Aristotle said that “we must treat equals equally and unequals unequally in proportion to their inequality”. It will be with this approach that governments and consumers will seek ways to decarbonize energy matrices and economic sectors, ensuring energy security and social justice.

In Brazil, Aristotelianism is also the basis of Article 5 of the 1988 Federal Constitution, which provides for the constitutional principle of equality before the law, however, differently from the constitutional approach which deals with people. Regarding this article, I will address the aspects of equalities and inequalities of what until recently was seen as a commodity, that is, without differentiation regarding its place of production or producer.

While the price of ethanol in Brazil and around the world is still largely guided by the economic premise of supply and demand, it is already possible to state that, given public and private commitments to reducing greenhouse gas emissions, the public policies of the main countries have already not only consider an environmental (financial) premium for ethanol with a lower carbon intensity, but also in the case of Europe, it already delimits the origin of the raw material.

In Brazil, the national biofuels policy (Renovabio) already plays the role of assigning a market premium to producers who certify their production and become eligible to generate decarbonization credits when ethanol is sold.

Environmental aspects: When we consider that one of the objectives of public policies for the production and use of biofuels is to reduce greenhouse gas emissions, the traceability and eligibility of raw materials used to produce renewable fuels have been the subject of global discussions.

In the case of Brazil, the model for contracting sugar cane supplied by third parties to ethanol producing plants usually has a period of more than five years, as well as a greater concentration of purchases with producers close to the plants, facilitating traceability and eligibility of ethanol produced via sugarcane. Better tracking of sugarcane suppliers also allows the industry to encourage, through the sharing of technologies and financial resources, the production of raw materials with lower carbon intensity, directly impacting the total volume of eligible ethanol and the energy efficiency score, therefore in the amount of decarbonization credits generated per liters sold.

On the contrary, corn ethanol plants have greater difficulty in mapping the emissions attributed to the production of the raw material, since there is a greater dispersion in the number of producers involved in the supply chain and, also, a greater distance from the plants of processing. For comparison purposes, according to data published by the Cana Observatory, of the total hydrated ethanol produced in the state of São Paulo, 91.99% is eligible for the program and has an average carbon intensity of 27.7 grams of carbon dioxide equivalent per megajoule, while in Mato Grosso, the state that leads the production of corn ethanol with 11 plants in operation, six of which are exclusive to corn and cereal ethanol, these figures are respectively 55% and 32.5 grams of carbon dioxide equivalent per megajoule. Still as an example, of all the hydrate produced by one of the main corn ethanol producers in Mato Grosso, only 24% is eligible for the Renovabio program, with a carbon intensity of 42.9 grams of carbon dioxide equivalent per megajoule.

Aiming to reduce total emissions attributed to the production process, some corn ethanol producers in Brazil and the United States are already investing in CCS, carbon capture and storage projects, which in Brazil is being discussed in Bill 1425 of 2022. The above facts highlight that, although ethanol from corn and sugarcane have the same molecule characteristic, for some markets willing to pay a premium for biofuels with lower greenhouse gas emissions throughout the life cycle analysis, sugarcane ethanol will tend to generate a higher market value.

Guarantee of supply via renewable sources: The Brazilian fuel market has a great difference compared to the rest of the world, with currently 85% of the fleet of light vehicles being flex fuel fuel. This allows the consumer to play a fundamental role in the ethanol demand curve, with such consumption decision still largely based on the difference between the price of regular gasoline, which contains 27% anhydrous ethanol, and hydrated ethanol, or E100.

This fact leads us to think about two aspects: the relevance of gasoline price policy and the Brazilian consumer's appetite for paying a premium to fill up with a fuel with a lower environmental impact. It is known (by few) that the decarbonization agenda goes far beyond an exclusively environmental agenda, but even fewer are the number of people who can financially opt for products with a lower carbon intensity, that is, that generate a lower impact on the environment environment.

When analyzing the total volume of ethanol sold by Brazilian producers in 2019, it was possible to note the high dependence on production originating in the state of São Paulo, which corresponded to 43.7% (14.2 billion liters) of the national total, being the state mostly dependent on sugar cane. In that same year, the share of the state of Mato Grosso do Sul was 7.4% (2.4 billion liters), Goiás had 3% (977 million liters) and Mato Grosso had only 2.1% (696 million liters). In this scenario of regional centralization of ethanol supply, the Southeastern states, even with their total demand for Otto Cycle fuels representing almost 50% of national demand, benefited from more competitive ethanol prices than the North, Northeast and South.

In the period analyzed between 2019 and 2023, the parity in the Central-West proved to be more favorable to ethanol than in the southern states. However, the total demand for the Otto Cycle in the region was on average equivalent to 10% of national demand. Observe the Regional Parity graph on the next page. We skip to 2023, and the expansion of the corn ethanol industry, mostly based in the Midwest states, has already generated a shift in the regional supply and demand curve. Of the total volume of ethanol sold by producers in 2023 , origination in the state of Mato Grosso represented 15.7% (4.5 billion liters); Goiás, 15.2% (4.3 billion liters); and Mato Grosso do Sul, 11.5% (3.3 billion liters). São Paulo, in turn, reduced the proportion to 34.2% (9.8 billion liters).

With the regionally decentralized supply scenario and a lower seasonal effect on product availability, the corn ethanol chain favored a new scenario of positive parities for hydrated ethanol in the South, North and Northeast regions, as demonstrated in the aforementioned graph. The greater supply of corn ethanol has already proven efficient in increasing the economic attractiveness of the biofuel nationally. The graph with the Brazilian Average Parity on the following page shows the average national parity between hydrated ethanol and gasoline in the period between January 2015 and March 2024. Over these almost nine years, hydrated ethanol offered a more competitive financial advantage compared to gasoline between June and November 2018, the peak of the sugarcane harvest in the Center-South of Brazil.

In fact, the advent of corn ethanol provided national consumers with an offer regular, that is, without the effects of price seasonality, new geographic ranges of supply of a renewable fuel and the opportunity for more consumers to realize the benefits attributed to the use of ethanol. Based on these premises, it is possible to conclude that the increase in the total supply of ethanol, whether from sugar cane or corn, will tend to benefit society in multiple ways: expansion of the availability of biofuels in the country, potentially more competitive prices compared to the direct fossil substitute, reduction of seasonality price curves, less exposure to global sugar prices, generation of a new value chain for agricultural producers and, last but not least, reduction of total greenhouse gas emissions from the transport sector in Brazil.

Solving climate and environmental problems, considering social and energy justice aspects, will require a combination of technologies and raw materials. So I conclude by saying: it's not about corn versus sugar cane, but rather about enjoying the best that the options can deliver.