Agri Business

Long-term policy backing needed for bioethanol: Brazilian sugar baron

TV Jayan New Delhi | Updated on January 24, 2020

Eduardo Leao de Sousa, Executive Director of UNICA (Brazilian Sugarcane Industry Association).

In the last two years, Brazilian sugar firms managed to divert sugarcane enough to produce 10 million tonnes of sugar into bioethanol production, helping keep both sugar and ethanol prices competitive, said Eduardo Leao de Sousa, Executive Director of UNICA (Brazilian Sugarcane Industry Association).

“If Brazil did not have the option of producing that much of ethanol, you can very well imagine what would have happened to our sugar industry. It could have just collapsed,” de Sousa, who was in India in connection with Brazilian President Jair Bolsanaro’s State visit to India, told BusinessLine.

Win-win situation

Brazilian sugar industry not only increased the production of ethanol but also earned more, as biofuel commanded better prices last year, he said. Brazil will be producing 10 million tonnes less sugar this year too as ethanol production is expected to go up. In 2018-19, Brazil produced 621 million tonnes of sugarcane – almost 50 per cent more than what India produced – which yielded 29 million tonnes of sugar and 33 billion litres of ethanol.

Significantly, Indian sugar mills went through a price crisis caused by a glut in sugar production last year. The government not only had to prop up sugar prices but chart out policies to encourage ethanol production and announce higher blending of bioethanol in petrol. According to de Sousa, Brazilian ethanol market has matured and its prices are now market-determined. Last year, ethanol producers in Brazil were able to make good profit.

Oil dependence

He said Brazil replaced 48 per cent of gasoline with bioethanol last year. Like India, Brazil was importing 80 per cent of oil in the 1970s. Over a period of time, Brazil reduced its dependence on imported oil and it imports very little nowadays. India could also achieve this if it increases bioethanol blending in auto fuel, the UNICA official said.

When Brazil decided to blend bioethanol in gasoline in the 1970s, nobody believed it could be done. Initially, the blending was 10 per cent and now it has gone up to 27 per cent. All vehicles, including imported ones, are running on 27 per cent ethanol-blended fuel. The South American country also has cars which run on pure ethanol (which can switch between petrol and ethanol).

“For ethanol, or any biofuel, to stay in the market, we need to have public policies in place. You have to create conducive conditions for this to happen. That could be through mandatory blends. Or through tax differentiation between biofuels and fossil fuels. And they need to be long-term rules,” de Sousa said.

According to the UNICA chief, India and Brizil would sign a memorandum of understanding for technical cooperation in the field of bioethanol. This will help bring experts in ethanol production, distribution and other aspects to hold discussions with stakeholders in India.

“We want India to be a big producer and consumer of ethanol. Currently, Brazil and the US account for 75 per cent of bioethanol produced in the world. We want more countries to start using bioethanol as vehicle fuel. We want to create a global market for bioethanol,” de Sousa said.

Ethanol benefits

Apart from ensuring energy security, bioethanol can lead to major environmental benefits – it can reduce the impact of climate change as well as improve air quality in cities. Even Brazil used to be a major emitter of carbon dioxide, but it has been able to significantly bring down Co2 emissions with the use of ethanol, de Sousa said.

India, which is the fourth largest emitter of greenhouse gases after China, the US and EU, can benefit as ethanol can cut down CO2 emissions by 90 per cent, compared with gasoline.

“In Sao Paulo, the largest city in Brazil, we used to have air quality problems with the government warning people almost every day about the risks of venturing out. With the use of ethanol as vehicle fuel becoming more popular, the air quality issues disappeared. In fact, air quality in Sao Paulo improved about three times, even though the number of cars on the road has actually doubled,” he said.

According to de Sousa, Brazil too has been working on 2G ethanol (producing ethanol from agricultural waste), even though the quantity is still less. Soon, it will be able to move to largescale 2G ethanol production, he said, adding that Indian industry will be able to learn from Brazil’s experience.

Published on January 24, 2020

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