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ETHANOL FUEL IN BRAZIL

ETHANOL FUEL IN BRAZIL. By: HAYDEE NASCIMENTO APRIL 27, 2007 hnascimento@kentlaw.edu. 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? .

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ETHANOL FUEL IN BRAZIL

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  1. ETHANOL FUEL IN BRAZIL By: HAYDEE NASCIMENTO APRIL 27, 2007 hnascimento@kentlaw.edu

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

  3. 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.

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

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

  6. RISING DEMAND • Brazil is the world's largest producer of ethyl alcohol • Alone it produced 14.75 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: http://www.international.ucla.edu/article.asp?parentid=19061

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

  8. Ethanol fuel in Brazil • Produced from sugar cane • Tropical climate • Largest sugar cane crop in the world • Source: http:Wikipedia.org

  9. 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 • http://www.earth-policy.org/Updates/2005/Update49.htm

  10. 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 • http://www.earth-policy.org/Updates/2005/Update49.htm

  11. 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

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

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

  14. America’s Involvement • The U.S. cooperates with Brazil • Two different approaches • Production is cheaper in Brazil • Source: http://ipsnews.net/news.asp?idnews=37172

  15. 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 • http://www.earth-policy.org/Updates/2005/Update49.htm

  16. EXPORTING ETHANOL • Joint Venture Based In Japan • Petrobas – state owned by Brazil • Formed venture with NAH to produce ethanol for the Japanese market

  17. 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 2nd largest gasoline market • http://www.greencarcongress.com/2005/05/japan_and_brazi.html

  18. 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

  19. 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 • www.ncga.com/ethanol/pdfs/DDGSMarkets.pdf

  20. 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 • http://www.ethanol.org/

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

  22. 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

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