The panel called “From petroleum to energy: ethanol as an option for petroleum companies” was one of the most interesting and attended of the 2009 Ethanol Summit and it was enjoyable for me to chair it. Speakers in this panel were Miguel Rosseto, President of Petrobras Biocombustíveis; Ricardo de Gusmão Dornelles, Director of the Department of Renewable Fuel of the Mines and Energy Ministry; Marcos Marinho Lutz, commercial and logistics vice-president of Grupo Cosan, and Mario Lindenhayn, President of BP Biofuels Brazil.

Miguel Rossetto emphasized the importance of all links in the biofuel production and commercialization chain guaranteeing compliance of strict environmental and social sustainability criteria. He pointed out in what way such criteria are a priority for all the investments to be made by Petrobras Biocombustíveis, both as related to bioethanol and to biodiesel.

He also emphasized the importance of prioritizing production models that benefit small farmers, particularly in those projects aimed at the production of biodiesel, reiterating Petrobras’ commitment to sizeable investments in the production and logistics area for the distribution of biofuel in Brazil. Ricardo Dornelles pointed out that the Brazilian energy matrix enjoys an enviable position, by entailing 45% of renewable energy, a fact admired around the world.

In the period from 1970 to 2008, the use of ethanol from sugarcane as fuel precluded the emission of 851 million tons of CO₂. Dornelles pointed out that the International Conference on Biofuel (São Paulo, Nov 2008) was attended by 92 foreign delegations and 26 international organisms, having been a mark in the debates involving biofuel. The major conclusions reached in the event were that:

1. even in a scenario in which petroleum predominates as the main source of energy in modern economies, biofuel is seen as an important element of energy safety;
2. the dependence on energy from energy sources abroad increases the vulnerability of developing countries, greatly threatening their economic prosperity and increasing their energy insecurity;
3. biofuel can benefit everyone. Exporters will benefit from the generation of foreign currency, and importers from savings achieved through reductions in petroleum imports and the diversification of the energy matrix;
4. evidence is available indicating that demand for clean and cheap fuel is unlimited. The supply guarantee is the barrier one must work on to overcome;
5. taking into consideration currently available technologies, the mandatory mixing of 10% of ethanol in all gasoline consumed around the world would be feasible. To the extent that technologies for the production of the next generation of biofuel becomes available, it will be possible to mix even higher percentages;
6. the inclusion of biofuel in the energy matrix requires a change of paradigm in the development of public policies, particularly in developing countries;
7. lack of political support for biofuel in the international arena is one of the main barriers to overcome. Short-term policies prevent the development of biofuel and, hence, the setting of mandatory mix percentages becomes necessary as part of a long term strategy to include biofuel in the global energy matrix;
8. biofuel is at the intersection of several public policies: the energy, social, environmental, agricultural, economical and technological policies. Thus, the institutional coordination is essential to guarantee full efficacy of such policies.

The following question was raised: why is ethanol an option for the international market? The conclusion is that ethanol has all the required conditions to expand its production and use on sustainable bases. This statement is asserted by:

• The regulatory mark already implemented in several countries, which mandates the mixing with the gasoline that is commercialized;
• The main producer and consumer countries are united in efforts to cooperate with other third countries to initiate the production and use based on well-succeeded experiments;
• The demand for a clean and price competitive fuel is unlimited;
• The Brazilian government is willing to cooperate with other countries to disseminate public policies applicable to the industry;
• The Brazilian distribution and commercialization logistics is qualitatively good and has a low cost.

Dornelles ended his presentation by raising the question: if ethanol is technically ready to be the preferred oxygenant for gasoline in the international market, what prevents petroleum companies from investing in this business? Marcos Lutz indicated that, around the world, fossil energy represents 81% of the primary energy supply offer, whereas 34% comes from petroleum and its derivatives, 26% from mineral coal, 21% from natural gas, 11% from biomass, 6% from uranium and 2% from hydraulic electricity.

Fossil fuels account for 57% of greenhouse gas emissions and, therefore, petroleum companies are increasingly pressured for their responsibility for carbon emissions to the atmosphere. Of the clean alternatives, biofuel is the best one and ethanol from cane is what has the best economic competitiveness and carbon performance. Emissions from Brazilian ethanol, valued at kilos of CO₂ equivalent per calorie are only 0.049, compared to 0.296 for gasoline, at a cost in dollars per calorie of 6.4 for ethanol and 7.5 for gasoline.

One of Brazil’s secrets is the long compromise history of petroleum companies with ethanol. Ethanol allowed Brazilian petroleum companies to stay focused on their core business while drastically reducing their carbon emissions. The intensity of emissions per used energy in the transportation industry is valued in some countries or economic blocs as follows:

• EU: 75 kg CO₂-eq/1,000 BTU;
• USA: 70 kg CO₂-eq/1,000 BTU;
• Brazil: 16 kg CO₂-eq/1,000 BTU.

Petrobras, and all other distributors and service stations nowadays operate with ethanol in their logistics and commercial systems, capturing synergies and maximizing efficiencies relative to other derivatives. Lutz indicated that Cosan seeks the same synergies to reinforce its consolidation and growth strategy. Cosan Combustíveis e Lubrificantes has made full use of the flow of derivatives to the country’s interior, to then return to the distribution bases hauling ethanol.

Mario Lindenhayn indicated that BP clearly opted in favor of biofuel since it combines energy safety with positive impacts on the climate change issue and on rural development. That is why one projects biofuel to have an 11% to 19% share of the total fuel market by 2030. BP is working with bioethanol from sugarcane in Brazil, advanced molecules such as biobutanol, and advanced technologies such as that of ethanol from lignin cellulose.

He believes Brazil will continue being a key producer in the world of bioethanol, and, therefore, BP has invested 50% in Tropical Bioenergia and intends to make a total investment in excess of 1 billion dollars in two industrial plants with a capacity of 435 million liters per year, producing fuel capable of reducing greenhouse gas emissions by up to 90% and generating surplus electricity of 30MW in each of the industrial units.

BP believes in the advantages of butanol in relation to ethanol, due to its higher energy content and because it can be mixed to gasoline in higher proportions than ethanol, being more compatible with the vehicle, and due to its better tolerance to water. In the area of lignin cellulose, BP has a partnership with Verenium, with a plant projected to be set up in Florida. BP’s policy has been to prioritize transparency, recognition of performance in the reduction of greenhouse gases, support for responsible biofuel, consistent and permanent government regulation, while providing incentives for best technologies, and free trade.

This is how the company seeks to increasingly grow its presence in the biofuel market. A lively debate among speakers and audience made it clear to everyone, that the petroleum companies are already widely present in the world of biofuel and that this participation tends to further grow in the future, with an increasingly more relevant role being played by biofuel in the world’s energy matrix.