Brazil sugarcane industry eyes EU biofuel market
Monday, 28 January 2008

Agence France-Presse . Sao Paulo

Brazil, the world leader in making ethanol from sugarcane, is homing in on Europe's biofuel market following a decision by the European Commission to combat climate change by reducing the dependency on petrol.

The EU plan calls for biofuels to be used in at least 10 per cent of fuels used in transport in the 27-nation bloc by 2020. For Brazil's sugarcane industry, the news is seen as a golden export opportunity.

'We see this as very positive because it will allow the development and consolidation of the European biofuel market, which was in doubt without the defining of these goals,' said an international advisor to the Brazilian Sugar Cane Industry Association, Geraldine Kutas.

The group, the biggest in the sector representing Brazil's sugarcane producers, also welcomed the criteria Europe was to apply to biofuel use. Brazil considers itself the world leader in biofuel production, with more than 30 years' experience. Also, sugarcane has proven more efficient than other biomass, such as maize (corn), to make ethanol.

A recent UN Development Program report observed that Brazil was more efficient than the European Union and the United States in producing ethanol. It estimated that sugarcane ethanol created up to 70 per cent fewer greenhouse gases than fossil fuels, whereas maize — most used in the United States — permitted a reduction of only 13 per cent.

Nevertheless, at the moment the EU plan 'is more a perspective than a real opportunity' because of the high EU tariffs — 60 per cent — applied to Brazilian ethanol, Kutas said. Brazil in 2007 sent 800 million liters of ethanol to Europe, which represented 30 per cent of European consumption of the fuel, according to UNICA.

The sector predicts the EU energy plan could increase demand by another 21,500 liters of ethanol per year. That is more than Brazil's current total production of 20,100 liters, 80 per cent of which is consumed domestically. Plinio Nastari, the head of analysis firm Datagro, said Brazil was hard pressed keeping up national demand.

'Export opportunities, if they come, will oblige Brazil to prepare itself and commit to medium- and long-term supplies, which we don't see happening,' he said.

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