1. Insights on Sustainability:Unicas VisionAlfred SzwarcWorkshop on the Impact of New Technologies on the Sustainability of the Sugarcane/Bioethanol Production Cycle Campinas May 14th, 2009

2. ABOUT UNICA UNICA is the leading sugarcane industryassociation, representing 127 mills inBrazil (most in the So Paulo State) Responsible for over. 50% of all ethanoland sugar production in Brazil Emerging as a leader in the generationof bioelectricity International presence, now in Washington& Brussels, to engage in constructivedialogue 3. SUGARCANE PRODUCTS 4. Best Agricultural and Environmental Practices Low levels of soil losses due to semi-perennial nature of sugarcane Increased soil conservation and retenciaas result of mechanisation, part of thestraw being left on the field as organicmatters. Reduced use of pesticides Low irrigation in Centre-South Almost no use of fungicides Decrease in water use in Biological control of plagueindustrial processing Use of vignasse Over 140,000 ha PPAs in So Paulo StatePaulo 5. Innovation & Productivity New sugarcane varieties Process improvements & New technologies Cellulosic ethanol Sugarcane Juice +Conventional 1 hectare 7,000 liters of ethanol Molasses 12,500 liters of Sugarcane Juice ethanol... or moreConventional 1 hectare + Molasses +(7,000 L from juice ++ CelluloseBagasse + Straw 5,500 L from bagasse and straw) 6. Sugar, Bioethanol and Bioelectricity Plant in Brazil Ethanol Distillery Sugar plant storageCelluloseethanol Bagasse tanksSugar canefieldStraw (tops & leaves) 7. Ethanol makes 50% of transport fuels in BrazilGasoline EthanolPetrol and ethanol consumption in Brazil Source ANP and UNICA 8. Environmental MeritsSelected Fuel Characteristics Ethanol GasolineSulfur content & sulfur compounds $$emissionCO2 , CO, VOC and fine particles NOxVolatility/Toxicity of fuel & combustion $$productsLife-cycle Greenhouse impact $$RenewabilityBiodegradability in soil & water $$ 9. Energy Balance FeedstockRenewable Energy Output / Fossil Energy InputWheat (EU)1.2Cassava (Asia)1.2Sugar Beet (EU) 1.9Corn (USA)1.3 - 1.8Sugar Cane (Brazil) 9.3* (11.6 in 2020)Gasoline/Diesel0.8** - 1.15***Source: F.O. Licht, Macedo, I et alii 2008*, Argonne National Laboratory 2002**, Personal Information from Petrobras*** 10. Life Cycle Analysis (Well-to-Wheel) Well - to - TankTank - to - WheelE Land UseT ProcessingCultivationH StorageA HarvestingN TransportationTransportation FuelingOL Storage Distribution CombustionFeestock-relatedFuel-related Use-relatedStagesStages StagesG Storage DistributionACombustionS TransportationTransportation FuelingO Oil extractionL StorageI Area UseRefiningNOil FieldEdevelopment 11. Life Cycle GHG EmissionsFarming & Harvesting Estimated values refer to 1,000 liters of Emission: 2,961 kgethanol and equivalent volume of gasoline (corrected for energy content).Sugarcane Processing Emission: 3,604 kgSugarcane GrowthUptake: 7,650 kgRoad TransportEmission: 50 kgBioelectricity generation Gasoline Life-cycleVehicle OperationUptake: 225 kgEmission: 2,280 kg Emission: 1,520 kgTotal: 8,135 kg CO2Total: 7,875 kg CO2Net emission: 260 kg CO2 (89% of gasoline emission) Source: Macedo, I., 2008 12. Life Cycle GHG by Feedstock Emissions avoided as the result of ethanol replacing gasoline Ethanol from grains Ethanol from sugarEthanol from sugar (US / EU)beet (EU) cane (Brazil)0% -20% -40% -60% -80%-100%Note: Reductions in well-to-wheel CO2-equivalent GHG emissions per km, from bioethanol comparared to gasoline,calculated on a life-cycle basis. Source: IEA International Energy Agency (May, 2004), based on a review of recentarticles. Prepared by Icone and Unica. 13. Life Cycle GHG by Feedstock 0.25 Source :International Council on Clean Transportation, Kodjak, D., 2006 U.S. (g/Btu)0.2Canada (g/Btu) Brazil (g/Btu) 0.15g CO2 / Btu0.1 0.050eel ss s m asorn orneen t n ent ni tyrt rt al al nlin es ndndnd eu Gan tiotiori c popo ococtioso Di SaSaSatrolal ll C ll C rcrmicarmica ctex ex /L/Lucar ililil turi iga Fe if FeifEle zil ilnd ndod G l fu O OlOPe Met M Susas s asraazLaLa Prte dSu ine G se mNa DryWmas sG ass G/BBr gw silul aw ol RFiefrom mroom as omas ndnd/istine srm Lo asrD f rororom lfBiBi La-N Fofo -0.05 lG fuPG Glflfnoy io mnt io m g LaEx e wlL noha d - nLoRe na SuCNno ooBla tBinew Ca al ioha ha Et dylPan ist -N nener nt ow Et Et lW oonoPlEx e Ca gar C ordnv eLno Wha ol-n r SuolFe haolEt an neCa gaCo Etanth Ca arSu an h E g thEt gar Su ESu 14. CALIFORNIAS LOW CARBON FUELS STANDARD(LCFS)Grams of CO2 per megajouleSource: California Air Resources Boards Low Carbon Fuel Standard, March 2009. 15. Grams of CO2 per megajoule LCFS WITH INDIRECT LAND USE PENALTY GTAP using ILUCSource: California Air Resources Boards Low Carbon Fuel Standard, March 2009. 16. SUGARCANE INDIRECT LAND USE EFFECTSource: UNICA, California Air Resources Boards Low Carbon Fuel Standard, March 17. EUDirectiveonRenewableEnergySources 18. TheChallengesoftheEUDirective Lack of clarity remains with regards to : The definition of highly biodiverse grasslands; The definition of a methodology to identify degraded lands; Criterias on conservation practices data (re. soil, water, air) which will be provided Guidance as per criteria implementation These definitions will be adopted up to 2010 Despite the timeframe, various countries could initiate theincorporation of the Directive into national legislation this year,creating legal uncertainties over required criteria. This isclearly unacceptable for Brazil ! The lack of clear definitions prevents the sector to progress inthe development of a certification scheme that responds tothe European demands. 19. TheBabel ofEthanolCertification National Certifications Directive on Renewable Energy Sources Directive on Renewable Energy Sources European UnionEuropean UnionMe Consulting // ISCCMe Consulting ISCCGerman Government German Government Numerous initiatives RTFO RTFOto verify and certify UK Government UK Government ethanolRFS // LCFS RFS LCFS US Government US GovernmentPBCB PBCBHow to deal with thisBrazilian GovernmentBrazilian Governmentsituation? Institutional Certifications RSB RSBProliferation of diverse Based in Switzerland Based in Switzerland certification schemes iscounterproductive: LimitsBSI BSI Based in the UK Based in the UKinvestments, especially indeveloping countriesPrivate CertificationsSEKAB, GREENERGYSEKAB, GREENERGY Sweden, UKSweden, UKv.mar09 20. Sustainability initiatives for biofuels: A universe in constent expansion... No same attention for other agriculture products use. Are they sustainable per se?SUSTAINABLEBIOFUELSINTERNATIONAL GLOBAL NATIONAL BODIESMULTISTAKEHOLDERINITIATIVES INITIATIVES EUDirectivesIDB IFC OCDE IEAG8+5 FAO UNEP ISO NL UK DE SEUSABR ScorecardCRAMER RTFO SEILCFSPBCB Equator Task39Prop.Me/ISCCPrinciplesGBEPRSBABNT+DIN Cramer RenewableTransportLowCarbonBrazilianBiofuelsLiquidBiofuels GlobalBioenergy Commission FuelObligation BiofuelQuotaLawBiofuelQuotaLawStockholmRoundTableFuelStandardCertificationProgramfromBiomass Partnership onSustainableOrdinanceforsustainability Environment requirements Institute PRIVATE BiofuelsGreenergyRFSINMETROBANKSCENVERIFIEDSUSTAINABLERenewable FuelStandard ETHANOL European RTRS CommitteeforLowCVPFuels BSI RSPOStandardizationSEKABBAFF BetterSugarcaneRoundtableonRoundtableon Initiative SustainablePalmOil ResponsibleSoy IBSistemadeVerificao.daSistemadeVerificaSDGPreparedbyUNICAAtividadeAgropecuriaAtividadeAgropecu Sugarcane WWFv.mar09DiscussionGroup 21. The Green Protocol in So Paulo State Signed between the So Paulo state government and UNICA in June 2007. Mills and sugarcane suppliers are involvedProtocol Guidelines Elimination of sugarcane straw burning by 2014. Approximately 50% of theharvest is already mechanized Protection of river side woods and recovering of those near water streams(APPs) Adoption of technical plans for soil conservation and water resources Measures to reduce air emissions New sugarcane areas must be harvested mechanically. 22. UNICA-FERAESP Protocol Signed in February 2006 with the objective to enhance the workingconditions of the sugarcane sector workers, and to evaluate andrecommend best practices for the following areas:1. Gradual elimination by 2011 of the practice of outsourcing in the sugarcane manual cutting2. Improvement in the transport system for rural workers3. Transparency in the systems of labor evaluation and payment in the production of sugarcane. 23. Average Wage in Different CropsSources: HOFFMANN, R e OLIVEIRA, F. C. R. Evoluo da remunerao das pessoas empregadas na cana-de-acar e em outras lavouras,no Brasil e em So Paulo. Piracicaba: ESALQ. 2008. 24. Social ResponsibilityWorld Program of Social Responsibility and Sustainable BankCompetitiveness Institute Sustainable Partnership Program Social Balance Program IBASE IBASE Between 2003 and 2005 47 mills participated in the program 70 mills in 2007GRI Report SocialGRI 10 mills in 2007ResponsibilityEthosIndicator of Business Social Responsibility Institute First phase: 33 mills Second phase: 30 mills ProjectPartneships: IDB/FUMIN / INST. ETHOS / UNICATear Usina Santaelisa Vale 25. Social-Environmental Projects Developed by UNICAs Members in 2007Number of Total people benefitted by Investments projectsthe projectsR$ million % Training15431.5295,13% Health 8983.340 79,750% Life quality 6250.7777,55% Environment 10310.319 40,726% Sport30 9.0101,11% Education 11415.866 19,913% Culture66279.418 3,92% Total 618480.259157,9 100Source: UNICA GRI report preliminary results. 26. Sustainability Report Unica launched in 2008 the first Sustainability Report ever produced by an Association. The Report is based on the Global Reporting Initiative Guidelines (GRI) and the content was checked by GRI. The report is a proof of commitment to sustainability principles by a growing number of mills and shows governance transparency. 27. The Challenge of the Sustainability Uncertainties Despite of present sustainability issues, Unica believes that any fair evaluation of the Brazilian sugarcane industry willdemonstrate that sugarcane and its energy by-products are a viable and sustainable alternative to complement existing energy sources. 28. Thank you !Obrigado !alfred@unica.com.br www.unica.com.br