FACING ENERGY SECURITY IN THE AMERICAS THROUGH AGROENERGY SOURCES Roberto Rodrigues Washington / USA - October, 28th 2008 - OAS

The ten biggest problems for the humanity in the next 50 years AGRICULTURE Energy Education Water Democracy Food Population Environment Disease Poverty Terrorism & war Source: Alan MacDiarmid, em São Carlos – SP 18/11/2018

Trends Changes in the demand: Sustainability: Economical, social and environmental - flavor - quality - traceability - health - environment - organic products 3 18/11/2018 3

Demographic trends: + 62.0% Trends Food Demand (2000 – 2025) China Increase.% 2000-2025 Part.% 2025 China 13.2% 17.4% India 36.6% 16.8% Africa 68.9% 15.4% World 33.9% 100% Food Demand (2000 – 2025) + 62.0% Source: Bourlaug, N., Agroanalysis, Vol. 27, nº 03 (março/2007) Elaboration: GV Agro 4

Projection of the urban and rural population in the world Trends Projection of the urban and rural population in the world Rural Urban billion of people Source: ONU Elaboration: GV Agro 18/11/2018

Participation in the world GDP Trends Evolution of GDP (2006-2013) World: 4.6% a.a Countries of G-7: 2.2% a.a Developing countries: 7.1% a.a Participation in the world GDP 2006 2013 Countries of G-7 Países do G-7 59.5% 53.6% Others devoloped 15.8% 15.6% Developing countries 24.7% 30.8% 6 Source: FMI Nota: PIB a preços de 2005 18/11/2018

World: offer and estimated demand for food (in million tons) Slide09.xls Source: FAO (2003) Elaboration: AGE – MAPA ¹ all of consumed meats 18/11/2018 7

Global stockpiles Source: USDA (out/08) Elaboration GV Agro

Global stocks of grains Production x Consumption*: total in the period (2000/01-2007/08) Brazil produces surpluses to supply the world stocks Source: USDA Note: * Soybean, Corn, Wheat and Barley. In thousand tons Elaboração: GV Agro

Main products (by value) - 1965 Brazilian agribusiness exports Main products (by value) - 1965 Source: UN COMTRADE Elaboration: GV Agro Agribusiness Exports: US$ 1.35 billion (84.4%) Total Brazilian Exports: US$ 1.59 billion 10 18/11/2018

Main products (by value) Brazilian agribusiness exports Main products (by value) 11 18/11/2018

Brazilian Agribusiness Exports US$ 20.5 bi US$ 63.9 bi Developing Countries from US$ 6.2 bi to US$ 29.1 bi Variation (2000-2008*): +21.3% a.a. Developed Countries from US$ 14.4 bi to US$ 34.8 bi Variation (2000-2008*): +11.7% a.a. 12 Source: Aliceweb-MDIC. Nota: * from jun/07toa mai/08 Elaboration: GV Agro 18/11/2018

Brazilian production of grain - 27.2 million tons The use of high technology resulted on an increase of 99% in productivity at the period from 1990/1991 to 2007/08. 13 Source: CONAB Elaboration: GV Agro * 1ª Estimate (october/2008) 18/11/2018

Brazil: meat production Broiler +200% Beef +77% Slide03.xls Pork +130% 14 Sources: ABIEC, ABEF e ABIPECS Notes: *Estimative 18/11/2018

21st Century: the beginning of a New Era % Challenge: TO DIVERSIFY ENERGY SOURCES Up to 2030, the world demand for energy should increase 58%. Sources: Nakícenovic, Grübler and MaConald, 1998 and Energy Information Administration - EIA/USA 18/11/2018

Why biofuels? 18/11/2018

Organization of the market • More countries producing • Elimination of myths • Global strategy 17 18/11/2018

Energetic matrix – Brazil and World More countries producing Energetic matrix – Brazil and World World Brazil Participation in the total consumption Renewable sources: 45.8% 2.1% 48.5% 100% In 2007, sugarcane became the second main source of energy in Brazil. World total: 11,434 Mtep Source: MME/BEN (2007) Elaboration: GV Agro 18/11/2018

Tropical region: favourable to the sugarcane production More countries producing Energy: consumption per capita (2006) Tropical region: favourable to the sugarcane production 100 countries could supply biofuels to 200 nations, while currently 20 oil producers provide fossil fuels to the rest of the World. Tons oil equivalent Source: BPStatistical Review of World Energy Elaboration: GV Agro 18/11/2018

Substitution of part of the gasoline 3 CENARIOS: E-5, E-10 and E-20 Market potential for ethanol Substitution of part of the gasoline 3 CENARIOS: E-5, E-10 and E-20 World: potential demand for ethanol (billion liters / year) Demand for planted area 34,4 million ha (using E-20) Worldwide demand for ethanol in the 3 cenarios (billion liters / year): 60.1 120.2 and 240.5 Sources: IEA, CONAB e IBGE Notas: para o cálculo da área, considerou-se um rendimento de 7.000 litros/ha. Elaboration: GV Agro

There is still a lot of arable land worldwilde “Taking these data at face value, and in relative terms, there is greatest potential for agricultural expansion in Sub-Saharan Africa and in South and Central America, which together form over 70% of the global potential increase.” Source: LAND RESOURCE POTENTIAL AND CONSTRAINTS AT REGIONAL AND COUNTRY LEVELS FAO Rome, 2000

Ethanol world production: projection to 2012 Note: projections 2008/2012 are based on the capacity of production and the target of consumption of the main countries Source: Fapri, Acti, FO Licht, Unica and Toepfer Elaboration: UNICA 22 18/11/2018

Emissions of CO2 in 2005: 20 main polluters Eliminating all myths Emissions of CO2 in 2005: 20 main polluters 50% of emissions 23 Source: Embrapa Monitoramento por Satélite Elaboration: GV Agro 18/11/2018

Ethanol from corn (USA) Ethanol from sugarcane (Brazil) Emission of GHG through the replacement of gasoline by ethanol Ethanol from corn (USA) Ethanol from beet (E.U) Ethanol from sugarcane (Brazil) Compared to diesel, biodiesel reduces in about 50% of the CO2 emissions. The replacement of 1,000 buses (diesel) by buses that use ethanol would avoid the emission of 96 tons of CO2 per year, equivalent to emissions of 20,000 cars with gasoline. Since 1970, is estimated that the use of ethanol in Brazil has avoided emissions of 644 million tons of CO2 and 25.8 million tons last year. 24 18/11/2018

Production with sustainability Eliminating all myths Production with sustainability Source: IBGE and CONAB

Production (million tons) Eliminating all myths Sugarcane: evolution of the productivity Production (million tons) 7.1 million of ha were preserved Preserved Area ** Planted Area (million ha) Source: IBGE (Censo Agropecuário: 1970-1975-1980-1985; PAM (1990 até 2006); e LSPA (2007 e 2008) Elaboration: GV Agro Note: * Estimate **Area calculated by the productivity of 1970 18/11/2018

Eliminating all myths Balance of energy Energy contained in the fuel / Used fossil energy to produce fuel 9.3 * Fuel completely not renewable has value lower than 1. * Values superior to 1 indicate how much renewable is the fuel. Source: World Watch Institute 18/11/2018

Biofuels: production costs - 0.40 0.20 0.00 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 04 05 06 07 Ethanol Biodiesel Sugar cane Maize Rape oil Sugar beet Wheat Brazil USA EU US$/l gasoline equivalent Year, fuel type, country Energy costs Processing costs Feedstock Co product value Net price gasoline Net costs, total Source: OECD

Brazil: Automobiles and light vehicles – fleet projection (2006 to 2015) million of vehicles Sources: ANFAVEA, MAPA and ICONE

Soil and climate adapted to the sugarcane production without irrigation Eliminating all myths Excluded the Amazon Region, Pantanal and declivity superior to 12% Source: UNICAMP 18/11/2018

Brazil: herd of cattle x pasture Eliminating all myths Brazil: herd of cattle x pasture pasture area cattle (heads) Slide04.xls More efficient livestock liberation of land for the agriculture Source: IBGE (Censo Agropecuário) e IEA/SP Elaboration: GV Agro *lotação média de São Paulo (2006) 18/11/2018

Energy content of the sugarcane Global strategy Energy content of the sugarcane Energy contained in 1,000 tons of sugarcane (tons in petroleum equivalent ) Slide12.xls Total energy: 162.59 tons in petroleum equivalent Source: Nastari, Lisbon, 2000

Estimates of the potential of bioeletricity in Brazil Global strategy Estimates of the potential of bioeletricity in Brazil The bagasse resulting from the processing of the cane represents 30% of the total volume. Raw material for the bioeletricity production Source: Cogen and Unica 18/11/2018

Participation of the products in the income of the sector Sugar Ethanol Exports Domestic Bioelectricity - Potential - 51% 32% Source: UNICA Note: For the calculation of the percentile of 2015/16 it was used as base the potential for production and export at constant prices of 2006.

Challenges to the sector • Commercial limitations? - protected markets - internal oil protection - self-sufficiency (target of the countries) - low/high prices cycles • Constant Expansion of the Offer - offer and demand balance - investments 18/11/2018

Challenges to the sector • Sectorial Regulation • Research and Development • Planning • Administration 18/11/2018

The ethanol certifications “Babel” National Certifications EU Directives European Union ETHANOL PBCB Brazilian Biofuel Program Certification Brazilian Government Biofuel Certification Meó Consulting Team German Government Sustainable Production of Biomass Cramer Commission Dutch Government RTFO Renewable Transport Fuel Obligation UK Government Institutional Certifications RTSB Round Table on Sustainable Biofuels Based in Switzerland Certifications proliferation schemes is counterproductive: discourages initiatives and investments, particularly in developing countries. BSI Better Sugarcane Initiative Based in United Kingdom Deprived certifications SEKAB, GREENERGY Sweden, United Kingdom 37 18/11/2018

Thank You!  gvagro@fgv.br  +55 (11) 3281-3645 18/11/2018