ETHANOL FUEL IN BRAZIL By: HAYDEE NASCIMENTO APRIL 27, 2007

Is Driving Sweeter in Brazil? Brazil’s ethanol program, a response to the uncertainties of the oil market. Source: Wall Street Journal

What is Ethanol?  Ethyl alcohol, is a high-octane liquid fuel produced by a fermentation and distillation process that converts plant starch to sugar then to alcohol  At its most basic, ethanol is grain alcohol, produced from crops such as corn  Other options: sugar cane, sugar beet, wood and vegetable wastes.

The national alcohol program  1973 oil crisis  Government funded nation wide  Initially you could not mix fuels

Introduction to flex fuel cars  Runs on gas, ethanol or a mixture  Facilitated the shift from imported oil  Restrictions inhibit foreign investment

RISING DEMAND  Brazil is the world's largest producer of ethyl alcohol  Alone it produced billion litres, or 38 percent of the worldwide total  This year, it expects to export 2.2 billion litres, three times the amount in 2003 Source: Source:

Equator Trop. Capricórnio 30 o S Trop. Câncer 30 o N Ethanol: Brazil is perfectly situated Source: Ministry of Mines and Energy

Ethanol fuel in Brazil  Produced from sugar cane  Tropical climate  Largest sugar cane crop in the world  Source:

OPTIONS AT THE PUMP  Customers have a choice of between gas or alcohol  Ethanol is alcohol which is distilled from locally grown sugarcane  It is blended with gas as an oxygenate or fuel extender for use in gasoline vehicles  It can also be used alone in flex fuel cars 

Brazil against the world…  Brazil led world ethanol production in 2004, distilling 4 billion gallons  The U.S. produced 3.5 billion gallons last year –almost exclusively from corn  China's nearly 1 billion gallons of ethanol –from wheat and corn  France produced over 200 million gallons from sugar beets and wheat 

SAVING AT THE PUMP  According to the World Bank, Brazil can make ethanol for about $1 a gallon. Compare this to the international price of gasoline at about $1.50 a gallon. Source – Wall Street Journal

The flip side…  At the expense of pasture land  Deforestation  Government officials argue these claims are unwarranted  Source: Nytimes.com/2006/04/10

Social Implications  Temporary work for migrant workers  Violence in rural areas  Sugar cane production & consequences

America’s Involvement  The U.S. cooperates with Brazil  Two different approaches  Production is cheaper in Brazil  Source:

Alternative Fuel & Climate Change  Biofuel crops take in carbon dioxide from the atmosphere  Offsetting GHG released when the fuel is subsequently burned  Biofuel can reduce air pollution 

PARTNERSHIP  Brazil – internationalize its market & enter the export fuel market  Petrobas made its first shipment to Venezuela in July 2005  Japan turning to ethanol to reduce GHG emissions under Kyoto Protocol  Japan is the 2 nd largest gasoline market 

Ethanol in the U.S. Illusion or reality?  Ethanol’s energy content is significantly less than gasoline’s  More than 40 percent of the world’s corn is grown in the United States  The wholesale price of ethanol in corn- producing states such as Illinois was $3.10 a gallon in July 2006

Ethanol in the U.S.  Ethanol production has grown in the past five years  Many corn ethanol plants are under construction  Illinois ranks second in U.S. corn production with more than 1.5 billion bushels produced annually.  Corn grown in Illinois is used to produce 40% of the ethanol consumed in the United States  More than 95% of the gasoline sold in the Chicago area contains 10% ethanol 

Production in the U.S.  Drives economic development  Adds value to U.S. agriculture  Moves us toward energy independence  Lowers air pollution  Cost effective option at the pump 

Lifestyle changes  Devastating changes in the ecosystem  Smart transportation choices  Conserve Energy at home and work  Personal observations U.S. v. Abroad

Conclusions:  Ethanol can be an excellent business  Producing and blending ethanol with gasoline are simple tasks, but it does involve careful planning  Brazil made mistakes during early phases and they can prevent other countries from making the same errors  Brazil is interested in sharing ideas with the world since they will need their markets