Ethanol in Brazil: a fruitful experience Service of Horticulture, Domesticated animals and Nourishment Supply, Service o

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Why picking SUGAR CANE? Remarkable life cycle adjust (the ... can be a magnificent business, uncommonly that customary sugar stick makers; ...

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Ethanol in Brazil: an effective experience Ministry of Agriculture, Livestock and Food Supply, Ministry of Development, Industry and International Trades Ministry of Mines and Energy Washington - March, 2006

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Economic Agents of Sugar Cane Industry Sugar Cane Agriculture Phase Sugar and Alcohol Industrial Phase 50 thousand sugar stick cultivators 3 46 Industrial Plants Regulatory Domain: Ministry of Agriculture Regulatory Domain: Ministry of Mines and Energy/ANP (National Petroleum Agency) Gas Stations 32,030 Gas Stations offer liquor. (92% of aggregate corner stores in Brazil) Mercado de Preços Livres Fuel Distributors Exporters 160 Operating Distributors Only distributers may mix ethanol with engine gas 2 . 38 Billion litters sent out in 2004 Fonte = MAPA – MME – MDIC - 2005

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Why BIOFUELS? Ecological increases - carbon sequestration -bring down discharge levels in utilization Renewability - short generation cycle -man-controlled process Economic angles - new request part -impacts on exchange adjust Social viewpoints -employments creation -pay deconcentration

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BIOFUELS: a characteristic fitness in Brazil 30 o N Trop. Câncer Equator Trop. Capricórnio 30 o S

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Why picking ETHANOL? Renewable: Zero Carbon Balance Not reliant of petroleum Large size of creation High miscibility with gas and it is an immaculate substitute for tetraethyl lead Oxygenated Compound: Reduces push discharge Low tox ic Sulfur free

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Why picking SUGAR CANE? Extraordinary life cycle adjust (the generation of 1m³ of liquor takes into consideration the lessening of 2.6 tons of CO 2 ). Very great lively adjust. Increments in modern productivity, with lower sugar creation costs. Change in sugar quality. Advertise enhancement and the diminishment of oil reliance.

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Why picking SUGAR CANE? (proceeding with) Equivalent vitality: 1 ton/sugar stick = 1.2 barrel/oil. Vitality dissemination: 1/3 on sugar juice, 1/3 on bagasse, and 1/3 on straw. Handle otimization permits to change factories into thermoelectric plants. Potential outcomes: straw and bagasse blazing or gasification, or liquor generation by hydrolysis.

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Physical profitability correlation Source: MAPA

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Current Matrix of Vehicle Fuels Diesel 2005 53 . 9% (*) VNG 2 .9 % Gasolin e A 26 .2 % Anhydrous Alcohol Hydrated Alcohol 8 . 7% 8 .3 % Share of Regular Gasoline (1) 26 .2 % + 8 . 7% = 34, 9 % Share of liquor 8.7 + 8 .3  1 7 % ( 1 ) The gas accessible in Brazil ian Gas Stations is included with 25% of liquor. Source: ANP; ABEGAS – 2006 Elaborated by MME - 2006

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ALCOHOL FUEL HISTORY IN BRAZIL

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Alcohol with engine gas: 80 years of experience First tests utilizing ethanol mixed to gas 1979: vehicles producers began offering 100% hydrous liquor autos

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Brazilian Automotive Market by Fuel Kind Great share of liquor autos: more than 80% Sales of new liquor autos fallen

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Brazilian Experience: these days… 1) Since 2003, 31 new models of Flex-Fuel Vehicles, by nine automakers: it can utilize any blend of gas and liquor, from 0 to 100%, with no activity of auto driver. 2) In December-2005 , Flex Fuel vehicles deals spoke to 73 % of aggregate light vehicles sold (2003-2005: 1,245,201 units).

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Nowadays: Brazilian Automotive Market by Fuel Kind Start of Flex-Fue l Sales Brazilian Light Vehicles Market Sales 5% 100% 20% 80% 60% 73% 40% 20% 0% jan/03 jun/03 nov/03 abr/04 set/04 fev/05 jul/05 dez/05 Flex ( Alcohol or Gasoline) Alcohol (Pure) Gasolin e Diesel Source: Anfavea - 2006

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Sugarcane: Cropped and Preserved Areas because of Technological Improvements efficiency Productivity (tons/hectares) safeguarded zone Area ( thousand hectares) trimmed region 1 ton of sugarcane = 80 liters of liquor 1 hectare of sugarcane = 6 m 3 of liquor Source: CIMA

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The accomplishment of the ethanol supplanting gas... Add up to economy of 1,09 billion boe or 22 months of the present Brazilian petroleum creation This bend indicates how much gas would be important to fulfill the fuel interest for light vehicles assuming the non-presence of the Brazilian Ethanol Program IN THIS PERIOD, THE USAGE OF ETHANOL FUEL IN BRAZIL HAS PREVENTED THE EMISSON OF 615 MILLION TONS OF CO 2 Source: Ministry of Mines and Energy Brazilian Energy Balance – 2005 and Laura Tetti – USP – 2002

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ETHANOL as another item... Great business for tropical nations Challenges to overcome: -general supply (short-term) -unsurprising costs -ensured supply (long haul)

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How to begin a program of mixing ethanol with fuel? Foundation establishments and calculated; Technical and formal inquiries Economic inquiries; Instruments for supply garanty; Fiscal inquiries Consumer response GENERAL RULE: There isn't any broad remedy to dispatch such a program. Every Country needs to plan its own particular model.

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Conclusions: Ethanol can be an amazing business, uncommonly that customary sugar stick makers; Producing and mixing ethanol with gas are straightforward assignments, if all the procedure is precisely arranged; Brazil learned with its own particular missteps. Alternate nations don't have to do likewise; We are keen on share our experience, exceptionally on the grounds that we require the assistance of different providers to arrange the market.

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Thank you! Contacts: Ministry of Agriculture, Livestock and Food Supply: daa@agricultura.gov.br Ministry of Development, Industry and International Trades Phone: 55 (61) 2109-7293 Ministry of Mines and Energy Phone: 55 (61) 3319-5106

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Incentives set up by the Pro-Alcohol at That Time Alcohol cost lower than gas cost Guaranteed compensation to the maker Tax decrease for hydrous liquor autos Loans for liquor makers to expand their ability Gas stations were committed to offer liquor Maintenance of strategical liquor stocks

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Problems and arrangements of a liquor filled autos Ignition troubles amid icy climate Auxiliary gas tank Metal erosion (tank, fumes pipe, fire infusion bomb segments) Substitution of tin and iron for aluminum and stainless steel Drying of plastic and elastic parts (pipes as a rule) Substitution for more resistent materials and the utilization of added substances Increase in pressure rate, R&D and endowments to customers amid the program's underlying stage. Utilization increment (liquor's warming limit is 30% lower than gasoline's)

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