Moving the Brazil-US Energy Cooperation a step closer
Leticia Phillips — posted 2012-04-05
As I write this, my Brazilian and American colleagues from government and private sector are working around the clock to ensure that President Dilma Rousseff’s trip to Washington D.C. on this upcoming Monday is a great success. Success for Brazil and success for the U.S. And because this is the President’s first trip to the U.S. in her current post it makes it all the more important. I am particularly glad that this meeting takes place at a time when the ethanol import tariff is an issue of the past. So, we can strike that item off the agenda once and for all.
We’ve passed some major hurdles, that’s for sure. We should now focus on finding ways to help create a global market for ethanol. This is my hope for the meeting next week. I strongly believe our governments are moving in the right direction on the MoU and on the Strategic Energy Dialogue. But I also believe we’d have more and faster impact if the private sectors in both countries are actively engaged in these processes. We’re hopeful that our government will call on us. Our capacity to bring new ideas to the table and our desire to innovate and invest can help make this political cooperation a reality for businesses and for consumers.
We all recognize that finding renewable, affordable and sustainable solutions to the world’s energy challenges requires a great deal of commitment and a good deal of courage. When Brazil and the U.S. eliminated their import tariffs they sent a clear signal to the global community. But both nation’s commitment and dedication need to be met with open minds and open arms if we want real, positive change for the environment. Come end of day Monday, we might know what energy deliverables will be announced and what new challenges will be put before us. I am excited to see what the results will be.
Brazil and the U.S. have shown what’s possible when policy is right, when markets are open and when trade and innovation are encouraged. But the challenges we face are complex and they require everyone’s genuine commitment that goes beyond what’s said in policy papers. We need to get things done! The goal here is to move the world away from near complete dependence on fossil fuels. When the ambition is so high, you can safely assume that the gains will be too.
Continuing to spread the Word about Clean Solutions from Sugarcane
Marcos Jank — posted 2012-03-05
When we created sugarcane.org last year, our intent was to continuously provide pertinent information for a growing audience of people who wanted to learn more about different aspects from sugarcane: products, sustainability, benefits, the Brazilian experience, global policies and much more. We wanted to let you know that we have just up-loaded additional information and materials on the website.
Here’s a brief snapshot of the new material we would like to share with you. We hope you find it helpful.
Additional content on sustainability and benefits from sugarcane include:
Interested in the Brazilian sugarcane experience? Here’s some new material we have picked out on this topic:
1 Impact on Brazil’s Economy – The sugarcane industry in Brazil represents an important part in the country’s economy. The sector adds US$50 billion to the country’s GDP and provides good employment to some 1.28 million workers whose salaries rank among the highest in Brazil’s agricultural sector.
2 Reduced Emissions – Since the start of Brazil’s ethanol program in 1975, more than 600 million tons of carbon dioxide emissions have been avoided thanks to the use of this clean and renewable fuel.
3 Commitment to sustainability – The Brazilian government’s comprehensive package of environmental policies is a global benchmark and can serve as a model.
4 Fair Pricing – In 1999, an innovative and voluntary sugarcane payment system was set up to help ensure fair and equitable relationships between sugarcane growers and millers.
We want to keep you informed of the latest developments in the sugarcane industry in the best way possible, so please feel free to send us your suggestions about new content for this website.
Once again thank you for your support and don’t forget to follow us on Twitter for latest news on clean and renewable solutions from sugarcane!
What’s possible when people have choice?
Géraldine Kutas — posted 2012-01-26
A lot. And the Americans will be the first to tell us.
After more than three decades, the U.S. government lifted its tariff on ethanol giving the American public greater access to and an increase in environmental benefits starting in 2012. This is clearly a significant step forward, but I can’t help but think that we are missing out here in Europe?
Europe has set an ambitious environmental target in its 2020 energy legislation yet it simultaneously discriminates against a commercially viable renewable fuel that enables us to reach those same targets. Does anyone else see this paradox?
I know – and EU decision makers know too – that sugarcane ethanol reduces greenhouse gas emissions by 90 percent on average compared to ordinary fossil fuels, making it the best carbon performing biofuel produced today on a commercial scale. Since free trade is, in fact, a two way street, I should highlight that in 2010, Brazil eliminated its ethanol import tariff, undeniably increasing Brazil’s energy security. Today, Brazil hopes to encourage other countries around the world to do the same and develop free markets for clean, renewable fuels such as ethanol. I commend the United States for finally letting their import tariff expire – now I urge European citizens to make note of what European legislators owe them. To be fair, Europe isn’t alone. Big economies like China and Japan also impose an import tariff on ethanol.
So, what I think European consumers are missing here is choice. The choice to:
…increase relative independence on fossil fuels
…choose to power cars with a clean and renewable fuel
…cope better with high fuel prices
And ultimately to play an important role in meeting ambitious environmental targets decision makers have promised them.
It is urgent to act.
I know this won’t happen overnight, import tariffs create distortions and distortions take time to correct. But my hope for this year is that we start questioning their true merit!
We have a busy year ahead, let’s get to work and you’ll hear from me again in the coming months.
Are EU sustainability criteria for biofuels compatible with WTO rules?
Géraldine Kutas — posted 2011-12-12
That’s the question many of us are grappling with today.
With the aim of meeting environmental goals, the European Commission is now due to finalize the very last provisions of the sustainability criteria it established two years ago in both the Renewable Energy Directive (RED) and Fuel Quality Directive. The criteria were created as a mechanism to ensure that biofuels marketed in the European Union (EU) truly help in mitigating climate change and preserving biodiversity.
But recent decisions taken by the dispute settlement body of the World Trade Organization (WTO) – US — Clove Cigarettes, US — Tuna II (Mexico) and US –– COOL – could jeopardize the viability of the criteria, resulting in significant consequences for trading biofuels.
Are sustainability criteria for biofuels “discriminatory” or “unrelated to product characteristics”? This issue has been widely discussed among stakeholders, including policymakers, scientists, NGOs and academics, all with competing views.
Given the importance of sustainability criteria for the EU biofuels market, we recently co-organized a workshop with the International Centre for Trade and Sustainable Development (ICTSD) to provide a platform for experts in Brussels to discuss the legal and technical arguments around the (in)compatibility of EU sustainability criteria. That way, we could gather opinions from all sides for a constructive dialogue in light of the recent WTO jurisprudence dealing with the Agreement on Technical Barriers to Trade (TBT).
The two remaining provisions I mentioned earlier that are under consideration by the European Commission are highly contentious. Indirect Land Use Change (ILUC) is one of the most prominent examples of where incompatibility could occur since science is currently too flawed to attribute a specific ILUC impact to specific biofuels feedstock. Another example is “highly biodiverse grassland”, which clearly targets specific regions of the world. Andrew Shoyer, chairman of Sidley Austin LLP’s international trade and dispute resolution practice, advises that land-use criteria on biodiversity and any ILUC factor would be “particularly vulnerable”. And furthermore, specifically regarding ILUC, a recent EU-commissioned study by the International Food Policy Research Institute (IFPRI) concluded that many uncertainties remain surrounding the calculation of ILUC. It especially emphasized that such model cannot differentiate between direct and indirect land use emissions due to a lack of empirical evidence.
Another reason that EU sustainability standards might not be compatible with WTO rules is if they effectively discriminate between domestic and imported products based on individual production methods. Even though EU directives don’t contain a legal restriction on the imports of biofuels, in practice they can affect its marketability resulting in de facto discrimination. That means Brazilian biofuels – despite their proven outstanding environmental benefits – potentially could be limited in accessing the European market – a market which developed these rules explicitly to benefit from GHG-reducing fuels. There is a hint of paradox here.
What I know for sure is that we have more questions than answers on the table. In fact, this was also the outcome of our event. Let’s not rush into this. With all the uncertainty still to be clarified, I hope EU policymakers will take the time to carefully analyze cases affected by the TBT and the GATT agreements. The consequences could be detrimental for biofuels and many other renewable energy sources if they get this wrong. At UNICA we welcome all efforts to address climate change, and are convinced that a thoughtful decision that meets environmental objectives and is compatible with the WTO can be reached.
Bioplastics Further Unlock the Potential of Sugarcane
Géraldine Kutas — posted 2011-11-21
We at UNICA use the phrase ‘One plant, many solutions’ and I think this describes sugarcane well. Sugarcane has played a major role in helping Brazil become virtually energy independent. But that’s not all.
Thanks to tremendous advances in innovation, sugarcane is being used more and more to help solve our global energy challenges. Sugarcane is now expanding into new clean and renewable products, like bioplastics and bio-packaging.
The latest developments in this fast-evolving sector were discussed last week at the Biopackaging Summit in Brussels. I was glad for the opportunity to participate in this event where stakeholders came together to discuss the latest trends, challenges and opportunities for the biopackaging industry.
Conventional plastics are ubiquitous these days – they are part of our everyday lives, the infrastructure around us and many products we use. But the problem is that they are economically and environmentally unsustainable. The production of traditional fossil-based plastics results in significant greenhouse gas emissions. They can also produce a significant amount of pollution and waste if not recycled properly, or not recycled at all. Many see the low cost of conventional plastics as an advantage. But the price is tied to volatile oil prices. That, combined with the fact that petroleum supply is a non-renewable resource and therefore finite, make it smart to look into alternatives.
The good news is that high-tech innovation has recently unveiled that sugarcane ethanol can be used as a substitute for petroleum, and the result is a more eco-friendly product! Bioplastics have the same physical and chemical properties as regular plastic. The difference is that sugarcane-based bioplastics generate far fewer dioxide carbon emissions during production. All of this while bioplastics are 100 percent recyclable and even some are biodegradable.
Bioplastics are still a niche, but the market is growing – particularly in Brazil where the largest plant of biopolyethylene is located. A recent report by Technavio, a global research company, predicts that the global bioplastics market will grow 32 percent by 2014.
And we have already seen a number of companies begin to switch to more environmentally-friendly packaging. Perhaps Coca-Cola is the best-known example, when two years ago it launched the PlantBottle, a PET made with Brazilian sugarcane. The new packaging contains as much as 30 percent plant material without changing the color, weight or appearance. Since then, Coca-Cola has shipped more than 2.5 billion beverages worldwide using PlantBottle packaging. Other industries have followed Coca-Cola’s lead in bioplastic packaging, including Heinz, Nestlé, Danone, Pantene, Johnson&Johnson and Ecover.
We are all under pressure to become more environmentally responsible. Since plastics are not going away anytime soon, I am excited sugarcane has helped in developing an environmentally-friendly alternative – bioplastics – that lowers greenhouse gas emissions in this world.
EU-Brazil Week: Only Baby Steps on Renewable Energy & Trade
Géraldine Kutas — posted 2011-10-10
Last week, at the annual EU-Brazil Summit, the EU and Brazil have been discussing how to jointly tackle our global challenges – chief among them trade, climate change and economic growth. For the last four summits, leaders have pledged their unwavering commitment to work together. But were there actual results?
Yes, we are happy to see some progress was made, but surely we can and must do much more. It’s time to be bold and make decisions that will make a significant difference. I was encouraged to hear the European Council President Herman Van Rompuy say “we are able and willing to do more.”
Now these words need to be followed by actions.
For instance, what was accomplished in terms of pressing issues that were on the agenda, especially trade and renewable energy?
Let me start with renewable energy. The EU and Brazil noted the importance of stable and transparent energy markets and the need for continuous efforts to improve energy access and sustainability, which are crucial elements for global economic growth. The Letter of Intent signed last week between the European Commission and the Federative Republic of Brazil is a first step in that direction. It aims at strengthening the scientific cooperation between both parties in climate change, energy and sustainable management of natural resources, among other issues. I think this is a promising start but now we need to take these talks to the next level.
By 2050, global energy demand is expected to double. The business community gathered at the 2011 EU-Brazil Business Summit fully agreed that biofuels are the only powerful resource available at a commercial scale to efficiently and economically decrease greenhouse gas levels in the transport sector. However, we need a clear policy framework that will enable increased, yet sustainable production. Brazilian sugarcane ethanol, which is produced in a sustainable way with no subsidies, is the best performing biofuel thanks to its environmental benefits. Yet its access to the European market is heavily restricted. This brings me to my next point: trade.
Brazil is the sixth largest investor in the EU but existing trade restrictions and unjustifiably high tariffs still limit the access of Brazilian products into the European market. Brazil already eliminated its tariff on ethanol. Now it’s time for Europe to do the same and offer its people a chance to choose a clean and sustainable fuel, at a competitive price.
If biofuels are indeed a powerful and sustainable alternative that can help Europe decrease transport emissions, we need to open up markets so we can share our expertise and goods, while at the same time helping Europe reach its targets.
So, we truly hope the new Joint Action Plan for the period 2012-2014 will provide us with a genuine level playing field and reduce suspicion on both sides. This will have an impact across many sectors and it will ultimately benefit us all. Not only do we hope it will boost innovation, enhance employment, stimulate economic growth, but a successful agreement can also create economic synergies and reduce costs of raw material for both parties, besides achieving an environmentally friendlier planet.
We’re on the right track, but baby steps won’t get us there fast enough. Let’s move beyond constructive talks and leapfrog into a sustainable and prosperous future for both Europe and Brazil.
“Brazil Week” Spotlights EU-Brazil Relations
Géraldine Kutas — posted 2011-10-02
For five years now, European and Brazilian policymakers and officials convene to exchange views on big ticket issues for Brazil and the EU. This week they will meet in Brussels – what better place if you want to advance some critical issues between major trading blocs. The Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy and business leaders plan to discuss ways to tackle common global challenges and work on strengthening ties between the EU and Brazil. Renewable energy is important to Brazil so we can safely assume it will feature on the agenda. As most involved parties, we too recognize that there is a lot to gain from a dynamic strategic partnership. Climate change, competitiveness, innovation and trade are global challenges, and they require global solutions. But most of all they require a genuine level playing field.
As you would expect, that brings me to the EU-Mercosur negotiations. Needless to say, they will drive a good deal of conversation this week. And for a number of good reasons. For one, the EU is Brazil’s leading trading partner. And the EU has repeatedly noted that Brazil is the most important market in Latin America. But existing trade restrictions and unjustifiably high tariffs limit the access of Brazilian products into the European market. Brazil has already eliminated its tariff on ethanol, but at this moment in time, Europe heavily taxes clean and renewable Brazilian sugarcane ethanol. How will this policy help Europe achieve a sustainable future? It most likely won’t. It doesn’t make much sense either because access to these goods will save Europeans money, advance competitiveness, drive innovation and protect the environment – the very challenges those leaders plan to resolve. I also believe that free trade stands to benefit us all. Brazil and the EU get to create one of the world’s largest bilateral free-trade zones. This is a hugely promising prospect. It’s also a lofty claim, so allow me to explain.
It really means that man on the street gets more choices! For us at UNICA, this means clean and renewable energy in the hands of European consumers and a competitive market that brings down the price of fuels that protect the environment. I’d argue that it will get us all closer to some tangible results as far as policy commitments are concerned.
I’m both proud and excited that UNICA can have a share of voice in this important debate. Our industry has been a critical component of what’s made Brazil a truly unique renewable energy pioneer over the past three decades. And we want to share our experiences with everyone who has an interest in smart, sustainable energy policy. Our goal is to partner with other countries to promote renewable energy on a global level. On October 3rd, we’re organizing a reception “Biofuels done well – Sugarcane leading the way to clean energy”, which will highlight what we believe can help Europe achieve a sustainable future. It’s hosted by MEP Britta Thomsen at the European Parliament in Brussels and will be attended by a number of Brazilian government officials. And that’s not all we’ve got planned for “Brazil Week”. Our Chief Representative in the EU Lola Uña Cárdenas will participate in a panel at the European Commission on October 5th, to speak about EU-Brazil cooperation efforts as they relate to agribusiness.
Brazil has an increasingly important role on the global stage – be it for energy, food or developing a strong and functioning bioeconomy. We hope policy leaders and businesses alike will take advantage of “Brazil Week” and put forward workable solutions to our mutual challenges. After all, a fruitful relationship between the EU and Brazil is good for everyone. Stay tuned for our take on this week’s discussions.
Ethanol – a new growth cycle
Marcos Jank — posted 2011-09-06
Brazilian consumers were shaken up in recent weeks by the steep price of ethanol at pumps throughout the country. People wonder why this happened and if it will happen again in the future. The most radical critics even said we could be facing a potential fuel shortage and raised doubts about the very future of ethanol. All of this calls for a careful analysis of the issues.
From 2000 to 2008, sugarcane production increased by 10.3% annually, driven by strong sales of flex-fuel vehicles. With about 20 new plants opened per year since 2005, the period was characterized by an abundance of cheap capital, new investors with limited experience in the sugarcane industry, and traditional businesses with limited access to modern financial tools. With prevailing low sugar prices, new investments were spurred on by the prospect of good profit margins for ethanol in Brazil and abroad.
However, the 2008 global crisis came and impacted primarily the companies that invested the most. One third of the industry ran into difficulties and went through significant financial and corporate restructuring. New actors have emerged from the crisis: existing companies achieved solid growth while traditional agribusiness, oil and chemical groups entered the sugarcane industry with full force. But investments were directed to the purchase of troubled companies, while expanding production grew at only 3% per year since 2008. The post-crisis scenario is dramatically different: over 70% of the cane industry is now comprised of groups with sizeable assets, capital structure and governance, operational performance and access to high quality capital. These are groups ready to invest.
The problem is that today’s market catalysts are very different from those observed in 2005. In the past six years, the cost of ethanol production increased more than 40%, hurting its competitiveness against gasoline, which has seen virtually no price fluctuation at the pump since 2005. Besides a significant reduction in margins, which currently do not justify heavy investments in new units, investors feel insecure about the lack of criteria in setting gasoline prices, a direct competitor of ethanol at the pumps with “managed” prices in Brazil, which do not follow the laws of supply and demand.
Land availability, technology, or capable and motivated employees, are not factors that currently affect or hinder the efficient growth and expansion of the ethanol industry. Difficulties in management, governance, and capital have also been overcome. What’s really lacking at this point is an adequate strategy to address structural factors that have reduced the competitiveness of ethanol. These are measures that require major efforts from both the public and private sectors: harmonization of federal and state taxes with reduced tariffs, strong incentives to bioelectricity, improved logistics and storage, a commitment to ensure the supply of the biofuel, increased productivity, cost reductions and improvements in flex-fuel engine efficiency.
Brazil is currently the country with the greatest availability of natural resources and technology to simultaneously expand the production of both oil and biofuels. The challenge is to grow quickly and in an organized manner. We do not want to repeat the stop-and-start growth witnessed in 2006. Brazil has built one of the most diversified and clean energy matrixes on the planet, with sugarcane appearing as the country’s number-two source of energy behind petroleum. Thanks to flex-fuel cars, Brazil is the only place where consumers can choose freely, at the pump, which fuel to use. If flex-fuel technology and ethanol did not exist, consumers would have spent an additional R$ 20 billion over the last six years to fill their tanks only with gasoline. Not to mention the damage that society would have incurred in the form of higher greenhouse gas emissions, worse public health, lower job creation and income generation, all of that leading to less development away from major urban centers. The world recognizes that Brazil has taken bold and innovative decisions in its energy sector. We must now advance faster and better.
A version of this article was originally published in the Brazilian newspaper, “Correio Braziliense”, on April 27, 2011.
Ethanol Summit 2011 – Day 1
Géraldine Kutas — posted 2011-06-06
Welcome to our first blogpost directly from the 2011 edition of the Ethanol Summit, one of the world’s top events focused on renewable energies, which takes place in São Paulo, Brazil today and tomorrow.
Today was an exciting and enriching debate surrounding solutions for a low-carbon economy. The day was kicked off with several Brazilian government officials sending a clear message to an audience of over 2,000 researchers, executives and renewable energy enthusiasts: the importance of sugarcane by-products as a solution to increasing global energy needs and climate change mitigation, as well as the need to increase the production capacity of the sector to supply this demand. As Geraldo Alckmin, governor of São Paulo, the main ethanol-producing state in the country, clearly stated: the benefits of ethanol go beyond what is initially imagined. An aspect that sometimes is not given so much attention is the impact of ethanol use on public health, and how ethanol use can reduce local pollution and result in fewer respiratory related hospitalizations and deaths.
However, the debate heated up during “The Future of Oil and Role of Biofuels” panel, where top executives from major oil companies (BP, Petrobras, Shell and Total) where challenged by Vinod Khosla, a well-known investor in clean technology, better known as one of the co-founders of Sun Microsystems. All four oil companies had high praises to sugarcane as being the only feedstock that is able to compete with oil, and which reduces greenhouse gas emissions by 90 percent on average compared to gasoline, the best environmental performance of any biofuel produced at commercial scale. Nevertheless, Mr. Khosla emphatically pointed out that, despite these recognized benefits, investments from oil companies were still extremely shy. “The bad part of innovation is failing. But investors like us should not be afraid to fail. We have to commit to taking risks,” said Mr. Khosla. He also reiterated that ethanol is not the only fuel of the future. The opportunity is also on non-ethanol molecules, from biomass the “and beyond” that we always like to point out.
At the end of the day after discussions that ranged from certification to public transportation, bioelectricity, investments in the sector and new products from sugarcane, the last plenary session gathered speakers that represented ¼ of the total sugarcane production in Brazil. These top executives sat down to talk about the future of the sugarcane industry by 2020 and beyond. Despite the many challenges that the Brazilian sugarcane industry faces, especially in the area of logistics, hopes and investments are expected to rise in the next decade.
All in all, today’s event was a positive debate that engaged people from different backgrounds, industries, countries and even technologies. But at the end of a long day of work, we conclude that events like these are not only important for the industry to showcase our accomplishments, but also recognize the challenges and opportunities that lay ahead. All that can be offered by this low-carbon plant: sugarcane.
By 2050, the world’s population will grow by 40 percent and add another 2.5 billion people who will need to eat and power their lives. During the same time period, global energy needs will likely double. And unless current trends change, carbon dioxide emissions that contribute to global warming could increase by 80 percent.
These alarming figures help explain why global leaders are searching for clean, renewable options to provide energy and reduce petroleum use. And in turn, this website is intended to explain how sugarcane can contribute solutions to many of these pressing challenges.
The Brazilian sugarcane industry decided to launch this new site to share knowledge and information with a growing global community of people who want to know how their food and energy choices affect our environment and people worldwide. And we did it specifically to provide information, new data and analysis about the efficiency and sustainability of sugarcane products including sugar, ethanol, bioplastics, bioelectricity and more.
We are excited to share what we know about this incredibly versatile plant and hope this website is a useful resource.
Knowing that you are one of many who look for research and insight to shape renewable energy policy and improve practice, we’ve built our site to make it much easier to find materials. As you navigate our pages you will see that we’ve also gathered information from other organisations whose perspectives inject new thinking into sustainability conversations.
We’ve also built a Global Agenda page to help you keep up to date on latest events that shape conversations on global renewable energy policy. Stay tuned in the coming months for new materials. We’ll add links to government policies or new research that we think will be of interest to you as it becomes available.
The launch of our website today coincides with the first day of the annual World Ethanol Summit in São Paulo. This year it’s about Solutions for a Low-Carbon Economy where we are going to be joined by nearly 1,000 participants to discuss the contribution of sugarcane products to the reduction of greenhouse gas emissions.