Mobility, Clean Energy & the Environment Dr. Plinio Nastari President, DATAGRO

1. Mobility, Clean Energy & the Environment Dr. Plinio Nastari President, DATAGRO Civil Society Representative at Brazil’s CNPE – National Council on Energy Policy Japan-Brazil Business Council XXII Plenary Meeting 29-30 July 2019 FIESP, São Paulo, Brazil

2. Main World ConsumersofFuelsused in Transport Milliontonnesoil eq. Brazil, Russia, India & China (BRIC) are amongst 6 largest Consumers of Fuels used in Transport Source: IEA, 2016

3. GHG Emissions in CO2 eq in Generation & Use of Energy by Sector World Source: IEA, 2016

4. GHG Emissions in CO2 eq in Generation & Use of Energy by Sector Brazil Source: MME, 2016

5. Brazil – CleanestFuels Matrix in the World, 2018 Brazil – ConsumptionofTransportFuels: 113.4 billionliters in 2018 30.9% Ethanol + Biodiesel Source: ANP, calculatedby DATAGRO

6. % ofEthanol in Consumptionof Otto CycleFuels, 2018 In Jan-May 2019, it was 45.7%in Brazil Source: DATAGRO

7. % ofEthanol in Otto CycleFuelConsumptionin gasolineequivalent *

8. Recently, Electric BatteryVehicles (EBVs) havecaptured a lotofattentionworldwide

9. ButtheOptionofTechnologicalPathwayfor Fuel & MotorizationwilldependonthemethodusedtomeasureEnergy Efficiency & Environmental Impact Well-to-Wheel (WtW) or Tank-to-Wheel (TtW)

10. ComparisonofFuel & MotorizationunderWtW Source: AEA , BrazilianAssociationofAutomotiveEngineering, 2018.

11. Comparisonof GHG EmissionsunderWtW - 2017 Total GHG Emissionsin gCO2e/km - 2017 Source: AEA / MAHLE, 2019.

12. Comparisonof GHG EmissionsunderWtW - 2032 Total GHG Emissionsin gCO2e/km – estimated in 2032 Source: AEA / MAHLE, 2019.

13. Automotive Technology • Electrificationwithbiofuels • “Withthecurrentethanoldistributioninfrastructure, BrazilhasalreadysolvedtheHydrogendistributionhurdle” (Nissan, June 2016). • Electrificationwithethanol does notrequire use ofraremetals. • Distributionofethanol, as a sole orblendedfuel in gasoline, isequivalentto a network ofHydrogenalready in place(over 41,700 retailstations in Brazil).

14. Automotive Technology • ElectrificationwithEthanol • Isanelectriccarusingethanol, withouttheproblemsfacedby Electric BatteryVehicle, takingadvantageofthehigh contentofHydrogen in ethanol.

15. KPMG Global Automotive Executive Survey 2017 Electric Battery Vehicles (EBVs) will fail due to infrastructure challenges, while Fuel Cell Vehicles (FCVs) represent the real advance in electrification in mobility 62%ofexecutivesagreetotallyorpartiallythatEBVswillfailduetoinfrastructurechallenges 78%ofexecutivesagreetotallyorpartiallythatFCVsrepresentthe real advance in electrification in mobility Totally Agree 22% Totally Agree 33% Partially Agree Partially Agree 40% 45% Neutral Neutral 20% 16% 12% PartiallyDisagree 5% PartiallyDisagree 6% TotallyDisagree 1% TotallyDisagree Source: 18th consecutive Global Automotive Executive Survey, Feb 2017

16. OtherEnvironmental & HealthBenefits Ethanol, Biodiesel e Biomethanesubstitute / reduce emissions of: • ParticulateMatter, MP2.5 • Tetra-ethyl lead • CarcinogenicAromatics • CarbonMonoxide • Formaldehydes • VolatileOrganicCompounds (VOCs) precursors of photochemical smog

17. Next steps Optimizationof ICE Flex HybridFlex ElectrificationusingSustainableBiofuels

18. The mainissuewithBatteriesisthattheyhaveLow Energy Density & Specific Energy

19. ElectrificationwithEthanol • Takesadvantageof high energydensityofethanol • Avoidsthetrapoffossil-derivedelectricity (importanceofconsideringWtWconcept) • ElectrificationwithEthanolhasthelowest GHG emission • Uses existingliquidfueldistributioninfrastructure • Avoidsconcerns over: • Availabilityandsourcingoflithium-ionandcobalt • Life-spanofbatteries • Discartofbatteriesandthepollution it generates • Istheoptionthatpromotesdevelopment (jobsandincome) andthesimultaneousintegrationofenergy, agricultural, industrial & environmentalpublicpolicyobjectives.

20. StrategicVisionfortheFuture of Mobility in Brazil & SelectedCountries • Itispossible to enlargethe use of high-densitylow-carbonliquidfuels, stimulatinghigherenergyefficiency and lowerenvironmentalfootprint, • Complementing in a virtuouswayrenewable and traditionalfuels, • Usingtheexistinginfrastructure, and • Promoting local technologies in fuel production and in automobiletechnologyfor local use and exports.

21. Brazil´s New National Biofuels Plan (RenovaBio), designed by CNPE and enacted into Law in December 2017, is a relevant strategy to reinforce policy towards Biofuels and the achievement of Brazil´s commitments before the Climate Agreement

22. Innovation and efficiency in biofuel production and use is at center of Brazil´s strategy for the use of low carbon sources of energy. • RenovaBio is not subsidy, nor carbon tax.

23. RenovaBiois a regulationbasedon 2 pilars: • Inductionofenergyefficiency in productionand use ofbiofuels; • Recognitionofthecapacityofeachbiofueltopromotecarbonreduction.

24. Target: • Market-driven mechanism to promote expansion of biofuel/bioenergy in final energy demand (including in sea and air transport) based on sustainable practices, and increased energy-environmental efficiency.

25. Mechanism: • Voluntary certification of biofuel producers for their energy-environmental efficiency, based on life-cycle assessment (LCA), which will determine ability to request issuance of Decarbonization Credits (CBios); • Financial institutions will issue Carbon Reduction Credits (CBios) to be freely negotiated at public exchange; • Definition of long term country carbon reduction target for the fuel sector, leading to individual fuel distributor carbon reduction targets, to be met with acquisition of CBios.

26. Market-driven carbon pricing mechanism (endogenous, not exogenous determination), rewarding achievement of individual efficiency, not a common or equal coverage. • Unleash market forces to implement and drive innovation for increased competitiveness in biofuel/bioenergy production. • Stimulates continued demand growth, independent of government mandate. • RenovaBio does not elect/predefine champions – expansion of bioenergy will be driven by energy-environmental efficiency and sustainable production.

27. Elegibility criteria: • Zero deforestation: biofuel production cannot be based on feedstocks coming from deforested areas. • Agroecological Zoning for Cane; • Agroecological Zoning for Palm; • Soy Moratorium. • All area under cultivation must be registered under CAR System (Brazil´s Forestry Code).

28. Is based on the belief that market forces should drive the choice for the most efficient option towards increased energy-environmental efficiency in fuel production & use.

29. Relevanceofthedistribution system • Brazilcantakeadvantageof its fueldistribution system for: • HydrousEthanolused as sole fuel, in fleetwhichisalready76% flexandgrowing, • AnhydrousEthanolblendedat 27% v/v in allgasolinenationwide (E27) – Brazilhasbeenusing “mid-levelblends” for a long time, • Biodiesel blended in allfossil-based diesel Nationwide (B10), goingtoB15 in March/23. • BiofuelisSOLAR ENERGY captured, storedanddistributed in anefficient, economical & safe manner.

30. Relevanceofthedistribution system • Brazilcantakeadvantageof its fueldistribution system for: • HydrousEthanolused as sole fuel, in fleetwhichisalready76% flexandgrowing, • AnhydrousEthanolblendedat 27% v/v in allgasolinenationwide (E27) – Brazilhasbeenusing “mid-levelblends” for a long time, • Biodiesel blended in allfossil-based diesel Nationwide (B10), goingtoB15 in March/23. • BiofuelisHYDROGEN captured, storedanddistributed in anefficient, economical & safe manner.

31. RenovaBio – a model for expansion of clean energy solution in mobility

32. COP23-Fiji in Bonn Declarationof Vision, by 19 Nationsrepresenting over 50% of world population, 37% of world GDP + IEA + IRENA Bonn, November 16, 2017 Target for 2030 (toachievethe 2-Degree Scenario) • % ofBioenergy in world energydemand must double. • % ofsustainablelowcarbonBiofuels in transport fuels, including sea and air transport, must triple. Scaling up the bioeconomy is possible, given smart agricultural practices, better use of rural and urban waste, and proper policies.

33. “Beyond 2025, IRENA’sRenewableEnergyRoadmaps(ReMap) scenario foresees that a global output of 500 billion liters of biofuels would be needed by 2030 (of which 124 billion liters in advanced biofuels) and 1,120 billion liters per year by 2050 to most cost-effectively contribute to the achievement of the Paris Agreement’s goals (IRENA, 2017).” In Creatingthe Biofuture: A Report on the State of theLowCarbonBioeconomy, 2018, pp.23-24. Nastari, P., EletrificaçãocomBiocombustíveis, ANP, Fev 2019.

34. Biofuels Solve The TwoBiggestChallenges For Humanity • Withbiofuelswe can solvethe 2 biggestproblemsfacingHumanity: • Global Warming and • TheRefugeecrisis Nastari, P., EletrificaçãocomBiocombustíveis, ANP, Fev 2019.

35. We are moving towards the Age of Hydrogen Not Hydrogen captured and stored in high-pressure, costly and risky Titanium tanks, but Hydrogen represented by high-density, low carbon footprint, sustainably produced Advanced Biofuelssuch as Ethanol, Biogas & Biomethane

36. RenovaBio: model for expansion of clean & efficientenergysolutionformobility

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