Brazilian biofuels update
Brazil has seen several developments in its biofuels sector recently. First of all, there was the announcement by Petrobras that it may invest in a fleet of dedicated ethanol tankers to export its rapidly growing output (earlier post). Today, Latin American leaders convene for a regional energy summit hosted by Venezuela, in which biofuels will take center stage. In another development, Brazil's largest ethanol producer, Cosan, announced it will be investing a massive US$1.7 billion over the coming four years to expand production and to make it more efficient. Finally, of all new jobs created during the first semester of this year in the industrial sector in São Paulo state - which is home to the Southern hemisphere's largest and most industrialised city - 74% were generated by the biofuels sector.
Cosan steps up investments
Brazil's leading sugar and ethanol producer announces [*Portuguese] it will invest US$1.7 billion in the next four years in expanding its production, in diversifying biofuel related activities, and in optimising the entire production chain.
The company, whose 17 ethanol plants are all located in the São Paulo state, intends to start new acitivities in other regions, most notably in the central state of Goiás. "Cosan's growth strategy is not exclusively aimed at taking over existing plants", says Paulo Diniz, CFO, even though this is what the company had been doing most.
The US$1.7 billion can be broken down as follows:
President Hugo Chavez of Venezuela is organising the first South American Energy Summit on la Isla Margarita today, where heads of state and energy ministers from Argentina, Brasil, Guyana, Bolivia, Chile, Colombia, Ecuador, Paraguay, Perú, Suriname and Uruguay gather to discuss energy security, biofuels, the integration of a region-wide natural gas grid, the creation of a 'gas OPEC', and the establishment of the Banco del Sur, a new development bank that should become an alternative to Washington-backed lenders such as the International Monetary Fund and World Bank:
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: co-generation :: Venezuela :: Brazil ::
Ahead of the summit, Marco Aurelio Garcia, a special aide to President Lula wrote in Venezuelan newspapers that "Brazil's energy options should not be converted into a platform for political-ideological discussion as though there were two opposing camps in the Americas." Chavez now denies any conflict with Lula and stresses his criticism is aimed at the US. Garcia in turn said the Brazilian leader is coming to the summit on Venezuela's Margarita Island "in peace and love," to promote ethanol "not as an ideological fuel, but simply a fuel." Meanwhile, the Brazilian government said in a statement that one key aim of this week's talks is to deepen dialogue toward regional integration begun at a January meeting of the Mercosur trade bloc in Rio de Janeiro. Those talks were marked by public spats over how best to move toward integration.
The South American leaders - most of who are situated on the political left - are all looking at biofuel production themselves. The question is not so much whether biofuels should be promoted, but rather in which kind of development context they should be placed.
Despite Chavez's criticisms of promoting ethanol as a substitute for gasoline, Venezuela still plans to expand its own ethanol production for use as a fuel additive. Venezuela's has launched a €665 million/US$900 million plan to this end, that envisions becoming self-sufficient in ethanol by 2012 by planting 300,000 hectares (740,000 acres) of sugar cane, cassava and rice and building up to 17 processing plants.
We keep an eye on the summit, and will report back as developments unfold.
Biofuels bring jobs - for low-skilled labor
According to the Federação das Indústrias do Estado do São Paulo (FIESP), the state of São Paulo generated [*Portuguese] some 57,000 new jobs in the industrial sector during the first semester of this year. The state is home to the city with the same name, a megalopolis of 20 million inhabitants, Brazil's largest and most industrialised city, and the larges megacity of the Southern Hemisphere.
Of these new jobs, 41,000 were directly generated by the biofuels sector, making it by far the fastest growing industrial segment. Without this sector, São Paulo's job growth amounted to 0.8%.
However, Paulo Francini, lead economist of the FIESP, notes that the growth in biofuels-related jobs is mainly due to increased demand for planting and harvesting cane. In short, most of the jobs are low-income, low-skill jobs for poor laborers, many of whom have no alternative employment opportunities.
This wraps up our Brazilian biofuels update.
Cosan steps up investments
Brazil's leading sugar and ethanol producer announces [*Portuguese] it will invest US$1.7 billion in the next four years in expanding its production, in diversifying biofuel related activities, and in optimising the entire production chain.
The company, whose 17 ethanol plants are all located in the São Paulo state, intends to start new acitivities in other regions, most notably in the central state of Goiás. "Cosan's growth strategy is not exclusively aimed at taking over existing plants", says Paulo Diniz, CFO, even though this is what the company had been doing most.
The US$1.7 billion can be broken down as follows:
- new plants: an investment of US$ 650 million will result in the construction of three factories with a capacity to crush 3.3 million tons of cane, in the municipalities of Montividiu, Jataí and Paraúna, in Goiás. The first of these is expected to come online in 2009. Diniz further announced Cosan is looking at projects in the Centre-West and the poorer and more arid Nordeste, as well as into diversifying its activities and enter fuel mixing and trading of biofuels.
- process optimisation: another focus of Cosan's investment is the optimisation of the production chain. The mechanisation of cane harvesting will recieve an investment of US$ 88 million; US$40 million will be dedicated to augmenting the productivity of sugarcane production by increased agronomic interventions and innovations, automatisation of harvesting, crushing and bioconversion processes. This will result in higher overall productivity and efficiency, that may save the company some US$ 177 million by 2010.
- increasing capacity of existing plants: A total of US$ 501 million will go into expanding the capacity of Cosan's 17 sugar plants, the output of which will increase from 40 million tons per year, to 50.6 million tons by 2012.
- co-generation: new co-generation technologies and capacity - based on utilising processing residues such as bagasse - receives a fresh input of US$448 million. This will boost Cosan's co-generation capacity to 390 megawatts, compared to Cosan's current 163MW. Electricity produced from bagasse is carbon neutral and renewable. This power is used to run the ethanol and sugar plants, but the excess is fed into the grid and sold. Cosan expects an additional return of US$174 million per year from the sales of this green electricity.
President Hugo Chavez of Venezuela is organising the first South American Energy Summit on la Isla Margarita today, where heads of state and energy ministers from Argentina, Brasil, Guyana, Bolivia, Chile, Colombia, Ecuador, Paraguay, Perú, Suriname and Uruguay gather to discuss energy security, biofuels, the integration of a region-wide natural gas grid, the creation of a 'gas OPEC', and the establishment of the Banco del Sur, a new development bank that should become an alternative to Washington-backed lenders such as the International Monetary Fund and World Bank:
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: co-generation :: Venezuela :: Brazil ::
Ahead of the summit, Marco Aurelio Garcia, a special aide to President Lula wrote in Venezuelan newspapers that "Brazil's energy options should not be converted into a platform for political-ideological discussion as though there were two opposing camps in the Americas." Chavez now denies any conflict with Lula and stresses his criticism is aimed at the US. Garcia in turn said the Brazilian leader is coming to the summit on Venezuela's Margarita Island "in peace and love," to promote ethanol "not as an ideological fuel, but simply a fuel." Meanwhile, the Brazilian government said in a statement that one key aim of this week's talks is to deepen dialogue toward regional integration begun at a January meeting of the Mercosur trade bloc in Rio de Janeiro. Those talks were marked by public spats over how best to move toward integration.
The South American leaders - most of who are situated on the political left - are all looking at biofuel production themselves. The question is not so much whether biofuels should be promoted, but rather in which kind of development context they should be placed.
Despite Chavez's criticisms of promoting ethanol as a substitute for gasoline, Venezuela still plans to expand its own ethanol production for use as a fuel additive. Venezuela's has launched a €665 million/US$900 million plan to this end, that envisions becoming self-sufficient in ethanol by 2012 by planting 300,000 hectares (740,000 acres) of sugar cane, cassava and rice and building up to 17 processing plants.
We keep an eye on the summit, and will report back as developments unfold.
Biofuels bring jobs - for low-skilled labor
According to the Federação das Indústrias do Estado do São Paulo (FIESP), the state of São Paulo generated [*Portuguese] some 57,000 new jobs in the industrial sector during the first semester of this year. The state is home to the city with the same name, a megalopolis of 20 million inhabitants, Brazil's largest and most industrialised city, and the larges megacity of the Southern Hemisphere.
Of these new jobs, 41,000 were directly generated by the biofuels sector, making it by far the fastest growing industrial segment. Without this sector, São Paulo's job growth amounted to 0.8%.
However, Paulo Francini, lead economist of the FIESP, notes that the growth in biofuels-related jobs is mainly due to increased demand for planting and harvesting cane. In short, most of the jobs are low-income, low-skill jobs for poor laborers, many of whom have no alternative employment opportunities.
This wraps up our Brazilian biofuels update.
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