Biofuels Digest Special Report from the 2009 Ethanol Summit

By special correspondent Al Costa

In Brazil, Petrobras confirmed that it will invest US$2.8 billion in biofuel production including ethanol from sugar cane: a total of US$174.4 billion for the period 2009-2013. Petrobras president, José Sergio Gabrielli cited a study by the Wood Mackenzie consulting company which estimates for Brazil to produce 23 thousand tons per year of ethanol now and 544 thousand tons per year in 2020. In that same period the study shows that the production in Southeast Asia will increase from 253 thousand to 845 thousand tons per year.

Gabrielli said that Brazil is the only country in the world where gasoline is actually the alternative fuel source. He said that the number of gasoline-only vehicles is diminishing: today represents 50% of the market for light vehicles and will reach 17% in 2020. On the other hand, ethanol is even present in 22% of heavy vehicles and the flex fluel models will sum 75% of the fleet in 2020. Gabrielli stated that these numbers were not achieved suddenly. Instead, he pointed out this is a process that has been happening for the past 40 years, which today means 37 thousand fuel pumps with at least one ethanol pump, and 97% of cars produced today being flex.

He believes however that this process will not repeat itself in the rest of the world. Instead, ethanol will grow, but mixed with regular gasoline. He claimed that blends with up to 5% of ethanol do not require any investment, and he announced that Petrobras will be the first distributor of ethanol in Japan.

Gabrielli also questioned the Subsecretary of Agriculture of the United States, Mr. Dallas Tonsager, during another panel on the Ethanol Summit to speak on tariff barriers to brazilian alcohol. He also classified as “highly inefficient” the U.S. ethanol made mainly from corn when compared to sugar cane, and stated that the US protections are not sustainable in the long term.

Tonsager said the production of ethanol in the U.S. will grow from 6 billion gallons in 2008 to 11 billion this year and projected a 36 billion gallons production in 2022. He said he was a farmer himself and that he spent the last 30 years very focused on energy investing great personal effort to a be part of this market, and stated “We will strongly continue to develop our market without disrespecting yours”.

Due to the heated dialog between Brazil and the U.S. during the panel “Biofuels in a global context,” Roberto Rodrigues (former minister of Agriculture in Brazil) intervened and recalled that Brazil is also young in this market, mentioning that 5 years ago it did have not flex cars. He also stated that “Others can also get there. We can search with the U.S., Japan and Europe a sustainable development model for ethanol, and Brazil can lead this project.”

Al Costa can be reached here. His company has developed a low-cost flex-fuel conversion kit. More information here.

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