Etanolmarknaden i Brasilien : etanol som fordonsbränsle

Abstract: According to the EC fuel regulations 2 % bio fuel has to be blended in all fuel by the year 2005, and 5.75 % by the year 2010, which means ethanol for gasoline driven vehicles, so there will be a substantial demand for ethanol. Brazil already has an established industry for producing ethanol and is the leading producer and exporter of fuel ethanol. My purpose with this paper is to investigate why Brazil decided to develop ethanol production on a large-scale operation and to find out today's situation. Focus will mainly be on ethanol production with sugarcane as a feedstock. To gather information the databases Agricola and Agris was used, and also the search program google.se on the Internet. The two oil crises in the seventies had a big impact on the Brazilian economy. Brazil's balance of payment deficits was negative at that time. 1980 Brazil used 48.7 % of the income from exports to pay for the import of crude oil. To the politicians it was clearly that something had to be done. Brazil has a long tradition of producing ethanol from molasses from the sugar extraction of sugarcane. The sugarcane industry, with its high capacity and decreasing profitability was an important reason for the implement of the Proalcool program that was launched in 1975. It was three important means for the Proalcool program, namely: to reduce the country's dependence on oil imports, to balance the payment deficits, and the decreasing international raw sugar prices. Brazil has very good conditions for growing sugarcane; sugarcane can be cultivated almost year round, and sugarcane is cultivated in very big units; 10 000 hectares to 45 000 hectares/unit. The sugarcane cultivation requires a lot of labour and almost two-thirds of the cost of producing ethanol is labour costs. The ethanol is produced in either an annexed distillery or an autonomous. In the annexed distillery molasses is used to produce ethanol and in the autonomous plant ethanol is obtained from sugarcane. Normally 96 % of the sugar can be extracted from the cane, and bagasse, the residue contains 50 % water. The Bagasse stands for more than half of the heating value in sugarcane and in a typical Brazilian facility all the bagasse is burned for the electricity and steam needed for the process. Some plants are even capable of selling surplus electricity to the grid. There are two kinds of ethanol produced: anhydrous, which contains no water and hydrous, or hydrated which contains some five percent of water. The anhydrous ethanol, with 99.5 % alcohol can be used as a blend in gasoline, up to 16-17 % without alternations in engines. The hydrated ethanol, with 95 % alcohol is used as a neat fuel in E100 cars. Ethanol contains 60 % of the energy value of gasoline but gives higher torque and peak performance, so an E100 car will use about 15- 20 % more fuel/mile. The measures that were taken to stimulate the ethanol production can be put in three different areas: • Financial • Fiscal • Law regulations Favourable loan conditions were offered, long-term loan with low interest rate. A massive advertisement campaign was launched to wake the public's interest in ethanol as a fuel. The consumer price of ethanol was set to 65 % of the price of gasoline. These incentives led to a growing interest in the ethanol business and until 1984 314 new distillery project were approved. The drop in international oil prices in 1986 made government efforts to keep ethanol prices at 65 % of the prices of gasoline an expensive task. At the same time international raw-sugar prices increased making it more profitable to produce sugar. This led to lack of sugarcane for the production of ethanol and ethanol production dropped with 4 billion Litres in 1987. The overcapacity costed even more money and 1988 the problem culminated and Brazil had to import ethanol in 1989. The Proalcool program was never terminated officially but from 1998 the subsidies was gradually extinguished. The ethanol price is now floating with the market. The only government regulation is the mandatory blend of 26 % ethanol in gasoline. The Proalcool program was a success. Brazil seems to have created a new industry, with the help of subsidiaries and regulations, which now can be competitive on a free market even when it is deregulated. Brazil now is the worlds leading producer and consumer of fuel ethanol. Brazil has an over-capacity of around 2 billion L a year and with the expected increase in demand there will be big possibilities for Brazil to export big quantities of ethanol.