When German engineer Rudolf Diesel took the first diesel engine to the world fair in Paris, France, at the beginning of the 1920's, he used peanut oil as a fuel. Eleven years later, despite using a fossil fuel, he stated: "The diesel engine may also be powered with vegetable oils, and this will help in the development of agriculture around the world."

Diesel was right. With studies showing that the world proven oil reserves total 1.137 trillion barrels and permit the supply of the world demand for another 40 years, and the advancement of the greenhouse effect, countries have intensified the speed of investment in production of biodiesel.

The European Union (EU) should produce 1 million tons of the fuel this year. In the United States, mills are spreading. There are now 35 in operation and 25 are awaiting authorization.

And Brazil has also entered into the route of biodiesel. Brazilian oil giant Petrobras alone has announced investment of US$ 145 million, in five years, in projects connected to the production of the clean fuel.

The money will be invested in the Guamaré mill, in the northeastern Brazilian state of Rio Grande do Norte, which is in operation and has a capacity for production of 6,000 tons of biodiesel a year, and in another plant, also in the Northeast of Brazil.

Other groups like Brasil Ecodiesel and Agropalma, controlled by Alfa Bank, are also betting on the production of biodiesel. The former has invested around US$ 4.4 million this year in a mill in the northeastern state of Piauí, with a capacity for production of 27,000 tons a year. The raw material is castor seed and the program generates income for small farmers in the state.

Agropalma invested approximately US$ 1.3 million in an enterprise in Belém, capital of the northern Brazilian state of Pará. Apart from them, another four biodiesel mills are operating in the country. Production this year will be around 176,000 tons, according to the National Petroleum Agency (ANP).

Investment by Petrobras and by private companies has one objective: supplying the Brazilian government biodiesel program. The methodology in Brazil is similar to that adopted in the EU: a percentage of clean fuel to be added to common diesel is stipulated. The Europeans began this year, using the B2 - 2% biodiesel mixed into the fossil fuel. In 2010, they should have reached around 6% clean fuel mixed into common diesel.

In Brazil, the B2 mixture will be compulsory starting in 2008. "A total of 800,000 tons of clean fuel will be necessary to supply the Brazilian demand when the law goes into operation," stated Nivaldo Trama, the president of the Brazilian Association of Biodiesel Industries (Abiodiesel).

The intention is to increase the percentage gradually so as to reach 5% - B5 - in 2013. According to the federal government, the commercial use of B2 will represent an annual economy of around US$ 160 million in the import of diesel.

A study shows that the economy forecasted may start being observed in January next year. This is due to the fact that through a resolution by the National Council for Energy Policies (CNPE), the government of Brazil has agreed to distribute, trough the B2, the volume of biodiesel produced by mills that prove they are buying raw material from family agriculture.

Purchases will be made through public auctions organized by the ANP. Brasil Ecodiesel and Agropalma have already made requests for participation in these sales.

Retake

Despite being the topic of the moment when the matter is agro-energy, biodiesel has been under research in the country since the 1970's. The fuel is made after a chemical reaction between vegetable oils or fats and ethanol or methanol.

At the time, the federal government created a program called Pró-óleo (Plan for Production of Vegetable Oils for Energy Use), similar to the program the government developed for alcohol, Proálcool.

The alcohol program evolved and generated good results, but the vegetable oil one stalled, and was only restarted in mid 2004, when president Luiz Inácio Lula da Silva's government gave signs that it would support enterprises turned to the production of biodiesel.

Initially the government released a biodiesel program that provided incentives to those interested in producing the fuel from castor seeds and oil palm in the poorest regions of the country, the North and Northeast.

Around 40 varieties of oleaginous plants were researched, but these two were chosen for two reasons: they are well adapted to dry climates and generate jobs. "It is possible to promote inclusion and social mobility," stated André Luis Girdwood, a director at Brasil Ecodiesel. According to the executive, for every three hectares of castor seed cropland, one direct job is guaranteed.

Soy

The program, however, has generated the interest of other sectors that had already been working on research for the production of biodiesel, like soy farmers. Farmers of the product say that the grain is a good way for the country to reach the quantity of biodiesel necessary to run its vehicle fleet by 2008.

"With castor seed and oil palm alone, we will not manage to reach the government target, and the country dominates soy production, has registered record gains in productivity, and may use the oleaginous seed in the production of biodiesel," stated Silvio Rangel, the director of Ecomat, an industry that develops vegetable oils in the midwestern Brazilian state of Mato Grosso.

Nivaldo Trama goes further: Brazil is the only country in the world that produces soy 11 months a year. "In Europe they produce for four months, and in the United States for five months. Here we currently have three crops a year, we have raw material for biodiesel practically all year round," he said.

This ease in production associated to low cost would compensate the fact that soy oil has a lower level of oil (18%) than other oleaginous seeds like castor seed (from 45% to 50%), sunflower (38% to 48%), canola (40% to 48%) and oil palm (22%).

Another factor in favor of soy: the cost. According to Trama, castor seeds cost around US$ 1,000 per ton, whereas soy costs around US$ 250. Soy oil also has a repressed demand on the foreign market, as it competes with the palm oil produced by the Asians.

"And there we can solve another current problem for biodiesel, the cost at the pump, as it is more expensive than common diesel," stated Cláudio Zattar, a director at the Ale petrol station chain, the first to trade biodiesel in Brazil, which hopes to sell 22,000 tons of the fuel this year.

According to the executive, the liter of the B2 mixture costs around US$ 0,01 more than the common fuel. "This is a barrier. Consumers do not want to buy biodiesel just because it is ecologically and socially correct. They also want prices," he said.

However, to place soy definitely on the route of biodiesel, businessmen want incentives from the federal and state government and investment from foreign companies. The largest share of soy crops in Brazil is in the Midwest and South, and it is not based on family farming, and therefore does not receive tax breaks.

"One possible action in this sector is the federal government stipulating how much it is going to pay per liter and how much is going to be bought. This will make possible the scheduling of investment. So as to be productive, a soy mill needs to process at least 100 tons a day," explained Trama.

Regarding foreign investment, some foreign companies are studying the Brazilian market. Trama explains that he has already been visited by a group of German businessmen. The Venezuelan government has also sent representatives to understand the process for production of biodiesel.

This article appeared originally in Anba – www.anba.com.br.

---

Add this page to your favorite Social Bookmarking websites