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Bioplastics Further Unlock the Potential of Sugarcane

Géraldine Kutas — posted 21/11/2011

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 10/10/2011

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 02/10/2011

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 06/09/2011

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 06/06/2011

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.

Tomorrow we have a fully-packed day. Don’t forget to watch the live debate!