January 1st 2008: The Day Brazil Goes Biodiesel

Brazil's biodiesel The scene of petroleum gushing out of an accidental hole in arid land, as shown in Hollywood movies illustrating the time when the fossil fuel was discovered in United States ground, is not part of the Brazilian scenario. In Brazil, petroleum lies offshore.

However, cities such as Caarapó, in the midwestern Brazilian state of Mato Grosso Sul, and Alto Araguaia, in the state of Mato Grosso (also in the Midwest), not widely known to Brazilians, will soon have biodiesel pouring out like rain.

The two municipalities will be important for the fuel's consolidation in the Brazilian energy matrix. In the two cities, soy processing plants are being built by European multinational Agrenco. The units will have a production capacity of around 280,000 tons of the biofuel per year.

In the city of Caarapó, where soy and cattle raising drive the economy, the signs of the installation of the biodiesel plant can already be measured – and its financial effects can be felt.

"The factory should only be inaugurated in March 2008, but the real estate rental prices are on the rise since the construction of the plant was announced. And now, even renting a house is difficult," says Chirato Alves Vieira, head of cabinet at the Caarapó city hall.

The announcement of the Agrenco plant, to be the first large-sized plant in the state, was made two years ago, in 2005, months after the Brazilian government launched the National Program for Production and Use of Biodiesel (PNPB), in December 2004.

According to Vieira, another measure of investment inflow is the number of inhabitants, which was 19,500 in 2004, and now stands at 22,700 people. "The plant's construction has attracted workforce to the city, approximately 200 jobs will be created," says he, who calculates that upwards of 6,000 people should settle in the municipality in the next few years as a consequence of investment by Agrenco and of other projects in the biofuel area, such as that of plant Nova América, in the southeastern Brazilian city of São Paulo.

The company should produce ethanol from sugarcane, and the plant should be inaugurated in 2009. According to estimates, 1,200 new job positions will be created as the ethanol plant enters into operation.

Well located, with a Ferronorte railway terminal installed – which makes outflow of production easier -, the municipality of Alto Araguaia has also hitched a ride in the current wave of optimism about biodiesel production.

"It will be a leap for the local economy," says Romildo José de Oliveira, secretary of Finance at the municipality. The 15,000-inhabitant city is also expecting, in the first half of 2008, inauguration of the Agrenco biodiesel plant.

The enterprise already generated 300 direct jobs in the region. Workforce, according to Oliveira, is being trained in São Paulo, in the company's headquarters.

A Must

Brazil currently has 44 biodiesel plants authorized by the National Petroleum Agency (ANP). Last year, the sector received a total investment of approximately 440 million Brazilian reais (US$ 247 million).

For 2008, another 760 million reais (US$ 427 million) are expected, according to data supplied by the Ministry of Mines and Energy, when the number of plants should rise to 61. Installed capacity will total approximately 2 billion liters – until October 2007, the country produced around 300 million liters of biodiesel.

The rising production is linked primarily to the beginning of B2 compulsoriness (2% of biodiesel mixed into diesel for consumption, starting on January 1st), which should regularize the sector, creating a continuous consumption flow.

It will take approximately 800 million liters to supply the Brazilian market. Of that volume, Petrobras and its subsidiary Refap, Refinaria Alberto Pasqualini, based in the city of Canoas, in the southernmost Brazilian state of Rio Grande do Sul, have already begun to sell, to all distributors, approximately 380 million liters of biodiesel, to be distributed in the first half of 2008.

Anba – www.anba.com.br

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