Brazil’s Sugar Rush

Photo: Reuters

by Peter Day – BBC World Service

Many people have been puzzled by “B” in BRICs; they have wondered why Brazil was included with Russia, India and China in the BRICs club of nations which the investment bank Goldman Sachs thinks will thrust their way to the global economic top table over the next few decades.
After all Brazil has been an up and coming country for the past 100 years and yet something always seems to stop it from actually getting to the top.

As I explained in a recent Global Business there are signs that this time the predictions may come true; there’s certainly an extraordinary spirit of optimism abroad in Brazil at the moment.
One of the things that may have happened is that decades of Brazilian economic isolationism have actually paid off.

For years importing foreign goods was regulated and taxed, to the extent that Brazil built up a manufacturing industries to supply its own (considerable) home market because bringing things inform abroad was impossible … even for the huge international automobile companies, for example.

And that’s one of the reason why Brazil is now well ahead in the alternative energy stakes. Figures from BP show that last year one third of Brazil’s energy was produced renewably… hydropower, wind power and ethanol largely produced from sugar cane.

Homegrown

This is a remarkable record when you compare Brazil with the other developed countries included in the club of 30 nations in the Organisation for Economic Cooperation and Development. Totalled up, OECD energy production is still only five percent renewable … 95percent non renewable. If this is a race to sustainability, Brazil is very much in the lead.

In fact sugar cane has been used to create alcohol for fuel in Brazil for some 90 years. But the use of ethanol took off in the 1970’s when the Arab oil producers in OPEC flexed their muscles and the world oil price jumped.

Brazil had its own homegrown fuel. The two 1970’s oil shocks encouraged Brazilian sugar growers to expand their acreage, refiners to build ethanol plants and those domesticated car manufacturers to producer engines which could burn both alcohol and gasoline.

When I first went to Brazil 20 years ago the distinctive smell of ethanol exhaust hung around the streets, but that now seems to have been overcome. So (I’m told) has the tendency for alcohol to induce rust in auto engines, a problem in the past.

Brazil’s car makers seem to have mastered the art of making flex fuel cars that can adapt to what they are being filled up with, and they are getting a lot of experience of a technology that may have global potential eventually.

Ethanol is obviously attractive from the diversity point of view, but some big questions remain. In a hungry world is it right to use food for fuel, or food growing land for fuel?

Reserves

What is the carbon footprint of ethanol production when you factor in things such as fertiliser, and transportation? There are plans for ethanol pipelines across the country from the main production areas in the state of Sao Paulo, but most ethanol at the moment is moved in trucks which still guzzle carbon fuel.

And (though this is comprehensively denied by Brazilian agriculturalists I’ve met) conservation campaigners in other parts of the world have big fears that the remaining Amazon forest is being devoured by demand for new land for crops such as sugar cane. Renewables are not necessarily a completely benign idea.

Meanwhile this year the Brazil energy picture has got very complicated indeed. Exploration companies have just discovered absolutely huge new reserves of oil in the Atlantic off the Brazilian coast.

And Brazil’s green campaigners are fearful that the effort of exploiting the new tricky-to-extract oil deposits will divert resources and attention from renewables such as ethanol, and then tempt governments into courting popularity with subsidised fossil fuel from the giant new oilfields.

This could be the familiar “oil curse” with a renewable twist to it. Just thinking about these things takes, well, a lot of energy.

Brazilian Wind Power Gets a Boost

By ROBERT P. WALZER from The New York Times

EPA Brazil will hold its first wind-only energy auction next month in a move to diversify its energy portfolio. Foreign companies are scrambling to take part.

 

Early this decade, a drought in Brazil that cut water to the country’s hydroelectric dams prompted severe energy shortages. The crisis, which ravaged the country’s economy and led to electricity rationing, underscored Brazil’s pressing need to diversify away from water power.

One result of that introspection will climax on Dec. 14, when the Brazilian government conducts its first wind-only energy auction. The bidding is expected to lead to the construction of two gigawatts of wind production with an investment of about $6 billion over the next two years.

The auction has attracted a number of international players, including the local units of Energias de Portugal, Electricité de France, Spain’s Iberdrola, EnerFin of the United States and several Brazilian companies, among others.

Interest has been so great, in fact, that the Ministry of Mines and Energy, which is conducting the auction, postponed it by three weeks to allow extra time to evaluate the preliminary bids.

“The number of projects proposed were much greater than expected by everyone,’’ said Pedro Perrelli, the executive director of ABEEólica, the Brazilian Wind Energy Association.

Industry and the government had anticipated proposals for 4.5 gigawatts to 6 gigawatts of projects, but “we came to the astonishing number of 13.3 gigawatts’’ from 441 proposals, Mr. Perrelli said. 

Within days, the government plans to release the auction’s technical manual, allowing participants to refine their bids. The winners will get a 20-year power-purchase agreement from the state.

Brazil counts on hydroelectricity for more than three-quarters of its electricity, but authorities are pushing biomass and wind as primary alternatives. Wind energy’s greatest potential in Brazil is during the dry season, so it is considered a hedge against low rainfall and the geographical spread of existing hydro resources.

“In Brazil, wind is very complimentary to hydro,” said João Carlos Mello, the chief executive of Andrade & Canellas, an energy consulting firm advising some bidders in the wind-power auction. “It’s clear that we need to open up our minds beyond hydro.”

Mr. Mello said Brazil’s technical potential for wind energy is 143 gigawatts due to the country’s blustery 4,600-mile coastline, where most projects are based. The Brazilian Wind Energy Association and the government have set a goal of achieving 10 gigawatts of wind energy capacity by 2020 from the current 605 megawatts, with another 450 megawatts under construction, said Mr. Perrelli.

The industry hopes the auction will help kick-start the wind-energy sector, which already accounts for 70 percent of the total in all of Latin America.

Brazil is already a renewable energy leader in the field of ethanol. Hydropower’s growth is increasingly held up over environmental concerns. And growing concerns about Brazil’s deforestation, the effects of climate change and pressure to reduce the country’s carbon emissions also work in wind’s favor.

But Keith Hays, the research director for wind energy at the Cambridge, Mass.-based Emerging Energy Research, a consultant firm to companies on renewable energy, said that uncertainty surrounding the financing and profitability of wind projects in Brazil raises doubts over whether the country can reach its goals.

He attributed the widespread interest in the wind auction to a desire among foreign companies to gain a foothold in Brazil, which is Latin America’s biggest market.

But Mr. Hays said that the lack of a floor on the price the government will pay for energy — as is customary in European countries that are leaders in wind energy, like Germany and Spain — could limit the industry’s growth because the winning projects may prove to be unprofitable.

“Their track record doesn’t speak to a huge success,’’ Mr. Hays said.