Friday, 4 December 2009

Brazil and biofuels

Brazil has become the world's biggest producer of bioethanol derived from sugarcane. But at what cost?

Robin Pagnamenta

The odour of molasses hangs in the air as a vast truck, groaning with thick green stalks of sugarcane, pulls up and tips its load into a metal pit. Here at the Santelisa Vale sugar mill in São Paulo state, Brazil is processing sugar cane into ethanol, which now provides about half the country’s transport fuel.
Brazil may not be famous for its environmental stewardship, but it has gone farther in breaking its reliance on fossil fuels than any other major world economy. The oil crisis in the 1970s forced Brazil, almost wholly dependent on imported oil and with little hard currency to pay for it, to examine radical options for its energy security. As a result, the country embraced new policies that are now paying off.
One of these was a huge expansion of hydroelectric power: around 600 dams now supply more than 90 per cent of electricity. The other was to encourage its well-established sugarcane sector to diversify into ethanol production.
On many levels, the programme has been a huge success. Now gasoline is the alternative fuel for light vehicles in Brazil, says Joel Velasco of UNICA, the association of the Brazilian sugarcane industry. Last year, the country produced 27 billion litres of bioethanol, making a huge contribution to its energy independence. In the Ribeirão Preto section of São Paulo state — heartland of Brazil’s sugarcane industry — the smart new cars and glitzy barbecue restaurants attest to the wealth that flows from the sector, worth £10 billion annually.

Although it was not the primary motivation at the time, the policy has also brought environmental benefits; Brazilian bioethanol emits 80 to 90 per cent less carbon than petrol.
But the industry is now being transformed as soaring global demand for bioethanol and a hunt for alternatives to petrol has unleashed billions of dollars’ worth of foreign investment. Oil giants such as BP, Shell and funds linked to George Soros have all invested in Brazilian biofuels in recent years and UNICA expects the country’s ethanol production to nearly double by 2015. Nearly eight million hectares of sugarcane are under cultivation but this is set to increase to 14 million by 2020.
This blistering pace of expansion has prompted concerns about the knock-on impact of Brazil’s bioethanol industry, in terms of deforestation of the Amazon and the exploitation of vulnerable workers. Other critics have claimed the industry has led to a rise in global sugar prices and hence the cost of food.
Marcos Jank, UNICA’s president, says major areas of sugarcane production are at least 1,000km (620 miles) from the Amazon region. However, the latest figures show production of ethanol in the two jungle states of Amazonas and Rondonia trebled to 15 million litres between 2006 and 2008.
That is small beer compared to Brazil’s total production, and soya and cattle ranching remain more powerful drivers of deforestation — but the trend is significant. If global demand for biofuels continues to soar, who knows what the long-term impact will be?
Meanwhile, about one million people are employed by the industry directly, up to half of whom cut cane by hand, using methods little changed since the crop was introduced here in 1532. Tales of exploitation and abuse have been trickling out in recent years.
Much of the industry’s growth will be driven by exports to the US and Europe, which have imposed legal requirements to include blended biofuels in petrol. To prepare for this, Brazil is planning a huge network of pipelines to transport bioethanol from cane mills in the interior to coastal ports.
But a curious irony surrounds this explosive growth in bioethanol production. It is unfolding just as another discovery promises to transform Brazil’s energy sector — the finding of vast oil reserves beneath the deep waters off Rio de Janeiro. Having built up its sugarcane industry to cut its reliance on oil imports, Brazil is set to become a major exporter of oil. One step forward, two back?