Raízen: Biofuels Digest’s 2014 5-Minute Guide

Based from the merger of Shell and Cosan, Raízen is now the Brazil’s fifth largest company in terms of billable revenues and the nation’s leading manufacturer of sugarcane ethanol, with production of about 2 billion litres of biofuel per year. This activity also includes the production of 4 million tonnes of sugar and the sale of 1.5 million MWh of electricity annually. In the fuels distribution segment, Raízen has a broad presence in Brazil with 4,700 Shell service stations, 54 airports and 60 terminals.

Model:
Owner-operator

The Situation:

After concluding that Iogen had the most advanced technology for building co-located commercial plants at Raízen’s sugar cane ethanol facilities, Raízen committed an initial investment for the project through the Iogen Energy JV in July 2012, revealing those details publicly in October 2012. In November 2012, Raizen CEO Vasco Dias projected that the Shell-Cosan joint venture expects to have eight plants producing advanced ethanol by 2024.

“This [first commercial plant] is just the beginning of our partnership with Iogen,” says Vasco Dias, CEO of Raízen. “We believe Iogen has the most robust, well proven, and competitive technology platform in the cellulosic ethanol business and, after this first facility is complete, we plan to combine Iogen’s cellulosic ethanol with seven more of our sugar cane production operations. We see tremendous potential for this technology in meeting the world’s growing demand for cleaner and more sustainable fuels, and we anticipate a long and profitable future.”

In June 2012, the company announced that it would invest $7 billion in a program to reach 100 billion tonnes in cane crushing capacity, a 50 percent increase over current capacity. At the time, Raizen exec VP Pedro Mizutani said that the company, which now has 10 percent of the cane crushing capacity in Brazil, would increase production by 5 million tonnes at its current plants, and achieve the remainder of growth through new project, as well as acquisitions.

In the nearer-term, Raizen expects national sugarcane production to fall 10% in 2014 due to the impact of a severe drought during the inter-harvest season. The company itself expects to be on target with a crush starting in April and processing up to 62 million metric tons. The drought has pushed back expansion plans to crush 65 million tons until at least next year.

Raízen is emphasizing the following research and development lines:
• Second generation ethanol;
• Biorefineries
• Industrial process efficiencies;
• Vinasse concentration and biodigestion;
• New raw materials, such as sweet sorghum.

Past Milestones:

In December 2013, Raizen broke ground on a commercial cellulosic ethanol plant using Iogen Energy technology, which represents more than a year of cooperation between Raizen and Iogen. The $100m plant, to be located adjacent to a sugar cane mill in Sao Paulo, will produce 10 mmgy per year. The plant is expected to start production by the 4th quarter of 2014.

In September 2013, Novozymes announced that it had entered into a collaboration agreement with Brazil’s largest sugarcane crusher, Raízen Energia S/A. As part of the agreement, Novozymes will supply enzyme technology to Raízen’s first commercial-scale cellulosic ethanol plant in Brazil, scheduled to be operational by end 2014. The plant will be a bolt-on facility to Raízen’s Costa Pinto sugarcane mill in the state of São Paulo and will have the capacity to produce 40 million liters of cellulosic ethanol a year from sugarcane bagasse and straw. The agreement also provides for Novozymes to supply enzyme technology to Raízen’s second cellulosic ethanol plant, should such a plant be constructed.

In March 2013, Raizen said it will will invest $102 million in an add-on cellulosic ethanol plant that will be attached to its Costa Pinto facility in Piracicaba. The 40 million liter per year bagasse-based facility may begin production as soon as next year, the company said at the time.

In October 2012, Raízen Group and Iogen Energy announced that Raízen has committed an initial investment to develop a commercial cellulosic ethanol project in Brazil with Iogen. The investment, the first step toward the commercialization of cellulosic biofuels technology in Brazil, will cover development and engineering costs associated with the front end design of a biomass-to-ethanol facility to be co-located with Raízen’s Costa Pinto facility in Piracicaba, São Paulo. The deal comes after Raízen conducted a thorough review of cellulosic technologies and concluded that Iogen is the company with the most advanced technology ready for commercialization at Raízen’s sugar cane ethanol facilities.

In June 2011, Shell and Cosan closed on their USD $12 billion joint venture to create Raízen, one of the world’s largest ethanol companies with over 2 billion liters annual production capacity, a retail network of 4,500 fuel stations, 24 sugar mills and an installed capacity of 900MW of electric energy from sugar cane bagasse. Globally biofuels currently meet around 3% of road-transport fuel demand. Shell expects this to rise to about 9% by 2030. As part of this agreement, Royal Dutch Shell plc has transferred its 15.7% ownership in Codexis to Raízen with the goal of deploying Codexis’ “super-enzymes” for the faster conversion of plant waste into transport fuels. As a result, Raizen is now Codexis’ largest stockholder. The deal includes part of Shell’s interest in the firm Iogen, which uses enzymes to break down plant waste into ethanol.

Future Milestones:

First commercial cellulosic biofuels plant by Q4 2014

8 plants by 2024

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