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Brazillian Ethanol Industry Readies for Growth

Brazil is the largest ethanol exporter in the world, and is second only to the United States in terms of production.   The industry is on the cusp of major growth.

Brazil biofuel largely comes from sugarcane, a more efficient fuel source than the corn used in the United States.  Sugarcane is widely considered to be the best of the alternative transportation fuels commercially produced today.

Major corporations have increased their interest in Brazilian sugarcane ethanol production  in recent years.  Shell, for example, launched a $12 billion biofuels joint venture with Brazilian firm Cosan last month.  The new firm, Raizen, will merge ethanol, sugar and conventional fuel divisions and will be the fifth largest company in Brazil in terms of revenue.

“Shell got involved because it believes the amount of energy needed by the world is not going to be possible just by [relying on] fossil fuels… and the motivation for Cosan was to transform sugarcane ethanol into an international commodity,” explained Raizan’s new CEO, Vasco Dias.

Domestic demand for ethanol is very high in Brazil, where 86% of all vehicles will be “flex-fuel” by the year 2020.  “Flex-fuel” vehicles are able to operate on gasoline, ethanol, or any mixture of the two.  In 2010, 54.2% of all sugarcane was used to produce ethanol, and that percentage is predicted to rise to 68.5% by 2020.

The U.S. political decision to repeal $6 billion in ethanol subsidies and remove a $0.54 per gallon tariff import tax on ethanol was welcome news to the Brazilian ethanol industry which anticipates market growth as a result.  Indeed, the outlook for sugarcane ethanol is so positive that the Brazilian government  reportedly changed its legal status from an agricultural commodity to a “strategic fuel.”

Although China and Russia have accused Brazilian ethanol policies of driving up the cost of sugar to 30 year highs, Brazil disputes these claims and furthermore says it can increase production of sugar and ethanol without resorting to land clearing, which is a major contributor to  climate change.

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USDA to Increase Investments in Cellulosic Biofuels

“Next-generation” biofuels are becoming increasingly attractive as a non-fossil source of transportation fuel.  By 2013, the Obama administration aims to produce 1 billion gallons of biofuels.

To achieve this goal, the United States Department of Agriculture (USDA) has lifted some bureaucratic restrictions that have hindered the building of new cellulosic biofuel refineries.  To drive investment in the industry, the USDA will streamline or reduce many complex ownership requirements and get rid of fees associated with joining the USDA research program in an initiative to be finalized this summer.

Unlike first generation corn-based fuels, cellulosic biofuels are made from various agricultural waste products, wood chips and other materials that are not in competition with food crops.  Scientists say next-gen biofuels have an overall lower carbon and water footprint compared with corn-based ethanol.

The Department of Energy’s Pacific Northwest National Lab (PNNL) also recently released a study highlighting the potential of another “second generation” biofuel source to help meet future transportation fuel in the United States – algae.

PNNL estimates 17% of our imported oil could be replaced with domestic-grown algal oil for transportation purposes.  According to the PNNL study, the U.S. could produce 21 billion gallons of algal oil by targeting sunny, humid regions such as the Gulf Coast, the Southeast and Great Lakes.

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Luftunsa Pioneers Use of Biofuel on Commercial Flights

In order to boost sustainability and reduce carbon emissions, european airline giant Luftunsa will become the first major carrier to use biofuel on commercial flights.

Beginning in April of 2011, Luftunsa will launch a pilot program testing a half blend of biofuel mixed with traditional kerosene on its Airbus A321 jets flying between Hamburg and Frankfurt.

This program is part of Luftunsa’s Future Aircraft Research Initiative (FAIR) which is investigating biofuel capacity and effects upon aircraft engines.  FAIR is supported in part by the German government with a €5 million grant.

Incorporating the use of biofuel in commercial jets is just one way that Luftunsa is attempting to reduce emissions through FAIR.  Thus far, the airline says its efforts have improved overall fuel efficiency by one third.  Read more…

 
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Posted by on December 1, 2010 in Energy Efficiency

 

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New Partnerships Prove Cellulosic Ethanol Still Attractive to Big Oil

Two major partnerships have taken shape recently between global oil conglomerates and smaller cellulosic biofuel companies, including a $12 billion joint venture between Shell and Brazilian ethanol producer Cosan, and an $11 million deal between Petrobas and KL Energy Corporation to expand Brazilian operations.

Corn-based ethanol has been criticized as an energy-intensive fuel source with a very large carbon footprint.  Competition between corn crops grown for food and crops grown for fuel production has been a major concern.

Cellulosic ethanol, on the other hand, can be made from just about any crop or plant matter that has a high concentration of cellulose, which means that waste crops, stalks, leaves and husks can be turned into fuel.  Technology developments and a drop in the price of necessary enzymes for the fuel conversion process has helped cellulosic ethanol production more economical, and therefore more practical as a major-scale substitution for gasoline-based liquid fuels.

Besides providing a major boost to the Brazilian cellulosic ethanol industry, these deals will allow the smaller companies to access broader markets and sources of capital.  The partnerships also demonstrate continued interest of Big Oil in “next-generation” biofuels as the wave of the future.

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Posted by on September 1, 2010 in Clean Energy, Oil, Traditional Energy

 

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Global Biofuel Market to Double by 2015

United States is the World Market Leader

The latest global market analysis released by Hart’s Global Biofuels Center (GBC) says the global biofuels market is poised to double in size by 2015.  GBC says the biofuel usage in the United States will likely increase by 35%, boosting the U.S. market to the world’s number one spot.  Brazil’s biofuel supplies are expected to expand as well, with production growing by 30% and export volume doubling in size.  Germany is expected to remain Europe’s largest biofuel producer, but GBC notes that important market players are emerging in countries such as Indonesia, France, China, India, Thailand, Malaysia, the Philippines and Argentina.  The report says by 2015, demand for ethanol will represent between 12 and 14% of overall demand for gasoline.  The GBC report also expects the Asia-Pacific region to become a major ethanol producing region, potentially producing 20% of global ethanol supplies by 2015.

 
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Posted by on October 13, 2009 in Clean Energy

 

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