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Brazilians, freed from the oil dictatorship, succumb to the one of ethanol.

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  • papp20032000
    The following is an article that deserves a comment of Milton Maciel. It invites to think about the biofuels dependency of the fossil fuels for agriculture.
    Message 1 of 3 , Jan 8, 2006
    • 0 Attachment
      The following is an article that deserves a comment of Milton Maciel.
      It invites to think about the biofuels dependency of the fossil fuels
      for agriculture. And also invites to think in the dilemma of food
      production for humans or for machines. Here it is:
      :::::::::::::::::::::::::::


      The ethanol prices are sky high in Brazil and Brazilians, who started
      to be free from the dictatorship of the high international prices of
      oil and gas, now succumb to the sugar cane producer prices.

      The Brazilian government has called the industry for a meeting next
      web, alarmed by the consecutive prices of the so called alcohol
      (ethanol fuel, manufactured from sugar cane. Today a sensible part of
      the Brazilian car park is working with this fuel)

      According to the industry, in 2006 the price of this fuel increased
      in the country an average of 6 percent. According to the press, the
      increases are much higher.

      Last Saturday, the Secretary to the Minister of Energy, Nelson
      Hubner, warned in a press conference that the government could reduce
      the ethanol mix with gas from 25 to 20 percent, if producers do not
      reduce prices.

      In Brazil, the sugar cane ethanol is a fuel in itself and besides can
      go mixed with the gas sold to public.

      Brazil is the first world producer of sugar cane, thus allowing them
      the technology development of the ethanol as fuel.

      At present, more than 70 percent of the cars sold in Brazil are
      bifuel; that is, they can be used with alcohol or gas, no matter
      which; a technology developed in previous years that seemed to have
      relieved Brazilians from the high prices dependency of the oil
      derivates.

      But the ethanol, with all the consecutive increases is close to the
      gas prices.

      In a report released this Saturday, the Globo newspaper estimates
      that the world demand of sugar will increase this year in 7 million
      tons, which may lead to new increases in the price of ethanol.
      Brazil suffered an ethanol crisis in the nineties.

      In 1988, 90 percent of the vehicles produced locally worked with
      ethanol as fuel, but then the cane producers shifted to the more
      lucrative exports to sell sugar and a fuel shortage took place (in
      the country).

      To avoid a similar crisis, they developed the bifuel vehicle, also
      called flex, which may use gas or alcohol, no matter which.
      Brazil will get this year the highest historic sugar cane crop, a
      total of 436.8 million tons (5.1 percent more than previous year),
      The state owned Compania Nacional de Abastecimiento (Conab) reported

      This will allow the production of 26.7 million tons of sugar and 17
      billion litres of ethanol.

      Globovision. Economy. January 8th., 2006
      http://www.globovision.com/news.php?nid=17579
      Translated into English by Crisis Energetica. www.crisisenergetica.org
    • Milton Maciel
      Well, Pedro, this is not an anomalous situation. This is only a manifestation of the old market law of supply and demand. Traditionally alcohol prices
      Message 2 of 3 , Jan 8, 2006
      • 0 Attachment
        Well, Pedro, this is not an anomalous situation. This is only a manifestation of the old market law of supply and demand. Traditionally alcohol prices oscillate from a minimum of US$ 0.21 (at the peak of harvest – June) to a maximum of US$ 0.45 per liter (in the period between harvests - from December to May). Maximum prices of 2003 have also been in the US$ 0.45/liter level. These are prices received by the ethanol distilleries.

        Next week a meeting of ethanol producers and government agents will set the norms for this special situation. Producers will assume a compromise of keeping a maximum price and also of anticipating the next harvest period from May to April and even to the second part of coming Mars, for a number of larger mills.

        Of course, if consumers, distributors and government – and the press - do not exert some pressure, ethanol producers would try to set their prices the highest possible. But there a series of actions that can be undertaken to control this trend.

        First of all is the dynamic of the market itself: with 72% of all new cars equipped with biflex motors, consumers can decide which fuel to employ. Anytime that alcohol price is higher than 70% of gasoline price, they just automatically change to gasoline. This has already 25% of anhydrous ethanol in its composition (75-25, mixed by Petrobras), so it is possible to reduce this participation – a government decision - to 20% for a limited time and ethanol would be more than enough for consumption. A small tax reduction on gasoline can avoid a small increase in 80-20 gasoline price, for this 5% substituting gasoline is, of course, more expensive than ethanol (even at the present peak prices for alcohol, Brazilian gasoline from Petrobras is at least 50% more expensive).

        In the city where I live alcohol prices increased 71% from June/2005 to present January/2006. But its price is still more than 70% lower than gasoline at pumps. So I have no problems with my car that runs on pure hydrous ethanol (For my personal use I don’t need a biflex, I prefer pure alcohol motors. In our firm fleet we have an old Fiat Uno, running on pure hydrous ethanol since 1987 and still in perfect use conditions, comparable to our newest similar 2005 biflex cars).

        At the moment there is a stock of 4.2 billion liters of ethanol. If the harvest starts in May, 4.8 billion liters would be needed. That is why it will be anticipated. These numbers denote an unbalance, so where did it come from?

        Well, first of all there was a reduction in harvested cane in 2005 of the order of 5%, resulting from drought in some producing regions of Southeast. But, more expressive than that, there has been an unpredicted increase in production and sales of biflex cars. When 2005 began, 27% of Brazilian cars leaved the assembly line with biflex motors. Automotive industries experts projected an expansion of this figure to a possible 45-50% at the end of the year. But at December 31 2005 72% of all produced cars were biflex. And users put then to run on pure hydrated ethanol only. The corresponding increase in demand was not expected.

        Also Brazil has exported more ethanol than it should do. A large number of new customers, some so weird as the big oil exporter Venezuela, imported fuel alcohol from Brazil.

        For this 2006 harvest things will be more under control. There is an area expansion (not very large), a productivity expansion in the fields with new cane cultivars and the start of the first plant using fast hydrolysis of bagasse for producing ethanol. Also some of the 54 new large mills under construction in Center-Southeast regions will start to operate.

        Now a comment about the title “Brazilians, freed from oil dictatorship…”

        Well, this is not still a complete true, since only 42% of the needed gasoline has already been replaced by ethanol. And 99% of all heavy transportation is diesel oil dependent, once our biodiesel program is just at its very beginning, very similar to the conditions we had at the onset of our Proalcohol Program in the seventies.

        But there is, indeed, a better condition for our oil dependency. Because of the regular use of ethanol as a gasoline substitute, Brazil is now self-sufficient in oil and is a gasoline exporter. Also, in last December 27th, Petrobras made an announcement of the final measurements taken at the Papa-Terra oil field at the Campos basin. Discovered in 2003, this field has been confirmed as a giant, with 700 million to 1 billion barrels of recoverable boe. Another announcement, released the following day, informed of three new discoveries at the Espirito Santo basin (offshore) and Bahia (inshore).

        In general terms this is not very impressive, once total Brazilian oil reserves are, until now, in the order of 12 billion barrels only. But Brazil is a modest economy, with a not so large oil consumption of 1.8 million barrels/day. With a limited increase in demand to 2.2 million barrels/day by 2010, the slowdown of some older fields and the ingress of the new fields (Papa-Terra will produce only in 2011) we estimate that Brazil will peak at 2017. Or later, with increases in ethanol and, most important, biodiesel national program.

        Brazil has some very particular conditions of large soil availability and technologies so it is one of a reduced number of nations that can really count on biofuels to make a significant contribution to replace oil fuels. These very particular conditions enable the country to produce biofuels for its own use and for some limited exports (as for Japan, whose Nippon Alcohol Hanbai has just signed an agreement with Petrobras to constitute a joint venture in Japan, who will be importing 1.8 billion liters of ethanol from Brazil in 2008. This is also a response for a post in ER that questioned how Japan would produce biofuels for replacing oil. No, Japan won’t produce it, but will import it, instead of competing with China, USA and India for the remaining oil of the world. A wise solution for a country that is not as heavily militarized as its competitors are).

        And, once again because of those very particular conditions, in Brazil there is no dilemma of producing food for humans or for machines. With an area for soybeans that is 10 times larger than total sugar cane area (what means 20 times larger than the area of sugar cane reserved for ethanol production), what we have is another dilemma: that of producing incredible large amount of beans for ANIMAL feed for exportation – that so inefficient way of producing food for humans the most difficult and stupid way, of fattening pigs, chickens, broilers and cows, so that First World (and now China) can feast with expensive animal proteins, with EROEIs ranging from 1/10 to 1/100.

        Indeed Brazil can multiply its biofuels production by 20 without disturbing food production. This is planned to happen as agriculture will be made progressively less dependent of oil and more dependent of its capacity of generating its own fuels. And we’re been very successful in converting large areas of conventional chemical cane cultivation to organic cane technology – what is meaning more productivity, more alcohol per hectare, soil and environment conservation and large carbon credits to be traded.

        Milton Maciel in Brazil

        papp20032000 <papp20032000@...> wrote:
        The following is an article that deserves a comment of Milton Maciel.
        It invites to think about the biofuels dependency of the fossil fuels
        for agriculture. And also invites to think in the dilemma of food
        production for humans or for machines. Here it is:
        :::::::::::::::::::::::::::


        The ethanol prices are sky high in Brazil and Brazilians, who started
        to be free from the dictatorship of the high international prices of
        oil and gas, now succumb to the sugar cane producer prices.

        The Brazilian government has called the industry for a meeting next
        web, alarmed by the consecutive prices of the so called alcohol
        (ethanol fuel, manufactured from sugar cane. Today a sensible part of
        the Brazilian car park is working with this fuel)

        According to the industry, in 2006 the price of this fuel increased
        in the country an average of 6 percent. According to the press, the
        increases are much higher.

        Last Saturday, the Secretary to the Minister of Energy, Nelson
        Hubner, warned in a press conference that the government could reduce
        the ethanol mix with gas from 25 to 20 percent, if producers do not
        reduce prices.

        In Brazil, the sugar cane ethanol is a fuel in itself and besides can
        go mixed with the gas sold to public.

        Brazil is the first world producer of sugar cane, thus allowing them
        the technology development of the ethanol as fuel.

        At present, more than 70 percent of the cars sold in Brazil are
        bifuel; that is, they can be used with alcohol or gas, no matter
        which; a technology developed in previous years that seemed to have
        relieved Brazilians from the high prices dependency of the oil
        derivates.

        But the ethanol, with all the consecutive increases is close to the
        gas prices.

        In a report released this Saturday, the Globo newspaper estimates
        that the world demand of sugar will increase this year in 7 million
        tons, which may lead to new increases in the price of ethanol.
        Brazil suffered an ethanol crisis in the nineties.

        In 1988, 90 percent of the vehicles produced locally worked with
        ethanol as fuel, but then the cane producers shifted to the more
        lucrative exports to sell sugar and a fuel shortage took place (in
        the country).

        To avoid a similar crisis, they developed the bifuel vehicle, also
        called flex, which may use gas or alcohol, no matter which.
        Brazil will get this year the highest historic sugar cane crop, a
        total of 436.8 million tons (5.1 percent more than previous year),
        The state owned Compania Nacional de Abastecimiento (Conab) reported

        This will allow the production of 26.7 million tons of sugar and 17
        billion litres of ethanol.

        Globovision. Economy. January 8th., 2006
        http://www.globovision.com/news.php?nid=17579
        Translated into English by Crisis Energetica. www.crisisenergetica.org










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