MINISTRY OF MINES AND ENERGY Biofuel: Investment and Partnerships Marco Antônio Martins Almeida Secretariat of Oil, Natural Gas and Renewable Fuels

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

1970 – 2020: 50 years in perspective Total fleet of vehicles250 million vehicles1 billion vehicles2 billion vehicles Accumulated oil consumption 200 billion barrels1.2 trillion barrels1.5 trillion barrels Climate changesThis was not a problem. There was no measurement of parameters related to the phenomenon 30 billion tonnes of CO2 eq emitted per year (half from burning of oil) Crucial moment to reverse the trend of growth in greenhouse gas emissions World population3.9 billion6.9 billion8.0 billion... in other words: the world will continue to use oil

Variation in demand for primary energy: Other Renewable Biomass Hydro-electric Nuclear Natural Gas Oil Coal Mtoe OECD countries Other countries Source: IEA – World Energy Outlook 2009 Fossil sources will continue to be preponderant: 77% of rise in demand until 2030

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

Recent Changes to Vehicle Fuels Use (Brazil) Anhydrated EthanolHydrated Ethanol Gasoline Diesel

BY VOLUME ETHANOL TOTAL: ANHYDR. ETHANOL: HYDRAT. ETHANOL: Anhydrated EthanolHydrated Ethanol Gasoline Diesel Recent Changes to Vehicle Fuels Use (Brazil) Millions of m3

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

1975: Pro-alcohol 2003: Flex-Fuel 2004: Biodiesel US$Millions of m³ Source: BP Statistical Review 2009/ MME 2010 Price of oil (US$) Consumption of ethanol in Brazil (m3) Consumption of gasoline in Brazil (m3)

1.4 billion barrels of oil shipped Emissions avoided of more than 900 million tonnes of CO 2 US$ 20 billion Total demand for Otto cycle (with LPG) Total demand for Otto cycle (without LPG) Gasoline consumption Fuel demand for Otto cycle vehicles 年

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

Market: 1 billion liters/year Market: 2.4 billion liters/year Biodiesel: The New Biofuel in Brazil  Targets planned by the government:  Law no /2005: to As of Authorized Obligatory Jan-Jun Jul – DecJan – Jun Jul –Dec Jan –

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

Other purposes Export Fuel Ethanol: Strong expansion of internal market Biodiesel: Guarantee of supply of B5 with diversification of raw materials Source: MME / PDE 2009 – 2018 (preliminary results) Billions of liters

Principal areas of sugarcane planting 91% of sugarcane production 9% of production Source: NIPE-Unicamp, IBGE, CTC, UNICA, EPE and MAPA production in 2009: 26 billion liters production in 2009: 26 billion liters Amazon Forest Location of production plants (in operation / design / being installed) Twice the distance between Shanghai and Beijing

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

Biofuels versus fossil fuels... in Brazil In the world Data refers to 2008 (Source: BP / MME) Light and medium derivates considered: Diesel, Gasoline and KAV 0.08 x liters/year 3.3 x liters/year 69 x 10 9 liters/year 24 x 10 9 liters/year Fossil fuels Biofuels Fossil fuels

Biofuels and Oil The world will continue to use oil in the coming decades, with increasing environmental restrictions Biofuels will have an increasingly important role, whether in mixtures or as replacements for fossil fuel. Biofuels, not just in Brazil’s opinion, are the best option to reduce the carbon content of fuels. Biofuels are increasingly part of the investment portfolio of large oil companies. Petrobras, Shell and BP are examples of this. The growing use of biofuels in the world is not a threat to investments in E&P, to the contrary, contribute to enabling the exploration of non-conventional oil. With the Pre-Salt resources, Brazil has the potential to become an important actor in the geo-political world and to maintain its policy of incentives in the production and use of biofuels.

Principal partnerships with the Oil Industry PETROBRAS: Investments of the order of US$ 2.8 billion in production of biofuels. Partner with Tereos. BP: Investments of more than US$ 1 billion in Brazil for ethanol fuel production. Partners with Energy Biosciences Institute in California, with DuPont in the United Kingdom and joint venture with Verenium. CHEVRON: Joint venture with Weyerhaeuser. Partners with the Technological Institute of Georgia and with the University of California in Davis (R&D). EXXON MOBIL: Investments of US$ 600 million in biofuels with Synthetic Genomics. SHELL: Partners with COSAN in Brazil, Iogen in Canada, Choden in Germany, Virent Energy Systems in the USA and investments in Codexis in the USA. TOTAL: Investments in Gevo Biofuels, in the USA. Source: Ecomii (2010)

Biofuel: Investments and Partnerships : 50 years in perspective The share of biofuels in Brazil Ethanol: from Pro-alcohol to Copenhagen Biodiesel: the new biofuel in Brazil The expansion of production in Brazil Biofuels and the Oil Industry Biofuels and the Consumer Conclusions

Positive Externals for Biofuels Renewable energy source Best CO 2 balance in the life-cycle Contributes to energy security Distribution of income, principally at the agricultural stage Biofuels industry is not concentrated (multiplicity of companies, actors and countries) Reduction of principal pollutant emissions Higher job and income generation in the production chain

Conclusions With the use of biofuels, Brazil shows that it is possible to obtain: protection of consumer interests in the supply, guarantee of the supply, price/tariff and the quality of energy obtainable diversification and energy security expansion of internal energy supply as a pre-requisite of social and economic growth mitigation of emissions of pollutants and greenhouse effect gases