60 81% Flex/total 30 61% Flex/total Millions of vehicles % Flex/total 70% Flex/total motorcycles (million) Fleet Flex fuel Gasoline Ethanol (only) Flex fuel Gasoline Brazil will need to double the supply of fuels (ethanol and gasoline) to attend the demand in 2020 Source: Estimate of UNICA.

15 AUTOMOTIVE FUEL IN SHORT SUPPLY IN BRAZIL Otto Cycle consumption In billion liters of gasoline equivalent Productive capacity of gasoline and VNG consumption Ethanol supply 48 6,0 16,5 Fuel deficit 75 29,5 20,0 Need to expand production of ethanol and / or gasoline Ethanol productive capacity (> 30 billion liters) 25,5 Gasoline production and VNG consumption: stable 25, Source: UNICA.

16 Ethanol trade offs There is a historical 70% Ethanol/gasoline price ratio Mills have flexibility but not that much: 60 / 40 40/ 60 Since 2009 Gasoline did not have its price adjust by inflation Since 2009 Ethanol has a 7%p.a. avg cost increase Petrobras case Lack of long term Policy

17 BRAZILIAN ENERGY MATRIX INPUT 2012 Natural Gas 10.1% Wood and Other Biomass 9.7% Other Coal and Renewables Derivatives 4.1% Uranium 5.6% 1.5% Hydro 14.7% Oil and Derivatives 38.6% Sugarcane 15.7% 47.3% 45.5% 44.1% 52.7% 54.5% 55.9% Non renewable Renewable WORLD (%) ,1 #1 Source of Renewable Energy in BR (but decreasing) ,9 World OCDE Brazil (2008) (2009) (2011) Non renewable Renewable Source: Balanço Energético Nacional BEN (2011) and International Energy Agency. Key World Statistics Elaboration: UNICA

18 Sugar, Ethanol and Gasoline production volume and prices Ethanol Project (Pro álcool program between 1975 and 2009 Ano Fas e Ethanol Productio n Ethanol Price Gasoline Price Sugar Price (m3) (R$/m3) (R$/m3) (Kgm3) ª ,74 3,18 3,36 3,23 3,09 tgc (%)* ª ,10 3,23 3,47 3,26 3,23 3,27 2,59 tgc (%)* ª ,09 3,24 3,22 2,34 2,40 3,05 2,44 2,99 2,22 tgc (%)* Produção Preço do Preço da Preço do Ano Fase de Etanol Etanol Gasolina Açúcar (m3) (R$/m3) (R$/m3) (Kgm3) ª , ,15 1,71 1,63 1,27 1,64 tgc (%)* fonte: * Elaboração Própria a partir dos Dados Oriundos do Ipea, Mapa, Conab, ANP, IEA e Unica. 5ª ,62 1,56 1,81 1,30 1,43 1,81 1,37 1,12 1,56 tgc (%)* tgc (%)*

19 Gasoline Prices in Brazil

20 Ethanol / Gasoline price comparison DIVERSOS PAISES

21 Ethanol / Gasoline price comparison by State in BR DIVERSOS PAISES

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23 Ethanol demand trend Bndes setorial

24 Gasoline Volume Due to this policy gasoline demand is increasing and Ethanol...

25 Hydrous Ethanol volume... Is crashing.

26 ETHANOL: Sugar cane prices Etanol: Preços O preço médio do etanol hidratado no produtor em fevereiro, sem tributos, teve uma média de R$ 1,389/litro do combustível. O preço médio do etanol anidro ficou em R$ 1,522 por litro do combustível. O que representa uma variação mensal positiva em relação ao mês de janeiro de 8,1% e 4,3%, respectivamente, nos preços do etanol hidratado e anidro. Comparando os preços de fevereiro de 2014 com os preços do mesmo período ano anterior, o do anidro está 13,3% maior e o do hidratado está 12,1% mais caro. Destaca se que o acompanhamento dos preços semanais realizados pela ESALQ refere se aos preços praticados no mercado spot, ou seja, não captura os preços praticados nos contratos.

27 ETHANOL: Sugar cane prices

28 ETHANOL: margins

29 ETHANOL: Prices comparison monthly average Etanol: Paridade de Preço Semana de a A paridade de preços no varejo, em nível nacional, no meado de março de 2014, esteve acima dos 70% (valor que torna o consumo de hidratado mais vantajoso do ponto de vista econômico em relação à gasolina) em todas as capitais do país. As cidades de Macapá, Belém, Teresina e Boa Vista tiveram as maiores paridades, próximas ou iguais a 90%. Na média das capitais a paridade está acima dos 70%. Os preços desfavoráveis ao etanol demonstram o período de entressafra na região centro sul.

30 ETHANOL: Sugar and Oil prices compared to Ethanol

31 Oil Price Evolution The future price evolution will show the ethanol advantages

32 Oil Price Evolution

33 World Oil Consumption by country

34 GEEs in a 100 km travel by different fuels in the same type of car: Model Motor Fuel Km/L Engine max HP GEEs emissions kgco2 Avoided emission (%) S10cabine simples 2.8turbo Diesel 13,5 140HP 29,69 S10cabine simples 2.4 flexpower Gasoline A 10,4 141HP 35,10 0 S10cabine simples 2.4 flexpower Gasoline C (24%ethanol) 9,5 141HP 28,34 19 S10cabine simples 2.4 flexpower Ethanol (sugar cane) 7,2 147HP 6,92 80 O veículo a álcool emitiria somente 20 % dos GEEs do que se rodasse a gasolina pura! Ou O uso do bio etanol proporciona uma mitigação de 80 % das GEEs emitidas em comparação com o uso de gasolina pura.

35 Futurolgy Ethanol will be an additive to gasoline worldwide Biomass residue will have cost (waste also) Algae may be the biggest source of CH Nanotech will open new frontiers

36 Oil participation in energy history Dario Costa Gaeta 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Before WW2 Post war Near future Coal Oil - Renewables Agrícola Carvão Petróleo When we look back, we will notice that we have had an short fossile raw material period fasis... Christian Kohlpaintner Board of Directors of Clariant

37 Thank you!!!

38 Back up

39 SUGARCANE AGROECOLOGICAL ZONING IN BRAZIL 1. It excludes sugarcane expansion in the most sensitive biomes e.g. Amazonia and Pantanal. 2. It excludes sugarcane expansion on any type of native vegetation (Cerrados, Campos,etc.) 3. Authorized areas for sugarcane expansion: 64.7 ml hectares, equivalent to 7.5% of the Brazilian territory (Currently 1% of the area is used for sugarcane)

40 Prices by product evolution AVERAGE PRICE IN SÃO PAULO STATE R$ / Kg of Sugar Content ( ATR) Source: UNICA 2014 Consecana Model/SP Produto 2007/ / / / / / /2014¹ White Sugar local market 0,2399 0,3011 0,5136 0,5667 0,5892 0,4879 0,4941 White Sugar export 0,2484 0,2958 0,4085 0,4386 0,5752 0,5361 0,4834 VHP Sugar export 0,2149 0,2615 0,3433 0,3934 0,4927 0,5013 0,4292 Anhydrous Ethanol fuel 0,2727 0,2982 0,3422 0,4007 0,5276 0,4472 0,4734 Hydrous Ethanol fuel 0,2510 0,2652 0,3019 0,3536 0,4389 0,4165 0,4377 Anhydrous Ethanol industrial 0,2794 0,3063 0,3360 0,3697 0,5144 0,4693 0,4871 Hydrous Ethanol industrial 0,2551 0,2730 0,3085 0,3684 0,4462 0,4206 0,4476 Anhydrous Ethanol export 0,2504 0,2841 0,2987 0,3600 0,4553 0,4741 0,4711 Hydrous Ethanol export 0,2575 0,2870 0,2414 0,3096 0,3985 0,4294 0,4443 Average Price per harvest year 0,2443 0,2782 0,3492 0,4022 0,5018 0,4728 0,4524 Average Price Sugar Cane 0,2284 0,2785 0,3982 0,4408 0,5280 0,5027 0,4517 Average Price Sugar for Ethanol 0,2582 0,2781 0,3070 0,3663 0,4698 0,4371 0,4823

41 Ethanol demand trend Bndes setorial

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