Heitor Moura 2007 Energy in Brazil

8/14/2019 Heitor Moura 2007 Energy in Brazil

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Presented at a private seminar in Brasilia, in February, 2008

ENERGY IN BRAZIL

[email protected]

Heitor Moura


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ENERGY IN BRAZIL A PRESENTATION BY HEITOR MOURAENERGY IN BRAZIL A PRESENTATION BY HEITOR MOURA FEBRUARY 2008FEBRUARY 2008

The energy supply chain

Consumption

Production

Trade

Oil

Hydrelectric energy

Natural gas

Eolic energy

Nuclear energy

Composition of energy supply


3/87


CONSUMPTION

DOMESTIC

PRODUCTIONEXPORTS

IMPORTSINTERNAL SUPPLY

Supply from domestic orforeign sources

Domestic or foreign demand

All mediating transportation,storage and commercialdistribution networks

Supply chain mostcommonly refers to physicalunits, but necessarily involveseconomic considerations, suchas prices, cost and capitaldisbursements, as well asregulatory aspects.


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Apart from a small slow-down in the 80s,energy consumption in Brazil has beenregularly growing at rates higher thanworld average.

This difference between World andBrazilian growth rates was greater in the70s and 90s than it is now.

The high rates in the 70s were associatedto the fast economic growth of the period.

On the other hand, the low average in the80s reflects the decades slow economicperformance.

SOURCE: United States-IEA-DOE e Brazil-MMESOURCE: United States-IEA-DOE e Brazil-MME

0%

1%

2%

3%

4%

5%

6%

% 70s % 80s % 90s % 00s

Averageannualgrowth.

World - sale of energyBrazil - final consumption

Energy consumptionEnergy consumptionAverage annual growth ratesAverage annual growth rates


5/87ENERGY IN BRAZIL A PRESENTATION BY HEITOR MOURAENERGY IN BRAZIL A PRESENTATION BY HEITOR MOURA FEBRUARY 2008FEBRUARY 2008

During the last 36 years, consumption ofenergy from renewable sources has beengrowing on average at a slightly lower rate(2,8% p.a.)than consumption from non-renewablesources (3,0% p.a.).

This difference, however, varied markedlyfrom decade to decade.

10.000

100.000

1970 1975 1980 1985 1990 1995 2000 2005

Consum

ption(1.000tpe).

Renewable Non renewable

SOURCE: Brasil-MME Balano Energtico NacionalSOURCE: Brasil-MME Balano Energtico Nacional

0%

1%

2%

3%

4%

5%

%75>85 %85>95 %95>05 %04>06

Averagegrowthrates

.

Renewable

Non renewable

Average growth ratesAverage growth rates

Total energy consumptionTotal energy consumption


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The growth in energy consumption iscyclic, following the ups and downs ofthe economy in general.

SOURCE: Brasil-MME Balano Energtico NacionalSOURCE: Brasil-MME Balano Energtico Nacional-2%

-1%

0%

1%

2%

3%

4%

5%

1973 1978 1983 1988 1993 1998 2003

2-yearmovinggrowthrate.

Renewable sources

Non renewable sources

Annual growth ratesAnnual growth rates


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The main non-renewable sources of energy in Brazil are crude oil and natural gas.

Of the renewable energy sources, hydrelectric power and sugar-cane relatedenergy have shown the greatest increase over the last 36 years.

Though growing at essentially the same long-term rates, other renewable energy(eolic, solar and nuclear) still represent only a small portion of total energyproduced.


RenewablesRenewables

100

1.000

10.000

100.000

1970 1975 1980 1985 1990 1995 2000 2005

Production(1.0

00TPE)

Hydrelectric

Wood

Sugar-cane productsOther renewable

1.000

10.000

100.000

1970 1975 1980 1985 1990 1995 2000 2005

Production(1.0

00TPE)

Crude oil

Natural gas

Other non-renewable

Non-renewablesNon-renewables


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10.000

100.000

1.000.000

1970 1975 1980 1985 1990 1995 2000 2005

1000TPE

Net imports

Final consumption

0%

10%

20%

30%

40%

50%

60%

1970 1975 1980 1985 1990 1995 2000 2005

Netim

ports/finalcons

Despite continued growth in finalconsumption, Brazils reliance on imports

of energy is today at a historical low,around 10% of consumption.

This reduction in energy dependence overthe last 3 decades came in two mainsurges:

in the late 70s and early 80s, and

since the mid 90s



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Lower dependence on imports occured mostly due to the increase in theproduction of non-renewable energy, mainly oil.

This increase eliminated total dependence on non-renewable sources, thoughthis does not mean elimination of imports.


Consumption less productionConsumption less production(1.000 TPE)(1.000 TPE)

-10.000

0

10.000

20.000

30.000

40.000

50.000

1970 1975 1980 1985 1990 1995 2000 2005

1.000TPE.

Renewable

Non renewable

10.000

100.000

1.000.000

1970 1975 1980 1985 1990 1995 2000 2005

1.000TPE

Renewable consumption

Non renewable consumption

Renewable production

Non renewable production

Development (1.000 TPE)Development (1.000 TPE)


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Energy imports until themid 80s were mainly oil.

During the 90s coal andoil products increased,while crude oil importswere reduced.

Since 2000, natural gasimports have becomesignificant.

Brazil has also purchaseduranium during peakmoments of its nuclearprogram. These importshave become steadiersince 2000.


Energy imports (1.000 TPE)Energy imports (1.000 TPE)

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

1970 1975 1980 1985 1990 1995 2000 2005

1.0

00TPE

Oil Coal and coke Oil products

Electricity Uranium Natural gas

Alcohol Vegetable coal


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Energy exports as a percentageof import requirements have

increased in 3 phases since the70s.

Two main product groups areexported:

crude oil

oil products

This is due to the peculiarBrazilian crude production andrefining characteristics:

Brazilian crude is mostlyheavy (low API);

most economic refiningoptions produce a greaterproportion of gasoline than

can be consumeddomestically;

there is a regular need forSOURCE: Brasil-MME BalanoSOURCE: Brasil-MME Balano

Energtico NacionalEnergtico Nacional

EnergyEnergyexports asexports as

percentagepercentageof importsof imports 0%

10%

20%

30%

40%

50%

60%

1970 1975 1980 1985 1990 1995 2000 2005

Exports/Imports(%)

Density ofDensity ofcrudecrude

producedproducedin 2005in 2005

0%

5%

10%

15%

20%

25%

30%

35%

40%

10>15 15>20 20>25 25>30 30>35 35>40 40>

Degrees API

Percentageoftotalproduction


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Until 1980, exports were irregular andin small volumes.

From 1980 to 1999, the main exportswere fuel oil and gasoline in excessfrom Brazils refining mix.

Since 2000, fuel oil exports havebecome much more important thangasolines, while crude oil volumesincreased significantly, to over half of

total energy exports.


Energy exports (1.000 TPE)Energy exports (1.000 TPE)

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

1970 1975 1980 1985 1990 1995 2000 2005

1.0

00TPE

Fuel oil Oil Gasoline

Diesel Kerosene Other exports

Ethanol


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Petrobras forecasts a growing surplus in oil products for the coming years, fromproduction in new offshore fields.

This forecast is based on tested fields coming into production, less gradualdepletion of old fields.

Recent discoveries of very deep deposits (Tupi), combined with continuousimprovement in exploration and production technology, warrants optimism forBrazilian oil reserves and production over the next decade.


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Brazil increased its oilproduction markedly during

two periods: in the 80s andfrom 1996 to 2003.

The jump in the countrysshare of World oilproduction, as well as in itsshare of South and CentralAmerican production,reflects this greater output.

Brazils share in Worldproduction has been growingmore rapidly than its sharein World reserves.

The recent discoveries in theSantos basin, though, willcertainly increase its share

of reserves by a significantpercentage

SOURCE: BP Energy ReviewSOURCE: BP Energy Review

0%

10%

20%

30%

1965 1970 1975 1980 1985 1990 1995 2000 2005

Brazil/World%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

Brazil/South+CentralAm

er.%

Brazil / South + C America

Brazil / World

Brazils share inBrazils share in

oil productionoil production

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

1980 1985 1990 1995 2000 2005

Brazil/World(%)

Proved reserves

Oil productionBrazils share inBrazils share in

oil productionoil productionand reservesand reserves


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Brazils proved reserves canmaintain current levels of crude

production for another 12-13years.

The forecast for an additional50% increase in total productionover the next decade requiresnew descoveries and theirdevelopment.

Analysis of the geologicalconditions of Brazil suggest anestimate of undiscoveredreserve of about 4 times currentproved reserves.

SOURCE:MMESOURCE:MME

Brazils estimated crude productionBrazils estimated crude production


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Petrobras forecasts, already for 2010,

a greater increase in oil product thangrowth in demand and refiningoutput.

So Brazil will probably continue toexport part of its crude production,and a growing volume of refined oilproducts.

SOURCE: PetrobrasSOURCE: Petrobras

Production, demand and refiningProduction, demand and refining


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SOURCE: ItaipuSOURCE: Itaipu

Itaipu damItaipu dam


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Brazil is considered to havethe Worlds third largest

potential of hydrelectricenergy.

Canadas potential is about40% of this estimatedenergy.

SOURCE: World Energy Council / MMESOURCE: World Energy Council / MME

The Worlds hydrelectric potentialThe Worlds hydrelectric potential


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Norway and Brazil are the countrieswhich produce most of theirelectricity from hydrelectric plants.

SOURCE: World Energy Council / MMESOURCE: World Energy Council / MME

Worlds largest producers of hydrelectric energyWorlds largest producers of hydrelectric energy

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

Cana

daUS

ABr

azil

Chin

a

Russia

Norway

Japa

nIn

dia

Fran

ce

Swed

en

GWhperyear

0

20

40

60

80

100

10.000 100.000 1.000.000

GWh / year

Perc

entofelectricenergygenerated NORWAY BRAZIL

CANADA

USACHINA

RUSSIA

JAPAN

SWEDEN

INDIA

FRANCE

Production versus percentage of electricityProduction versus percentage of electricitygenerated by hydrelectric plantsgenerated by hydrelectric plants

Hydrelectric energy productionHydrelectric energy production

Canada is the Worlds largestproducer of hydrelectric energy.

Brazil holds third place, after theUSA.


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Brazils main dams areconcentrated in the

Southeastern region,

but there are smallplants spread over theentire country.

SOURCE: ANEELSOURCE: ANEEL

Main hydrelectric power plants of BrazilMain hydrelectric power plants of Brazil

Electric power plants of allElectric power plants of allsizes and sourcesizes and source


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The concentration of electricgeneration in the Southeastimplies in the necessity of animportant transmission network.

The far North receives power fromVenezuela.

Itaipu binational dam is owned50/50 with Paraguay, but most ofits energy has been bought by

Brazil.

Reaching an agreement on newtransfer prices between Paraguayand Brazil is an upcomingnegotiation.

SOURCE: Brazil-National System OperatorSOURCE: Brazil-National System Operator

Electricity transmission networkElectricity transmission network


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Petrobras forecasts a largeincrease in natural gas

production and consumption atover 19% p.a..


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Natural gas is Brazils main energy source traded with its neighbours.

It also has the greatest growth potential due to South Americas large gasreserves.

-

Natural gas pipeline networkNatural gas pipeline networkMain natural gas reserves in LatAmMain natural gas reserves in LatAm


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Brazil has an important eolicenergy potential, as measured by

speed and regularity of prevailingwinds.

SOURCE: CBEESOURCE: CBEE

Eolic potential of BrazilEolic potential of Brazil


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Only a small part of thispotential, however, has

been harnessed.

Brazils share of theWorlds installed eoliccapacity is small,

and has been increasingat lower rates thanWorld total and that of

main eolic energy users. Energy-generation eolic

equipments still faceimportant import tariffs.

SOURCE: Tolmasquim-Windpower Monthly-New EnergySOURCE: Tolmasquim-Windpower Monthly-New Energy

Growth of World eolic energy capacityGrowth of World eolic energy capacityInstalled MWInstalled MW

10

100

1.000

10.000

100.000

200320022001200019991998

MWi

nstalledcap

acty

Germany

Spain

USA

Denmark

India

Italy

Netherlands

UK

Brazil

World


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Existing nuclear plantsExisting nuclear plantsAngra 1 and Angra 2Angra 1 and Angra 2

in Rio de Janeiro Statein Rio de Janeiro State

Planned Angra 3 plantPlanned Angra 3 plant


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Share of nuclear energy in total domestic supplyShare of nuclear energy in total domestic supply

0,0%

0,4%

0,8%

1,2%

1,6%

2,0%

1970 1975 1980 1985 1990 1995 2000 2005

Sh

areintotaldomesticsupply

Production of electricity fromuranium began in 1984.

Brazils share of nuclear energypeaked at below 2% in the early2000s.

The planned construction of athird plant is as yet undefinedand generates much polemic.


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Since 1970, the compositionof Brazils energy supply has

changed in clear directions:

reduction in the share ofwood and charcoal

increase in the share ofelectric power

increase in the share ofnatural gas

increase in the share ofcane products

SOURCE: MMESOURCE: MME

Composition of total domestic supply of energyComposition of total domestic supply of energy


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Environment

Economic

develo ment

Social development

Technology and scale


30/87


CONSUMPTION

DOMESTIC

PRODUCTIONEXPORTS

IMPORTSINTERNAL SUPPLY

Supply from domestic orforeign sources

Domestic or foreign demand

All mediating transportationand storage networks

Supply chain refers primarilyto physical units, butnecessarily involves economicconsiderations, such as prices,cost and capitaldisbursements.


31/87


WASTE

EMISSIONS

EFFICIENT TECHOLOGYINEFFICIENT

TECHNOLOGY

EMISSIONS

DOMESTIC

PRODUCTION

DESTRUCTION OFNATURAL RESOURCES

INTERNAL SUPPLY

CONSUMPTION

EXPORTS

IMPORTS

What environmentalresources are

affected,transformed ordestroyed for theproduction,transportation andconsumption ofenergy.

What resources andenergy are wastedat any stage of thesupply chain.

To what extent aretechnologies in

actual use the mostefficient givencurrenttechnological


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EMISSIONS

DOMESTIC

PRODUCTIONEXPORTS

IMPORTS

CONSUMPTION EMISSIONS

DESTRUCTION OF

NATURAL RESOURCES

INEFFICIENT

TECHNOLOGYEFFICIENT TECHOLOGY

WASTE INTERNAL SUPPLY

Internationalagreements

National regulations

Subnationalregulations

Physical andinfrastructure context

Technological context

Economicconsiderations

Property and capitalcontext

Labor context

Trade barriers

Cultural practices


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CONSTRUCTION and OPERATION

Brazilian environmental law requires important previous study, publicdiscussion and regulatory approval before building and before operation ofany activity with environmental impact.

CONSUMPTION OF OIL PRODUCTS

Carbon and particle emissions

THE SPECIAL ROLE OF PETROBRAS

Largest company in Brazil

Important international oil company

It has decided on becoming an energy company as its strategy aim.

Investment capacity

Capacity to form public opinion


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NEGATIVE ASPECTS

Construction of dams, flooding of large areas

Transmission lines

Population relocation

Effect on biodiversity

Effect on fish migration

POSITIVE ASPECTS

Regularization of water flow

Increased navigability of rivers

Economic and leisure use

Source for urban water supply

Source for irrigation waterItaipuItaipu

Flooded area: 1350 km2Flooded area: 1350 km2

Protected areas: 109.000 haProtected areas: 109.000 ha


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On average, Brazilian dams flood 0,52 square kilometers for each MW of installedcapacity.

Relation between generation capacity andRelation between generation capacity andKW per flooded area, for 46 largest damsKW per flooded area, for 46 largest dams

Least invasiveLeast invasive

Most invasiveMost invasive

SOURCE: IAEA / Brazilian Dam Committee (CBDB)SOURCE: IAEA / Brazilian Dam Committee (CBDB)


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MITIGATION

Repopulation of river fauna

Reforestation

Creation of new conservation units

Actions in surrounding towns

Building of water locks

Biological monitoring of river basin

COMPENSATION

0%

10%

20%

30%

40%

50%

60%

70%

1.000 10.000 100.000 1.000.000

Potential for energy generation (MW)

Percentdeveloped

AMAZON RIVER

PARAN RIVER

TOCANTINS RIVER

S O FRANCISCO RIVER

EAST ATLANTIC

URUGUAI RIVER

SOUTHEAST ATLANTIC

NORTHEASTATLANTIC

SOURCE: TolmasquimSOURCE: Tolmasquim

Relation between hydrelectric potential andRelation between hydrelectric potential anddevelopment of this potentialdevelopment of this potential


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POSITIVE ASPECTS

These are considered as

essentially friendly tothe environment.

NEGATIVE ASPECTS

Solar plates andbatteries use metalswhich require special

disposal after life span.

Large eolic systems mayaffect certain birdpopulations.

Petrobras wind farm in Northeastern Brazil,Petrobras wind farm in Northeastern Brazil,Mossor-RNMossor-RN


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NEGATIVE ASPECT

Risk of nuclear accident

High construction cost

Very negative public perception of risk

POSITIVE ASPECT

Low operational cost (about 8 times lower than conventional thermoelectricpower plants)

No carbon emissions

CO2 emissions


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2

Brazil ranks low bothin emissions per GDP

and in emissions percapita, among theWorlds 15 greatestCO2 emittors.

SOURCE: IAEA / World Resources InstituteSOURCE: IAEA / World Resources Institute

The Worlds top 15 COThe Worlds top 15 CO22-emitting countries-emitting countries

Relation between environmental quality of developmentRelation between environmental quality of development(CO(CO22/GDP) and intensity of emissions (CO/GDP) and intensity of emissions (CO22 per capita)per capita)


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Should we produce biofuels?

Climate change is now a fact

The question is mostly addressed indirectly:

as an alternative to fossil fuels (end of oil, pollution)

as a competitor for resources which should be dedicated to food

The question is frequently seen only in a geopolitical setting

Though advertising clean energy, oil majors look at biofuels as unwantedcompetitors

The public is bombarded with contradictory information.

What biofuel to produce?

Great variety of biofuels

Lack of understanding of their characteristics and

Lack of understanding of the meaning of these characteristics as to efficiency,carbon emissions etc.

Lack of understanding of the agricultural and industrial contexts of each rawmaterial


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Where and how much to produce of it?

There are rigid physical limits which restrict possible regions for each raw

material.

These physical limits are being more and more affected by greater weatherimpredictability.

There are varying economic limits to production.

There rigid regulatory restrictions on production, domestic distribution andinternational trade of biofuels.

There are fluctuations in the commodity markets (oil, oil products, biofuels,non-fuel products from same raw materials) which condition their productionand their sale markets on a daily basis.

General economic conditions affect fuel and energy earlier and with moreimpact than they do most other industries.


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Under what environment-protection conditions should it be produced?

The conventional wisdom

The research industry

The public-opinion industry

The stakeholders

The regulatory complex

The field

Under what land-holding and labor conditions should it be produced?

Existing regulations versus their practical application

Economic considerations

How much can regulations stretch economic facts?

Global harmonization: why, who, how, cui bono?


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Inputs

land

water

sunlight

fertilizers and pest control chemicals

labor

mechanization

Outputs

air pollution (field-burning, industrial smoke)

water pollution (fertilizers, chemicals,vinass,...)

reduction in biodiversity

products

revenue, employment, development


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24 hours of night-time24 hours of night-time


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Energy consumption increasedsignificantly in 2001-06 as compared to

1996-2001.

This increase occured outside OECDcountries and mostly in China.

SOURCE: BP Energy ReviewSOURCE: BP Energy Review


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Energy consumption is concentrated indeveloped countries.

Gas per capita consumption is highest inCanada, Russia e Saudi Arabia.

Oil per capita consumption is highest inthe USA, Saudi Arabia, Holland andIsland.

Primary energyPrimary energySOURCE: BP Energy ReviewSOURCE: BP Energy Review


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In the 70s, GNP increased 4% p.a. morethan energy consumption, indicatingtechnological progress.

This technological step reflected inreduction of energy consumption perGNP unit during the 70s.

Since then, this indicator has remainedstable, while consumption per capitacontinues growing.

FONTE: Brasil-MMEFONTE: Brasil-MME

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

FInal energyconsumption

GDP Population

Averagegrowth

(%p.a.).

% 70s

% 80s

% 90s

% 00s

40

60

80

100

120

140

160

180

1970 1975 1980 1985 1990 1995 2000 2005

Energyconsumption(1970=100)

Consumption per unit of GDP

Consumption per capita


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There is a clear relation betweenGDP per capita and energyconsumption per capita.

In the 70s, when growth was strong,so was increase in energyconsumption.

During the 80s and early 90s, whenthe Brazilian economy stagnated, sodid energy use.

Since 1996, both have continue theirincrease, but at lower rates thanduring the previous period ofgrowth.

Job creation in the energy sector is amain objective.

SOURCE: MMESOURCE: MME

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

0,700 0,800 0,900 1,000 1,100 1,200 1,300

Domestic supply of energy per capita

GDPpercapita.

1970

1980

1990

200620062000

Relation between economic development (GNPRelation between economic development (GNPper capita) and energy consumption per capitaper capita) and energy consumption per capita


49/87


SOURCE: IEA and MME for 2002SOURCE: IEA and MME for 2002

OECDBRAZIL

OIL 43 % 42%

COAL 20 % 7%

NUCLEAR 11 % 2%

GAS 21 % 8%

OECDOECD

BRAZILBRAZILWorld consumptionWorld consumptionof selected productsof selected products

0

0,2

0,4

0,6

0,81

1,2

1,4

1,6

1,8

Trigo eSoja

Cimento Ao Plsticos Madei ra

bilhes t/ano


50/87


Social cost of alternative electricity sources

Generation from cane bagass is lowest, but very close to hydrelectric powerplants, large or small, and coal thermo-electric plants.

The high share of taxes in cane-bagass equilibrium tariff, though, shows thatgovernment could reduce this tariff significantly through fiscal policy.

Nuclear and eolic energy remain much more expensive.

SOURCE: TolmasquimSOURCE: Tolmasquim

0 20 40 60 80 100

Eolic

Nuclear

Natural gas

Coal

Small hydrelectric

Hydrelectric plant

Cane bagass

Equilibrium tariff (US$/MWh)

0% 20% 40% 60% 80% 100%

Eolic

Nuclear

Natural gas

Coal

Small hydrelectric

Hydrelectric plant

Cane bagass

Percent of equilibrium tariff

Generation Taxes Connection


51/87


Technology for new sources

fuel cells

cellulosic ethanol

...

More efficient technology for existingsources

solar plates

eolic energy generation

tidal force

geothermic sources

More efficient energy use

Agricultural technology

Plant varieties

Use of water

Use of fertilizers

Output control


52/87


What are biofuels?

The sugar-cane supply chain

Tecnology and scale in sugar-cane

The inevitable linkage

CANECANE

BEETBEET

CORNCORN

JATROPHAJATROPHA


53/87


GEOTHERMIC

THERMO-SOLAR

HYDRAULIC

WAVES

TIDES

EOLIC

CURRENTS

PHOTOVOLTAIC

throughdirect use

throughenergy

conversion

through biomass

BIOMASS INTENSIVE IN

STARCH, CARBOHYDRATES,

CELULOSE OR LIPIDS FORBIOFUELS

VEGETABLE BIOMASS FOR

STRAW, WOOD, COAL,CHIPS OR BRICKETS

FORESTAL OR

AGRICULTURAL RESIDUES

FOR DIRECT BURNING ORBIOGAS

SOURCES OF

RENEWABLE

ENERGY

VEGETABLE BIOMASSFROM STRAW, WOOD,

COAL, CHIPS ORBRICKETS


54/87


COST OF ELECTRICITY US$ / KWhCOST OF ELECTRICITY US$ / KWh

Low HighLow High


55/87


SOURCE: FAO-Global Bioenergy PartnershipSOURCE: FAO-Global Bioenergy Partnership


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58/87


Biofuels sources are partiallythe same as food rawmaterials.

There are clear natural limitsto the agricultural productionof biofuel raw-materials (land,water).

This restiction imposed on theproduction its raw materialsmeans that biofuels cannot

cover, given currenttechnologies, more than 15%or 20% of the energy demandcurrently supplied by fossilfuels.

AGR

SUGAR +

ETHANOLINDUSTRY

VEGOIL

INDUSTRY

OILREFINERY

FOOD AND

NON-FOOD

AGRI-

INDUSTRIES

FEEDSTOCK PRODUCTION

AGRI-

CULTUREFOSSIL

EXTRACTION

SEED/

NUT

CANE

BEET

CORN

OTHER

OIL FUEL

TRADE

FUEL

DISTRIBUTION

GASOLINE

BLENDING

FUEL

ETHANOL

GASOLINE

GASOLINE

DIESEL

BLENDED

GASOLINE

GASOLINE

FUEL ETHANOL

TRADE

BIODIESEL

INDUSTRY

BIODIESELTRADE

FOOD +

BEVERAGECONSUMPTION

BLENDED

GASOLINE

FUEL

CONSUMPTION

FEEDSTOCK EXTRACTION

PRODUCT

TRADE

FEEDSTOCK PROCESSING

BLENDING +DISTRIBUTION

CONSUMPTION

VALUE-CHAINSECTOR

CRUDEOIL

PRODUCT

B100

SUGAR

TRADE

SUGAR

VEGOIL

TRADE

SUGAR

BIODIESEL

BLENDING

FUEL

ETHANOL

VEGOIL

VEGOIL

VEGOIL

CORN

OTHER

FOOD

DISTRIBUTION

NON-FOOD

DISTRIBUTION

NONFOOD

AGRI-PRODUCTS

CONSUMPTION

SUGAR,

ETHANOL,

CORN,

VEGOIL

PRODUCTSBLENDED

BIODIESEL

DIESEL

B100


59/87


Today they are usually used incombinations with fossil fuels:ethanol-gasoline blends and

biodiesel-diesel blends.

AGR

SUGAR +

ETHANOLINDUSTRY

VEGOIL

INDUSTRY

OILREFINERY

FOOD AND

NON-FOOD

AGRI-

INDUSTRIES


AGRI-

CULTUREFOSSIL

EXTRACTION

SEED/

NUT

CANE

BEET

CORN

OTHER

OIL FUEL

TRADE

FUEL

DISTRIBUTION

GASOLINE

BLENDING

FUEL

ETHANOL

GASOLINE

GASOLINE

DIESEL

BLENDED

GASOLINE

GASOLINE

FUEL ETHANOL

TRADE

BIODIESEL

INDUSTRY

BIODIESELTRADE

FOOD +

BEVERAGECONSUMPTION

BLENDED

GASOLINE

FUEL

CONSUMPTION


PRODUCT

TRADE



CONSUMPTION

VALUE-CHAINSECTOR

CRUDEOIL

PRODUCT

B100

SUGAR

TRADE

SUGAR

VEGOIL

TRADE

SUGAR

BIODIESEL

BLENDING

FUEL

ETHANOL

VEGOIL

VEGOIL

VEGOIL

CORN

OTHER

FOOD

DISTRIBUTION

NON-FOOD

DISTRIBUTION

NONFOOD

AGRI-PRODUCTS

CONSUMPTION

SUGAR,

ETHANOL,

CORN,

VEGOIL

PRODUCTSBLENDED

BIODIESEL

DIESEL

B100


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AGR

SUGAR +

ETHANOLINDUSTRY

VEGOIL

INDUSTRY

OILREFINERY

FOOD AND

NON-FOOD

AGRI-

INDUSTRIES


AGRI-

CULTUREFOSSIL

EXTRACTION

SEED/

NUT

CANE

BEET

CORN

OTHER

OIL FUEL

TRADE

FUEL

DISTRIBUTION

GASOLINE

BLENDING

FUEL

ETHANOL

GASOLINE

GASOLINE

DIESEL

BLENDED

GASOLINE

GASOLINE

FUEL ETHANOL

TRADE

BIODIESEL

INDUSTRY

BIODIESELTRADE

FOOD +

BEVERAGECONSUMPTION

BLENDED

GASOLINE

FUEL

CONSUMPTION


PRODUCT

TRADE



CONSUMPTION

VALUE-CHAINSECTOR

CRUDEOIL

PRODUCT

B100

SUGAR

TRADE

SUGAR

VEGOIL

TRADE

SUGAR

BIODIESEL

BLENDING

FUEL

ETHANOL

VEGOIL

VEGOIL

VEGOIL

CORN

OTHER

FOOD

DISTRIBUTION

NON-FOOD

DISTRIBUTION

NONFOOD

AGRI-PRODUCTS

CONSUMPTION

SUGAR,

ETHANOL,

CORN,

VEGOIL

PRODUCTSBLENDED

BIODIESEL

DIESEL

B100


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Use of raw materials not used as essential for food

jatropha (pinho manso)

rape seed (canola)

castor oil (mamona)

palm oil (dend, babau,...)

cotton seed oil (algodo)

sunflower seed oil (girassol)

Use of land not used for food agriculture

how can this be evaluated?

how can it be inspected?

what are the secondary cross effects? (water, pollution etc.)

Unmasking the hidden agendas Poverty and lack of food has always been present. What was being done before,

what is being done now and what must we do in the future?


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In the G-8, Canada, France,Germany and the USA arethe countries which have the

largest shares of biofuels intotal primary energy supply(between 2% and 5%).

Large biofuels producers,such as Brazil, India andChina, though, have muchgreater shares(from 20% to 30%).



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AGRICULTURAL

INPUTS

CAPITAL

GOODS

CANE

PRODUCER

SUGAR,

ETHANOL

AND ENERGYPRODUCER

BIODIESEL

PRODUCER

AUTOMOBILE

MAKER

FUEL

DISTRIBUTOR

ELECTRIC

UTILITY

FOODINDUSTRY

INDUSTRY

WHOLESALE

RETAIL

TRADING

COMPANIES

WHOLESALEAND RETAIL

CAR

RESELLERS

FUEL

RESELLERS

CONSUMER

FOREIGN

MARKET

RESIDUES

SUB.PRODUCTS

INFRASTRUCTURE

FUEL

RESELLERS

Source:CANAPLAN


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Sugar-cane agriculture

Plant varieties

Minimum water requirements

Effect of irrigation

Minimum sunlight requirements

Maturation and harvest under low rainfall

Just rainfall With irrigation


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Harvesting cane by hand

traditional for 5 centuries

best after burning the field

any topography

intensive in labour

hard labour conditions

difficult for large scale

Mechanical harvesting

does not require burning

requires flat topography

highly intensive in capital

very low use of labour

allows large scale


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Sugar and ethanol industry

design for maximum sugar,maximum ethanol or

intermediary combinations

requires lowest distance fromfield to plant, due to canedegradation after burning andcutting

important industrial economiesof scale up to 4-5 milion tons of

caneper harvest

in Brazil, plants are in useduring only part of the year

there is a great variety of sizes,ages and technologies

as there are multiple

intermediary processes in themill, each phase may usedifferent technologies and maybe designed for different


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Increased scale translates intolower investment and operationalcosts, with diminishing returns to

scale.

Cumulative scale has led to steadily

declining average cost of cane andof ethanol.

SOURCE: W.Bake.SOURCE: W.Bake.http://www.chem.uu.nl/nws/www/publica/publicaties2006/NWS-I-2006-http://www.chem.uu.nl/nws/www/publica/publicaties2006/NWS-I-2006-


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Current production cost of ethanol are below the equivalent of US$ 30 per

SOURCE: J.GoldembergSOURCE: J.Goldemberg


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Energy potential of the sugar cane:

Future uses:

bagass and straw for energy

bagass and straw for cellulosic ethanolequal to 1,24 barrels

of oil equivalent

1 TON of CANE100%

1718 x 103

kal

JUICE

BAGASS

STRAW

1/3 608 x 103

kal

1/3

1/3

598 x 103

kal

512 x 103

kal


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1983: All1983: Allgasoline in Brazilgasoline in Brazilmust containmust contain22% anhydrous22% anhydrous

2007: 69% of2007: 69% ofnew cars andnew cars andlight vehicleslight vehicles

sold in thesold in thecountry arecountry are


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Cars sold are nowCars sold are nowalmost all flex-fuelalmost all flex-fuel

0%

20%

40%

60%

80%

100%

jan/06 mai/06 set/06 jan/07 mai/07 set/07

Percentflex-fuelintotalsales

Cars

Light commercials

All vehicles

94,0 %

84,3 %

57,4 %

SOURCE: AnfaveaSOURCE: Anfavea

Domestic sales in Brazil of flex-fuel vehiclesDomestic sales in Brazil of flex-fuel vehicles


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The distribution of cane between sugar and ethanol is dependent on theirrelative prices, but shows a definite tendency towards greater ethanolproduction and consumption.


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Ethanol vessel being loaded atEthanol vessel being loaded atRio de Janeiro,Rio de Janeiro,

Petrobras Ilha dgua terminalPetrobras Ilha dgua terminal

May 2007May 2007


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Brazilian ethanol production in 2007 will belargest ever, but mostly destined fordomestic consumption.

With lower purchases by the US, Europe isstill Brazils option, though the Far Eastremains important for beverage andindustrial ethanol.

SOURCE: KingsmanSOURCE: Kingsman


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OBTAINING

RAW-MATERIALS

INDUSTRIAL

PRODUCTION

DOMESTIC INTERNATIONAL FOREIGN

MARKETING LOGISTICS DISTRIBUTION

CRUDE OIL

OIL

PRODUCTS

ETHANOL

BIODIESEL

OIL MAJORS

LOCALS

ETHANOL

TRADERS

RECENT BIO-

FUEL FUNDS

OIL

MAJORS

IN BRAZIL

LOCALSMILLS

PL

A

N

TE

R

S

BIODIESEL PRODUCERS

OIL

TRADERS

VEGOIL

TRADERS

A i lt l t


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Agricultural aspects:

type of land and climate required

input and labour requirements

possible productivity per area

natural fuel-potential of raw materials

Economic considerations:

requirements and cost of land, capital investments, inputs and labour

possibilities and costs of agricultural technology

Industrial extraction technologies

Product design (technical requirements, policy limits, blendingcharacteristics)

Adaption of motors

Adaption to climates

U d t d th t h l i i lt l d i d t i l


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Understand the technologies: agricultural and industrial

Understand how production and consumption of each product affects the

environment

Decide how each positive and negative characteristics should be given priorityor penalized

Understand how technologies and products are associated to certifications andtrade barriers

Evaluate how supposed (positive or negative) characteristics are publicized andare used as policy drivers.

Understand the focal origin of fuel and biofuel regulations: the state-owned oilcompany, the oil majors, independent (?) research institutes, independent (?)environmental NGOs

Understand the policy drivers and stakeholders behind fuel and biofuel tradebarriers.

Actual proven requirements and effects of each energy option


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Actual proven requirements and effects of each energy option.

Public perception of these requirements and effects.

Commercial, political and ideological use of the scienceperception gap.

Difficulty or impossibility of fair understanding, discussion and decision onsuch themes.

Certainty that purely economic considerations will continue as the main driverof production and consumption.

Certainty that current decisions will discount future costs by high factors.

As the difference between correct and expensive options versus egoistic

and cheaper options increases, more stringent regulation and stronger policeaction will grow in importance.

Energy companies are investing all over the World


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Energy companies are investing all over the World

Oil companies increase their exploration and development activities

Equipment suppliers to oil companies increase production

Oil companies seek clean energies as marketing ventures

Oil companies seek clean energies as strategic objectives

Biofuel companies invest in production and distribution

Fuel distribution companies integrate biofuels into their network

Clean energy companies develop new markets

Equipment suppliers for clean energies increase production

Clean energy companies invest in research and development of newtechnologies and products.

Universities and research institutes increase their clean energy activities.

Investors and fund managers look to energy business as a rapid-growth sector.

Governments and legislators seek to understand the energy sectors and reviewregulations.


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IEA has forecasted variousscenarios of demand for oil andits products.

Even considering the openingto production of new oil fields,there will be still much unmetdemand requirements.

Annual capital investments inthe oil industry are estimatedincreasing from US$ 400 billion

today to over US$ 1 trillion inthe next decade.

SOURCE: PlattsSOURCE: Platts

Industry specialists foresee annual growth


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y p gratesof over 15% in investments in clean energytechnologies during the next decade,

of which:

biofuels: 14,7 % p.a.

wind energy: 13,0 % p.a.

solar energy: 16,1 % p.a.

fuel cells: 27,3 % p.a.

SOURCE: Clean EdgeSOURCE: Clean Edge

Some hypothesis adopted by Petrobras in its strategic planning:


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Some hypothesis adopted by Petrobras in its strategic planning:

It will produce heavy oils of decreasing quality

There will be greater availability of natural gas.

There will be lower consumption of fuel oils.

There will be a greater pressure from society for the production of cleanfuels.

There will a reduction in consumption of fossil fuels as motors become moreefficient and alternative fuels are substitutes for fossil fuels.

Economic margins will be low.


.

Petrobras aims to direct at least 0,5% of its total investments to clean energies:


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biodiesel and biomass

eolic

photo-voltaic

By 2010, it aims to produce 96 MW of power and 2.300 barrels per day ofbiodiesel.



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Light vehicle emission levels in Brazil had reached US standards by 2000.


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From current risks


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internal security for production and distribution

autonomy from international trade

protection from foreign price fluctuations

protection from extreme weather fluctuations (hydrelectric powergeneration)

need for operational reserves

From future risks

change to renewable sources

increased generation capacity for growing demand

Environmental risks

urban air pollution


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Presented in February, 2008

ENERGY IN BRAZIL

[email protected]

Heitor Moura

Heitor Moura 2007 Energy in Brazil

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