by Lais F. Thomaz (Advanced Biofuels USA) From 25 to 27 April 2016, renowned experts, entrepreneurs and government officials were reunited at the “12 th Sugar & Ethanol Brazil,” conference organized by F.O. Lichts. In this event, workshops were held on cost management, access to credit and taxation of the sector, as well as conferences on the sector’s relationship with the government and new possibilities for action, highlighting the second generation ethanol industry (E2G).
The sector seems quite optimistic about the coming years, but there is consensus that long-term goals need to be established in addition to public policies that allow a full recovery of the sector and attract new investments.
The USP researcher, Haroldo Jose Torres da Silva, pointed out that, in the short term, there could still be some problems arising from financial expenses and from the need to adopt a funding strategy. On the other hand, he said that there are price recovery signals arising from the partial return of the Contribution for Intervention in the Economic Domain (CIDE) which is a Federal Tax imposed on the import and marketing of fuels such as gasoline; diesel and gasoline price adjustment; and reduction of the state tax levied on goods and services (ICMS in Portuguese) rates.
Relationship with Government
The Secretary for Climate Change and Environmental Quality of the Ministry of Environment, José Domingos Miguez, presented the positive results of the COP 21 held in Paris as well as the commitments made by Brazil and its ability to reach its iNDC (intended Nationally Determined Contribution) noting that the increase of the use of biofuels by 2030 will be 18% and bioelectricity should increase at least 23% in the Brazilian energy matrix in the same year. Miguez argued that to achieve these goals it is necessary to restore the profitability of the sugar-energy sector in the short term.
Pedro Mizutani, VP of Raizen, stressed that greater participation and pressure by companies on the government is required, along with seeking to improve their presence in international events and conferences in order to publicize the potential of the Brazilian industry.
Another important issue that involves the government is the role of BNDES, the state-owned company and the main provider of long-term financing in Brazil, which has played an important role in the sector. In bio-refinery funding, Felipe Pereira, Manager of sector of the Department of Chemistry of the BNDES, said that the bank funded US$ 6 million for Amyris, US$ 66 million in a partnership between Solozyme and Bunge, US$ 80 million for GranBio and US$ million for the 2GE Raízen plant. Pereira also presented other funding programs that should collaborate further to revitalize the industry, such as Chemical Industry Innovation Plan (PADIQ) and Hybrid Bond Support Innovation (THAI in Portuguese), in which the bank shares the risks of process performance and shares the cost risk of the main inputs.
2G Ethanol
Brazil could produce about 10 billion liters of second generation ethanol per year via retrofit and industrial biotechnology, said Bernardo Silva, president of the Brazilian Association of Industrial Biotechnology (ABBI). Therefore, Silva pointed out, Brazil needs a national strategy and long-term vision, a stimulating and modern regulatory framework, taxation of the production of carbon dioxide, encouragement of the consumption of low carbon fuels, reduction of CAPEX costs and expansion of guarantees to the sector, leveling fossil and renewable subsidies and expanding communication potential and externalities.
Evandro Curtolo, the New Technologies Manager at Raízen, did not disclose details of its current production, but said the scenario is positive. Nevertheless, we must remember that GranBio halted the activities of its Bioflex plant until October this year. After that, the expectation is they will re-open at 50% of total capacity, although there are many hurdles to overcome with respect to mechanization and pretreating of the biomass. For this reason, it is important for different companies to share their experiences about the E2G plants for new solutions to be reached.
* Contributing author, Laís Thomaz, is a Ph.D. in International Relations, Unesp/Unicamp/PUC-SP, São Paulo, Brazil and researcher at National Institute of Science and Technology for Studies on the United States (INCT-INEU)