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Sugarcane at the crossroad of agriculture, energy, transport and innovation

By Géraldine Kutas posted Mar 21, 2016
This week UNICA’s President Elizabeth Farina was supposed to attend the Apex-Brazil conference in Brussels and talk about the EU-Mercosur trade agreement. The event was cancelled because of the tragic events but here are the key messages she would have conveyed.

This week UNICA’s President Elizabeth Farina was supposed to attend the Apex-Brazil conference on the EU-Brazil partnership, in the presence of Brazilian Ambassador to the EU Vera Machado.

Of course, the event was cancelled as a consequence of the tragic events in Brussels on Tuesday 22 March. Elizabeth would have shared important messages on sugarcane which represent such a strategic sector for Brazil, as it delivers many products and opportunities, mainly from sugar and ethanol

On sugar, some of you may already know that a little over ten years ago when the EU and Brazil were negotiating the Mercosur agreement, sugar was excluded from it because the EU sugar market was deemed to be too fragile for competition. Since then, it has gone through a series of reforms – the last of which will take place next year – that will effectively make it mature for competition from abroad. A number of countries have already been granted duty-free sugar export quotas to Europe. It’s time Brazil is given the same treatment through the EU-Mercosur agreement.

On ethanol, we have extensively debated about its sustainability. Let’s talk now about the role it could play if only it was traded freely in Europe. Unfortunately, what currently happens is that ethanol is considered an agricultural product, contrary to what happens for biodiesel which is considered a chemical product, and this means a higher tariff at 19 euro/hectoliter in the EU. This custom classification is effectively preventing Brazil to export to Europe. By removing this tariff barrier, more Brazilian sugarcane ethanol could be traded with Europe. This does not mean that it would replace European production, but only complement it.

In addition, those who think this would only benefit Brazil are missing the point. It’s about much more than just exports really. Firstly, this would benefit European companies as well. Approximately 20% of the sugarcane processing in Brazil is actually done by European groups. For those operating in Europe in the bio-chemical and bio-plastic industry, it would mean access to an affordable and low-carbon feedstock in the shape of sugarcane ethanol.

With minimum 71% GHG emission reduction according to default values in the Renewable Energy Directive, and 55% if ILUC is factored in, its GHG performance is simply unmatched among first generation biofuels. Higher blends in conventional fuels would be a simple step. Add to this the diversification of supply sources, the competition to lower costs, the alleviation of pressure on cereals commodity markets… If this is not a low-hanging fruit to help the EU decarbonize its transport sector, I don’t know what it is!

If the EU wants to decarbonize its transport system, it must address the paradox of trading oil freely while imposing high import taxes on Brazilian sugarcane ethanol. The Mercosur agreement is a good opportunity to do this; let’s not waste it.

Beyond the “conventional v/s advanced biofuels” dilemma: sustainable biofuels should win!

By Géraldine Kutas posted Mar 07, 2016
A few days ago, I was listening to the speech of Vice-President Šefčovič’s at a high-level event in Brussels on biofuels. He said that “all main alternative fuel options must be pursued”. We hope that sugarcane ethanol will be given a chance to prove what it can do.

A few days ago, I was listening to the speech of Vice-President Šefčovič’s at a high-level event in Brussels on biofuels. This was shortly after the release of the Energy Security package, and so the Commission’s main angle was diversification of supplies, in addition to decarbonisation of transport obviously, given the upcoming Communication in June.

The Vice-President started by setting the scene: transport counts for a third of the EU energy consumption, one fourth of emissions, the instability on the international oil market, etc. The bulk of his intervention was then about the way advanced biofuels can help solve these issues. Needless to say, it was disappointing to hear no mention of sustainable first generation biofuels such as ethanol. This showed that once again the Commission had given up on all first generation biofuels regardless of their differences; and sugarcane ethanol falls victim to this black/white distinction in biofuels. As time goes by and only a few months remain until the publication of the decarbonisation of transport – and later on the review of the Renewable Energy Directive – it is frustrating to see the Commission perpetuate this simplistic approach. 

But let’s try and be optimistic. Mr Šefčovič did also say that “all main alternative fuel options must be pursued”. We hope that sugarcane ethanol will be given a chance to prove what it can do.

In the meantime, a few days ago the Commission launched a tender for a study on the ILUC impact of biofuels. The purpose of this study will be to gather the ‘best available scientific ILUC research evidence’ able to influence ILUC modelling results.

I’m sure most of you sadly thought: “OMG…ILUC is back!” (me included!!!). However, this may eventually help the identification of low ILUC risk biofuels ahead of the elaboration of further legislation. This may be a chance for sugarcane ethanol to finally differentiate itself from other first generation biofuels in the upcoming proposals to decarbonize transport!

There are still opportunities out there to get recognition for the potential of ethanol in Europe’s transport system. We’ll keep following these developments as they unfold...read us to know more!

Our Authors

 

Géraldine Kutas, Head of International Affairs & Senior International Adviser to the President of UNICA Géraldine Kutas
Head of International Affairs & Senior International Adviser to the President

 

Leticia Phillips, Representative-North AmericaLeticia Phillips
Representative, North America

 

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