President of SIMESPI (Supplier Class Entity for the Industry)
Until the 70’s, all the technology applied and developed in the agricultural and industrial sectors was exclusively oriented to sugarcane production. At the time, few mills used residual surpluses to produce ethanol. All priority was afforded sugar. Since then, the sugar-based energy sector’s technology has made much progress, in all areas, always in a sustainable manner.
Nowadays, using state-of-the-art technology, we produce biosugar, bioethanol, bioelectricity, biodiesel, biowater and biofertilizer. New technologies are being introduced by the day, making our efforts even more effective. For example, through a new fermentation process, the quantity of vinhasse obtained from the production of one liter of ethanol will be reduced to five liters.
Also with this system, another technology will improve the process even more, by concentrating vinhasse using descending flow evaporators (of the high turbulent mist type), reducing the volume of vinhasse obtained in the production of one liter of ethanol to 1.5 liters. Industry has made major investments and is doing its part, developing advanced technology, ranking Brazil in first place in this field.
Why does the Government not do its part, for instance, by supporting the industry in conquering and consolidating markets? Support has been superficial and election-oriented. Ethanol is on a constant rollercoaster, going up and down, but the fact is that we still have not come out of the recession of 2008. The industry by now should have been operating with second generation ethanol, if there were safety and the right climate to undertake major investments.
Twenty years ago, Dedini started transforming bagasse into ethanol, developed a pilot lab for a 100 liter scale and produced a semi-industrial model for 5,000 liters. With a little more investment, a little more support, a little more time, we will make it to controlling the technology. Now, let us assess the reasons why ethanol has still not been incorporated into the world production. The Brazilian states have different tax rates for ethanol.
Now, who should be looking into this? The Government knows everything it needs to know about this matter, it talks a lot about it, but, in reality, it does nothing. There is a lack of transportation infrastructure, for destinations in and outside the country. Who should be organizing and looking after the country’s infrastructure? There is no offsetting buffer inventory aimed at price discipline. Brazilian law states that this is the Government’s responsibility, but this law is not respected. What trust can we generate abroad? For 5 or 6 years now, Japan has been considering buying Brazilian ethanol, but why doesn’t it?
The first step would be to convince the governments of other countries of ethanol’s importance in minimizing the effects of greenhouse gas emissions. UNICA is doing an exemplary work convincing the Americans that ethanol from sugarcane was much more than it appeared to be to them. After a long period, the Americans were convinced that the product incorporates advanced technology.
They signaled that they may buy ethanol made from sugarcane. They laid out their plans for mixing, informed that they will need 136 billion liters of ethanol, and have already made it known that they will not produce more than 60 billion liters of ethanol from corn, and that they will require additional 70 billion liters from other advanced technologies, therein now included ethanol from sugarcane.
However, they will not buy from Brazil if there is the slightest feeling that we may not deliver. Furthermore, there needs to be good rapport with our Government. However, the Brazilian Government, rather than seeking and consolidating such good rapport with the world’s largest buyer, prefers to complicate relations by systematically opposing what they do and by seeking alliances with the governments of countries like Iran, Cuba, Venezuela, Bolivia, Ecuador, and other totalitarian regimes.
As long as the Brazilian Government lacks a thought pattern for a democratic relationship with the United States, we will face much difficulty in selling ethanol to the Americans. We are talking about partnerships. Seventy billion tons represent about 300 mills, with a production of 3 million tons of sugarcane, the creation of 300,000 direct jobs and investments in the magnitude of US$ 60 billion. What chunk of the pie could we get?
A second step would be to provide financing to open markets and sell mills to other countries. For example, Columbia has a law that specifies mixing 85% of ethanol to gasoline, by 2012. Brazil is the potential supplier of new ethanol and biodiesel mills. Now, why does this not work? Because Brazil is not on good terms with Columbia too.
The Government could bring together agricultural technology companies, organize consortiums, bring in development banks, bring about integrated solutions and organize meetings among several government areas on both sides. When a tender is put in the market in Columbia, several Brazilian companies show up, operating without common coordination, undertaking individual and competing initiatives. We could be taking part in such tenders in a cooperative manner, presenting integrated solutions, which should also include international financing packages for the buyer.
What we have seen in these international tenders, are other countries participating in a well-organized manner, with proposals that include financing at international rates. Our industry has permanently been in a crisis. I believe that if we had more effective initiatives, with a long-term perspective, and continuous, professional and interested actions on the part of the Government, in a simple format, with no other expectations of gains, we would stand a better chance at succeeding.