Flex-Fuel Technology Makes Brazil Leading Ethanol Exporter and Producer

Sugarcane plantation in Brazil Brazil consolidated itself, in 2008, as the world's leading ethanol exporter and third largest biodiesel market, with the entry into operation of six new biodiesel plants and another 29 for ethanol, 18 of which integrate the Growth Acceleration Program (PAC) of the Brazilian federal government.

Investment in the ethanol plants has reached 12 billion reais (US$ 5 billion). According to information supplied by the Brazilian Ministry of Mines and Energy, ethanol production has exceeded 22 billion liters (5.8 billion gallons) per year, which makes Brazil into the world's second largest producer country after the first place, the United States. The figures were disclosed by the Communication Secretariat of the Presidency of the Republic.

As a result of the success of the Brazilian flex-fuel technology (which allows for the mixing of ethanol and gasoline at any proportion), presently, nearly 90% of Brazilian light vehicle production uses the technology.

In 2008, the Brazilian market reached the mark of seven million flex vehicles in circulation. Currently, more than 25% of the national light vehicle fleet counts on the technology. The ethanol market in Brazil has the same size as the gasoline market, be it concerning production, consumption or exports.

The year of 2008 saw the entry into force, in January, of the mandatory addition of 2% biodiesel to all diesel sold to end consumers. In July, the rate of the mix was increased to 3%, the equivalent to an annual volume of 1.3 billion liters (343.4 million gallons). In November, the installed capacity for biodiesel production reached 2.993 billion liters (791 million gallons) a year, and the number of plants operating in Brazil totaled 46.

From November 2007 to November 2008, seven biodiesel auctions were held, and the delivery of over 1.33 billion liters was negotiated for the period ranging from January 2008 until the first quarter of 2009.

Estimated investment in order to manufacture that volume is around 3 billion reais (US$ 1.2 billion). In these auctions, approximately 80% of the purchased amount will be produced at plants bearing the Social Fuel Stamp, meaning that they purchase raw material from family farmers.

The consolidation of the biodiesel production chain in Brazil was encouraged by a public policy launched by the federal government in 2004. The policy is the National Biofuel Production and Use Program (PNPB), based on three pillars: economic (creation of a new industry), social (insertion of family agriculture) and environmental (reduction of pollutant emissions).

By means of a stable regulatory environment and a series of auctions for purchase, the production chain has been structured out and the market supply, guaranteed. Now, one year after the entry into force of the mandatory addition of biodiesel to diesel, Brazil already stands out as the world's third largest buyer and consumer of the fuel.

Anba

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