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Working Together to Benefit Brazil, America, and the World

By Leticia Phillips posted Jun 30, 2015
Today, Brazilian President Dilma Rousseff is visiting Washington, D.C. to strengthen the relationship between two of the Western Hemisphere’s biggest nations. But as with any successful relationship, compromise is key on important issues, and President Rousseff plans to discuss several three issues critical to the global ethanol trade with President Obama.

Today, Brazilian President Dilma Rousseff is visiting Washington, D.C. to strengthen the relationship between two of the Western Hemisphere’s biggest nations. But as with any successful relationship, compromise is key on important issues, and President Rousseff plans to discuss several three issues critical to the global ethanol trade with President Obama.

America’s Renewable Fuel Standard

The issue: The Renewable Fuel Standard (RFS) is significant for both America and Brazil’s ethanol industries, and is a central topic for President Rousseff’s visit. The U.S. Environmental Protection Agency (EPA) identifies sugarcane ethanol as an advanced biofuel because it reduces emissions 61 percent compared to gasoline. 

Between 2012-2014, over one billion gallons of sugarcane ethanol flowed from Brazil to U.S. vehicles, and while sugarcane ethanol comprised only two percent of all renewable fuel consumed by Americans, it provided nearly 15 percent of the U.S. advanced biofuel supply. EPA’s recent RFS proposal significantly reduced target volumes for advanced biofuels below Congressionally mandated levels, but increased requirements for advanced biofuels in 2015 and 2016. 

Our position: Americans deserve access to the cleanest possible fuels, but reducing RFS target volumes threatens the future of U.S. ethanol supplies. EPA should protect the RFS’ integrity by maintaining volume requirements for advanced biofuels, and should guard against using the regulatory process to impose anti-competitive requirements on foreign biofuels.

Climate Change and Transportation Emissions

The issue: Brazil and the U.S. must consider transportation sector emissions as negotiators work toward an international climate change agreement at December’s COP21 conference in Paris. The World Energy Council reports fossil fuels currently represent 63 percent of all global emissions, with transportation fuel generating 28 percent of total U.S. emissions and 17 percent total Brazilian emissions.

Transportation emissions aren’t limited to ground transport however, and biofuels must become viable alternatives to aviation fuel. The international aviation industry is committed to growing at a carbon-neutral rate until 2020 then reducing emissions 50 percent by 2050, but biofuel production and consumption must expand to achieve this goal. The U.S. and Brazil have cooperated on technological innovation exchange since 2011, and numerous commercial and military flights have since demonstrated the potential of aviation biofuels.

Our position: Ethanol is arguably the cheapest option available to replace fossil-based transportation fuel at large scale. Some commercial technologies can reach virtually zero emissions, and every gallon of biofuel creates long-term climate benefits and short-term public health benefits. The U.S. and Brazil must work together to develop solutions on a global scale, including incentive policies (tax or environmental) to encourage production and consumption, or private sector cooperation to drive investment and innovation.

Bilateral Cooperation to Benefit Both Countries 

Brazil and the U.S. are proof pragmatic public policy can create economic growth and environmental benefits. Earth has an urgent need for low-carbon, sustainable transportation fuels, and as the two biggest ethanol producers and exporters in the world, our countries have much to share in experience and technology with other nations. 

As the world’s two largest ethanol producers, Brazil and the U.S. have a responsibility to collaboratively build a global biofuels market providing clean, affordable, and sustainable solutions to the planet’s growing energy needs. Brazil’s government and sugarcane ethanol industry are committed to not only expanding the mutually beneficial relationship with America, but to growing the international biofuels market.

A realistic fuel mix for post-2020

By Géraldine Kutas posted Jun 29, 2015
Here we are! The ILUC file is finally over and now it seems that no one wants to hear more about biofuels, especially the Commission. However, biofuels are alive and kicking and there has been evidence of their presence in the past few weeks!

Here we are! The ILUC file is finally over and now it seems that no one wants to hear more about biofuels, especially the Commission.

However, biofuels are alive and kicking and there has been evidence of their presence in the past few weeks!

During his opening speech at the EU Sustainable Energy Week, Commissioner Cañete focused on energy efficiency and didn’t even mention biofuels, but he emphasized that the transport sector should be prioritized, particularly through the adoption of ever stricter CO2 emissions standards for vehicles. 

In addition, the Commission released the RES progress report showing that the penetration of renewables in transport has been very slow so far, reaching 5,7% in 2014 and concluding that introduction of higher blends of biofuels will be necessary to put biofuels back on track. After all, Cañete declared that “achieving our 10% target of renewable energy in transport [by 2020] will certainly be challenging, yet feasible.”

At the conference on decarbonisation of road transport, on 18 June, biofuels were not on the agenda, but the biofuels industry – and not only them luckily! – made it loud and clear that a post-2020 energy framework should include targets for renewables in transport. I was actually pleased to see that after the conference Commissioner Cañete used again the #biofuels hashtag for the first time in some weeks in one of his tweets. To get clarity of the post-2020 biofuel policy we would however need a bit more than a hashtag, Mister Commissioner!

These are all little hints that we shouldn’t lose hope and still find the energy to advocate for balanced policies on biofuels and decarbonisation of transport post-2020.

UNICA is fully committed to engaging in the next months for a ‘decarbonisation of transport’ policy that includes all options available on the market. If we want to reduce our transport emissions, we will need a diverse mix of fuels and technologies. We can’t just rely on electric vehicles only - just like we cannot rely only on biofuels. Let’s aim for a realistic, greener fuel mix for 2030.

As you can see from the pic below, I had the chance to meet Mr Cañete at EXPO during his visit to the Brazilian Pavilion and hopefully my message came across!

Visit of Commissioner Arias Cañete to the Brazilian Pavilion

Commissioner Arias Cañete, Dr. Roberto Rodrigues and Géraldine Kutas discussing in front of the sugarcane at the Brazilian Pavilion (Expo Milan).

UNICA Statement on Changes to Brazil Tax Policy on Imported Ethanol

By Leticia Phillips posted Jun 23, 2015
Brazilian President Dilma Rousseff yesterday signed a decree creating tax parity between domestic and imported products, including ethanol.

The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) issued the following statement regarding changes to Brazil’s tax policy on imported ethanol. It should be attributed to Elizabeth Farina, UNICA President.

Brazilian President Dilma Rousseff yesterday signed a decree creating tax parity between domestic and imported products, including ethanol.

Ethanol produced in Brazil is subject to a range of federal taxes with revenue allocated to social security, including the social participation program (PIS) and social security financing contribution (COFINS) on domestic production.  Today’s action by President Rousseff will level the playing field between Brazilian sugarcane ethanol and imported biofuels by subjecting foreign renewable fuels to comparable taxation and should not be confused with an importation tariff. 

Today’s decree raises the PIS and COFINS on a number of imported products, including ethanol. These taxes will increase from the current 9.25 percent to 11.75 percent (2.1 percent PIS and 9.65 percent COFINS).  Imported ethanol was exempted from the same level of taxation as domestic products in 2013, but this action resulted in accumulated costs for domestic producers with no commensurate costs for foreign producers.

It is important to note the PIS and COFINS paid on ethanol imports will turn into a credit for the importer, which may then be used to pay other tax debts or be reimbursed by the Brazilian government, having the effect of anticipated taxes that would already be collected. 

Brazilian sugarcane producers have long been strong advocates of removing trade barriers and creating tax parity for renewable fuels.  Today’s action continues that tradition.  Working together, the United States and Brazil have built a thriving global biofuels trade benefiting both countries, and we look forward to continued progress toward shared environmental and economic goals. 

Environmental Goods Agreement - how green are the EGA negotiations?

By Géraldine Kutas posted Jun 09, 2015
I recently attended a conference in Brussels on the negotiations of the Environmental Goods Agreement (EGA). Quite disappointingly, ethanol is not part of the list of green products falling under the scope of the agreement. The biggest challenge of the negotiations is indeed about deciding on the list of products. Every country promoted a list of products, but ethanol was not part of any of the lists suggested, despite its proven environmental benefits.

I recently attended a conference in Brussels on the negotiations of the Environmental Goods Agreement (EGA). The negotiations, which were mandated by the 2001 Doha Declaration, were launched on a plurilateral basis in July last year by a group of WTO countries (accounting for around 86% of the world trade in green goods) including the European Union. It aims to remove tariff and non-tariff barriers to trade for “green goods and services”.

What are we talking about when referring to environmental goods? There is no clear definition yet. In effect, everything that helps us ‘green’ our economies, from wind turbines, water treatment filters to recycling equipment and air quality monitors could be considered an environmental good. It is estimated that global trade in environmental goods amounts to nearly $1 trillion annually.

So far, already six rounds of negotiations have taken place, with the next round scheduled for next week, from 15-19 June. Quite disappointingly, ethanol is not part of the list of green products falling under the scope of the agreement. The biggest challenge of the negotiations is indeed about deciding on the list of products and, by now, already 650 tariff lines and more than 2,000 products are under consideration. Every country promoted a list of products, but ethanol was not part of any of the lists suggested, despite its proven environmental benefits.

Brazilian sugarcane ethanol reduces GHG emissions by 90% on average compared to gasoline and it achieves among the highest GHG emission savings compared to fossil fuels even when land use change factors are accounted for.

My doubts of course are on the credibility that such project will have if products like ethanol are not included in the list and if new countries do not joint. Countries in EGA are in fact already part of lower tariff schemes. So further reducing tariffs may not have a huge impact on GHG emissions reduction, I’m afraid! In the case of ethanol, tariffs are generally very high (0.19€/liter) in the EU. Tariff reductions, then, would have the potential to yield extraordinary environmental benefits.

During the conference, both Trade Commissioner Cecilia Malmström and Climate & Energy Commissioner Miguel Arias Cañete emphasized the positive impact that EGA could and should have in the fight against climate change and made reference to Europe’s role “as major exporter of clean technologies”.

However, contrary to the Commissioners’ words, it seems to me that, as it stands, the EGA will lead to a list of products selected in a somewhat arbitrary manner, rather than on the basis of their environmental benefits. The EGA looks more, for the time being, like a platform for the negotiating parties to advance their exporting interests when it comes to green technologies than a tool to fight climate change.

Trade is not a zero-sum game. If the EGA negotiating parties are serious about making legitimate progress towards addressing global warming, then they would have to widen the list of liberalized products to include all goods that deliver environmental advantages, such as ethanol.

We’ll certainly monitor with great interest the next two rounds of negotiations next week and in July, when the negotiation parties should narrow down the list of products. 

UNICA comment on EPA proposed mandates under RFS

By Leticia Phillips posted May 29, 2015
The Brazilian Sugarcane Industry Association (known by the acronym "UNICA") issued the following statement in response to the U.S. Environmental Protection Agency's rules proposal for the 2014, 2015, and 2016 Renewable Fuels Standard. It should be attributed to Elizabeth Farina, UNICA President.

The Brazilian Sugarcane Industry Association (known by the acronym "UNICA") issued the following statement in response to the U.S. Environmental Protection Agency's rules proposal for the 2014, 2015, and 2016 Renewable Fuels Standard. It should be attributed to Elizabeth Farina, UNICA President.

While UNICA is disappointed that today's Renewable Fuels Standard proposal from the U.S. EPA significantly reduces target volumes for advanced biofuels below Congressionally mandated levels, we are pleased to see growing requirements for advanced biofuels in 2015 and 2016. This leaves the door open for continued American access to sugarcane ethanol, one of the cleanest and most commercially ready advanced biofuels available today. 

EPA identifies Brazilian sugarcane ethanol as an advanced biofuel because it reduces greenhouse gases by more than 60 percent compared to gasoline.  This advanced biofuel from an American ally plays a modest but important role supplying the United States with clean renewable fuel. For the past three years, more than one billion gallons of sugarcane biofuel imported from Brazil flowed into American vehicles. During this time, sugarcane ethanol has comprised only 2 percent of all renewable fuel consumed by Americans, but has provided nearly 15 percent of the U.S. advanced biofuel supply.  

Our association looks forward to commenting on this proposal and will continue to play an active role in the RFS rulemaking process, serving as a source of credible information about the efficiency and sustainability of sugarcane ethanol. Likewise, Brazil will continue to be a strong, dependable partner helping America meet its clean energy goals.

# # #

The Brazilian Sugarcane Industry Association is the leading trade association for the sugarcane industry in Brazil, representing 60 percent of the country’s sugarcane production and processing.  More information on sugarcane ethanol and its role as an advanced biofuel is available at www.sugarcane.org/rfs

Fancy a visit to Brazil? Brazil comes to you… Come and see us at the Brazilian Pavillon, EXPO Milano 2015

By Géraldine Kutas posted May 12, 2015
This year’s theme of the Universal Exposition EXPO Milano 2015 “Feeding the planet. Energy for life” couldn’t be more spot on for us!

This year’s theme of the Universal Exposition EXPO Milano 2015 “Feeding the planet. Energy for life” couldn’t be more spot on for us!

I’m very excited to present Brazil’s success story with renewable fuels and to organise a conference on “Producing food and energy for a healthier planet: the case of the Brazilian Sugarcane Ethanol”, on Tuesday 2 June in the Brazilian Pavillon, Milan of course!

As I mentioned a few times already in my blogs, Brazilian sugarcane industry typically supplies both food and energy, with a minimal use of land. Only 0.5% of Brazil’s territory is used for bioethanol, with which Brazil managed to replace 40% of gasoline. 

Botton Expo Milano 2015

We’ll have a number of speakers , experts in sugarcane, including  former Minister José Goldemberg, Sven Sielhorst from Solidaridad and Simon Usher Chief Executive Officer at Bonsucro, ready to walk you through the Brazilian experience and we hope this may serve as an inspiration for Europe, which is struggling to make a good use of biofuels.

More information on the event are available here! Come and see us in Milan…as an anticipation I can already tell you that the event will be followed by a cocktail with Brazilian food and drinks, where Chef Diego Lozano will talk about the history of Brazilian pastries to interested participants!!!

The Good, the Bad & The Ugly… about ILUC

By Géraldine Kutas posted Apr 29, 2015
After the disappointment of not winning concessions from Member States on any of their main points, MEPs have – against the will of many – voted in favour of the Council ILUC text. Now it’s time to turn the ‘ILUC page’ and look beyond 2020. Policymakers need to set up a credible framework for the post-2020. Low-ILUC biofuels should be promoted and sugarcane bioethanol is one of those.

Members of the European Parliament finally endorsed the COREPER text on ILUC yesterday morning in plenary. After the disappointment of not winning concessions from Member States on any of their main points, MEPs have – against the will of many – voted in favour of the Council ILUC text. Final rubber stamp (for real this time!) should be given by Member States at the next Energy Council on 8 June.

In the meantime, in case you are confused on the outcome of almost three years of negotiations, here below you can find a summary (I couldn’t help thinking about this movie, which also happened to be quoted by Mr Torvalds during yesterday’s debate!)

“The Good”

  •  Little consolation that the final cap agreed is set at 7%. My comment is: better than nothing! We have always criticized such a black and white approach, but we don’t want to be too negative and at least a higher cap than the 5% proposed by the Commission will allow a little share of bioethanol to remain in the EU biofuels market.

“The Bad”

  • The 0.5% non-binding target for advanced biofuels. With no incentives for advanced biofuels, their ability to participate to the 3% left of the 10% RED target is even more in doubt…

“The Ugly”

  • …and, of course, the exclusion from the deal of the 6.5% sub-target for bioethanol. More sustainable biofuels will therefore not be incentivized in Europe and Member States will not move towards an E10 blend. A real disappointment for bioethanol, considering that biodiesel will cover most of the 7% cap.

It’s time to turn the ‘ILUC page’ and look beyond 2020. Policymakers need to start thinking already about the longer term and set up a credible framework for the post-2020. Low-ILUC biofuels should be promoted and sugarcane bioethanol is one of those.

We see two important milestones in particular: the revision of the Renewable Energy Directive in 2016/2017 and the wider discussions around the decarbonisation of transport. In both cases, we will be there to put sustainable biofuels at center stage.

California LCFS Re-Adoption Workshop Shows Sugarcane Biofuel Benefits

By Leticia Phillips posted Apr 07, 2015
Updates to CARB’s indirect land-use change (ILUC) modeling and carbon intensity lifecycle analysis reinforce a key fact – sugarcane ethanol is the most environmentally friendly biofuel supplying today’s market.

Last Friday, the California Air Resources Board (CARB) held a workshop on the Low Carbon Fuel Standard (LCFS) re-adoption process. Updates to CARB’s indirect land-use change (ILUC) modeling and carbon intensity lifecycle analysis reinforce a key fact – sugarcane ethanol is the most environmentally friendly biofuel supplying today’s market.

CARB’s revision of indirect land-use change (ILUC) modeling resulted in reduced penalties for Brazilian sugarcane ethanol and the lowest overall number in the LCFS, confirming it as the lowest-carbon biofuel available at commercial scale today.

This positive result is due to the sugarcane industry’s innovative sustainability efforts including reducing deforestation, promoting a double-crop system in production, and expanding mechanized harvesting instead of pre-harvesting burning techniques.

However, sugarcane ethanol’s environmental benefits in the LCFS would be even more significant if CARB included the emissions benefits of electricity cogeneration in sugarcane mills using leftover plant material, which displaces fossil fuel power generation.

UNICA was disappointed CARB has chosen to apply a U.S.-style average electricity mix to Brazil rather than crediting sugarcane biofuel producers for this marginal displacement of fossil energy. The average electricity mix approach may make sense for the U.S., but it does not realistically calculate the low-carbon benefits of bioenergy in sugarcane production, and we urge CARB to reconsider this decision.

LCFS re-adoption will have a major impact on America’s single largest transportation fuels market, but will also reverberate in states now launching their own LCFS policies. California has always led America in clean fuels policy, and CARB’s approach will once again stand as a national model for emulation – let’s ensure policymakers get biofuels policy right. 

EU still debates E10, while Brazil moves to a 27% blend

By Géraldine Kutas posted Mar 16, 2015
I just can’t help praising the decision taken by the Brazilian government to increase, today, the ethanol blend in gasoline to 27%. A question came straight to my mind: Is the EU not simply lagging behind? Is it not incredibly ironic to see Europeans getting cold feet about moving to a 6.5% content of ethanol (in energy) in petrol?

Working for Brazilian interests, you may say my judgment is biased, but I just can’t help praising the decision taken by the Brazilian government to increase, today, the ethanol blend in gasoline to 27%. This move is expected to have a positive impact on the biofuels industry and will no doubt have a positive impact on the environment.

A question came straight to my mind: Is the EU not simply lagging behind? As Brazil moves to 27%, is it not incredibly ironic to see Europeans getting cold feet about moving to a 6.5% content of ethanol (in energy) in petrol?

I mean, the EU wants to be at the forefront in the fight against climate change and you’d expect sustainable fuels to be promoted over less sustainable ones. However, it seems the EU is not even ready to generalise the use of E10! In the current debate around the 6.5% sub-target for bioethanol in petrol, some argue it would go against a level playing field between biodiesel and bioethanol - despite the superior GHG savings of the latter. Another reason invoked is technical compatibility with the current fleet. In the meantime, the United States widely use E10 and Brazil is even allowing higher blends.

You might ask yourselves: why the EU is struggling with this?

ENVI MEPs barely managed to pass a sub-target at 6.5% in their second reading position and Member States don’t seem overly enthusiastic.

The reality is that only a few people actually understand the meaning of ‘that 6.5%’. I would like to explain it here and respond to the main concerns raised by MEPs and Member States.

A 6.5% of renewable energy (in energy) in petrol corresponds to an ethanol blend of 9.5% in volume (E9.5). Although the European Commission declared in 2012 that E10 should be the main petrol fuel used in all the Member States by 2013, only 3 Member States (France, Germany and Finland) are currently selling this blend in fuel stations.

The good news is that there are no technical barriers preventing widespread use of E10 across Europe, as 90% of all cars produced after the year 2000 can run on E10. The only element needed is the political will to incentivise bioethanol usage among European consumers who are otherwise attracted by diesel, currently benefiting from lower taxation compared to gasoline.

Another essential question needs to be addressed at this point: why does a level playing field between biodiesel and bioethanol not make much sense?

Because biodiesel is already the preferred option in Europe and, with a cap on traditional biofuels, Member States will meet their target for conventional biofuels (at whichever level it’s eventually set: 5, 6 or 7%) just by using biodiesel.

What would be the consequence? Bioethanol would be out of the market, despite its sustainability!

It’s absolutely critical to understand the consequences of a cap on traditional biofuels and the subsequent necessity for a specific sub-target for bioethanol. In addition, if the EU market stays locked with E5, there will be no space for advanced ethanol as there is currently enough conventional production to supply this blend.

We, at UNICA, tried to make it simple and understandable for non-experts in this infographic. I hope this helps!

Infographic for blog

It’s now up to Member States to show commitment to the reduction of transport emissions

By Géraldine Kutas posted Feb 24, 2015
Today, the European Parliament’s Environment committee adopted a second reading position on the ILUC dossier, and I’d like to congratulate MEPs for many of the points they expressed through their vote.

Today, the European Parliament’s Environment committee adopted a second reading position on the ILUC dossier, and I’d like to congratulate MEPs for many of the points they expressed through their vote.

First, they signed off on a 6.5% target for energy from renewable sources in petrol by 2020. At UNICA, we believe this particular amendment was critical to the development of a more balanced biofuel policy in Europe. Today, MEPs agreed on a 6% cap on conventional biofuels. This cap could be entirely met by biodiesel, leaving no room for bioethanol (please see our new infographics here on why this would be the case).


6.5% sub-target for RES in petrol

 

If we want to be serious about reducing emissions from petrol, we need to be able to blend it with bioethanol, a fuel guaranteeing significant emission savings, even when ILUC is taken into consideration. The 6.5% target provides certainty for bioethanol and will help the EU reduce its transport emissions.

Second, we are satisfied with the 1,25% sub-target for advanced biofuels, assorted with multiple counting. We believe it is a realistic ambition and a good signal sent to investors. Developing advanced biofuels requires considerable R&D efforts. For projects to reach commercial scale – a great challenge for some advanced biofuels – the regulatory framework needs to be crystal-clear.

Finally, I am also particularly glad to see that ENVI MEPs agreed to consider a longer timeframe for biofuel policy beyond 2020. We hope this will break the ‘code of silence’ around biofuels for the post-2020 period that has prevailed in the Commission over recent months.

As the Parliament will now engage in trialogues with Member States, we urge the rapporteur Nils Torvalds to carry these three points forward, especially the 6.5% target for renewable energy in petrol.

I’m aware that there will be limited flexibility amongst Member States to deviate from the Common Position adopted in first reading. The Council openly stated that the target for renewable energy in petrol was seen as unnecessary (Council Statement accompanying the first reading position) as it would not directly tackle ILUC. However, I strongly believe that the one way of tackling ILUC is to incentivise the consumption of low-ILUC biofuels such as bioethanol and even more, Brazilian sugarcane bioethanol. Sugarcane bioethanol brings emission savings of 55.8%, even when the ILUC impact is taken into account.

My last word will be for Member States: if you are serious about reducing transport emissions, use every opportunity at hand, including the wider use of bioethanol to reduce emissions from petrol!

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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