Porto, September 23 rd, 2009 Ricardo Cavalcanti Furtado Environmental Planning Manager Empresa de Pesquisa Energética Biomass for Energy Generation: Environmental Issues

Government-owned company, linked to the Ministry of Mines and Energy, instituted by Law n° /2004 EPE has been created to develop studies and research to support the energy sector planning in the areas of electric energy, oil and natural gas and its derivatives, mineral coal, renewable energy sources and energy efficiency Empresa de Pesquisa Energética

Energy Planning in Brazil

HIGH PROPORTION OF HYDRO POWER LONG TRANSMISSION LINES INTENSIVE CAPITAL LONG TERM INVESTMENTS HIGH UNCERTANTIES MULTIPLE OBJECTIVES COMPLEMENTARY GENERATION SEASONALITY ENVIRONMENTAL ISSUES Brazilian Power Sector Planning RISK ANALYSIS FAIR TARIFF DIVERSITY INTEGRATION ENERGY SECURITY

NATIONAL ENERGY PLANNING NATIONAL ENERGY OUTLOOK TEN YEAR ENERGY PLANNING AUCTIONS Crude Oil and Natural Gas Electric Power Transmission Biofuels PROGRAMMING VIEW SHORT AND MEDIUM TERM STUDIES (10 YEARS AHEAD) STRATEGY VIEW LONG TERM STUDIES (30 YEARS AHEAD) Planning Process

Scenarios for Electricity 2030 (GW) Source: PNE ,9 GW

Source: National Energy Balance. EPE, 2008 Energy in Brazil – Energy Sources Share

Source: National Energy Balance. EPE, 2008 Ethanol Bagasse Straw Cogeneration Vehicles Charcoal consumed by blast furnaces.

Transmission Lines Planned System Existing System

Biomass

Biomass participation in the Energy Auctions AuctionPlantsPower (MW) A3/ A5/ Alternative Sources/ A3/ A5/ Biomass/2008 (Stock Auction) A5/ Total Environmental Information Analysis in the auctions Plant carachteristics Environmental licensing Reserve of water availability and allowance for water use

The ethanol/sugar production chain Main environmental issues: Food competition Land use on expansion areas Energy Balance Emissions Solid waste Liquid effluents Water consumption Employment (quantity and quality)

Source: EPE, 2009 based on Municipal Agricultural Research developed by IBGE 2006 Current sugarcane production and expansion perspectives Year Sugarcane (Mt) Ethanol (billion liters) , , , , , , , , , ,9 Source: EPE, PDE Amazon Pantanal Savanna Caatinga Mata Atlântica

Where to expand? The National Agro-ecologic Zoning for the sugarcane harvesting will determine the most appropriate areas to expand the sugarcane production (under development – coming soon) –Soil –Climate –Environmental issues It’s desirable that the expansion occurs on non- productive areas such as abandoned crop fields and pasture areas Suitable Suitable with environmental limitations Suitable with environmental constraints inappropriate Agroecologic zoning - SP Example of Agro-ecologic zoning developed by SP Government (2008)

Food competition Sugarcane can be considered as food (sugar and other products), but the part destined to ethanol (today ~55%) doesn’t compete with this purpose Some studies, based on satellite images (INPE/CANASAT), have found that the last 4-year expansion occurred mainly over consolidated agriculture and pasture areas The production of grains, rice, fruits (almost all) has increased continuously Currently, in Brazil, the sugarcane production does not influence food prices

Energy Balance The sugarcane provides one of the best energy balances in bioethanol production The energy “Output/Input” index in the Life Cycle of sugarcane ethanol = 8.1 The bagasse cogeneration ensures the energy self- consumption (power, mechanic and thermal) in the sugar/ethanol plants The power excess can be sold for the Interconnected System (Auctions)

Emissions In Brazil, ethanol (hydrous and anhydrous) substitutes a great amount of gasoline consumption. As consequence, even taking into account the life cycle emissions, it avoids significant amounts of GHG emissions The use of biofuels also reduces the SO x, particulates and VOC emissions in comparison with gasoline and diesel Burning of straw in the field facilitates manual sugarcane picking. However it causes air pollution in regional scale. Recently, regulation and agreements established a schedule to gradually mechanize the sugarcane picking

Solid waste and liquid effluents Technically, bagasse and straw can be considered as co-products of sugarcane production. Both can be used for energetic purposes. Part of the straw is also important for soil covering Currently, the vinasse (high BOD) produced is destined for the crop field in substitution for chemical fertilizers Other liquid effluents can be easily treated before released on the environment (rivers) Vinasse sluice - Usina Coruripe, AL

Water consumption In Brazil, sugarcane harvesting doesn’t need irrigation. However, sugar/ethanol plants consume a significant amount of water Water consumption – national average –1997 = 5,0 m 3 /t.sc –2008 = 1,0 – 2,0 m 3 /t.sc –New plants = 0,7 – 1,0 m 3 /t.sc The water availability is one of the main environmental constraints on new plants licensing, particularly in the Southeast Region Sugarcane washing

Employment Sugarcane manual picking requires a large number of workers. However, these jobs are extremely exhaustive and don’t need schooling (low level income) The mechanization of sugarcane picking will certainly reduce the number of jobs in the sector. This will create better jobs (salubrity and level income) There are public and private initiatives to regulate the social aspects of sugar/ethanol production chain in Brazil. An international certification system could guarantee this goal Sugarcane manual picking

Other possibilites in bioenergy Increasing the use of sugarcane straw in cogeneration Ligno-celullose ethanol Biogas from sewage, biodigestors and landfill Woodchips and agriculture scraps Elephantgrass for power generation Biodiesel from vegetable oil, fried oil, tallow and other fatty raw materials

Conclusions Today, biomass power generation in Brazil uses predominantly sugarcane bagasse as fuel Sugarcane bagasse is a co-product of the sugar/ethanol production chain Currently, the sugarcane production does not affect the Amazon and Pantanal areas The expansion areas for sugarcane will be determined by the Agro-ecologic Zoning The Brazilian sugar/ethanol industry manages the most of environmental impacts in sugar/ethanol production chain Brazil has a great potential on bioenergy

Ricardo Cavalcanti Furtado Superintendente de Meio Ambiente Empresa de Pesquisa Energética