Brazil to invest $22B in ethanol expansion, as GM CEO says ethanol has not much future in US

June 8, 2011 |

Ethanol: Market growth management challenges in Brazil; market development challenges in US

In Brazil, 2,000 industry executives gathered at UNICA’s biennial Ethanol Summit in Sao Paulo. Among the highlights, Brazilian state-owned development bank BNDES announced that it will make $18-22 billion in loans to the sugarcane and ethanol sector. The move was made in order to facilitate expansion of sugarcane cultivation in Brazil, and was the give-back to industry for instituting regulation of ethanol as a strategic fuel.

Under previous arrangements, rising sugar prices would induce increased sugar conversion at mills, which in turn reduced ethanol production volumes and created shortages in domestic ethanol that induced rising fuel prices and ethanol imports, as well as a reduction in the blending rate of ethanol with gasoline. Earlier this year, after prices soared in the double digits in March and April, the federal government proposed that  Brazil’s National Oil and Biofuels agency, ANP, regulate production as well as distribution of ethanol fuels.

Meanwhile at the Summit, Allan Kardec, supply director for ANP, told Reuters that ANP expects to have new regulations in place by July.

Policy clarity needed

The move comes as producers said that the lack of policy clarity has been hurting ethanol investment. “As long as there is no clarity about the policy for fuels, there is a risk for investments,” Plinio Nastari of Datagro told attendees.

Brazilian flex-fuel car numbers to soar in the 2010s

The Brazilian government has been dealing with explosive growth in the ethanol sector. UNICA is projecting that the percentage of Brazilian cars that will be flex-fuel enables will rise to 86 percent by 2020, up from 45 percent today.

GM to halt new investment in US flex-fuel cars?

While Brazilian flex-fuel vehicle numbers are growing explosively, the main driver of US flex-fuel car manufacturing, General Motors, capped off another year of massive US ownership with reports that the company will scale back investment in flex-fuel vehicle production. AOL Autos editor-in-chief David Kiley wrote yesterday that [CEO Dan] Akerson, speaking at the annual GM shareholder meeting, “appears to be killing off further investment in vehicles that would run on fuel primarily made from ethanol or hydrogen, saying that neither fuel source had much of a future.”

Ford tells Congress to forget about ethanol?

In Washington, Ford CEO Alan Mulally “urged members of Congress to back “one technology” if they were serious about alternative energy vehicles,” according to this DailyTech report, which added that Ford “did not specify what this “one technology” was, but most construe it to mean electrified vehicles.  Ford has been less enthusiastic than its peers about the “other” leading alternative vehicle technology — ethanol fuel.”

Former Iowa Governor Culver describes impact of Iowa Power Fund

Among the speakers in Sao Paulo, former Iowa Governor Chet Culver, ousted by voters last November, who told attendees that “we have invested more than $65 million in 40 renewable energy research and development and early stage commercialization projects..and successfully leveraged more than $575 million in private investment.” Iowa’s new governor, Terry Branstad, nixed adding more money to the Power Fund this year.

Category: Fuels

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