MINISTRY OF MINES AND ENERGY

Biofuel: Investment and Partnerships

Marco Antônio Martins Almeida

Secretariat of Oil, Natural Gas and Renewable Fuels

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

1970 – 2020: 50 years in perspective1970 2010 2020

Total fleet of vehicles 250 million vehicles 1 billion vehicles 2 billion vehicles

Accumulated oil consumption

200 billion barrels 1.2 trillion barrels 1.5 trillion barrels

Climate changes This was not a problem. There was no measurement of parameters related to the phenomenon

30 billion tonnes of CO2 eq emitted per year (half from burning of oil)

Crucial moment to reverse the trend of growth in greenhouse gas emissions

World population 3.9 billion 6.9 billion 8.0 billion

... in other words: ... in other words: the world will continue to use oilthe world will continue to use oil

Variation in demand for primary energy: 2007-2030

- 500 0 500 1 000 1 500 2 000

Other Renewable

Biomass

Hydro-electric

Nuclear

Natural Gas

Oil

Coal

Mtoe

OECD countries

Other countries

Source: IEA – World Energy Outlook 2009

Fossil sources will continue to be preponderant: 77% of rise in demand until 2030

Fossil sources will continue to be preponderant: 77% of rise in demand until 2030

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

Recent Changes to Vehicle Fuels Use (Brazil)

Anhydrated Ethanol Hydrated Ethanol Gasoline Diesel

BY VOLUME 1990 2009 ETHANOL TOTAL: 11.4 24.0ANHYDR. ETHANOL: 1.2 6.3HYDRAT. ETHANOL: 10.2 17.7

Anhydrated Ethanol Hydrated Ethanol Gasoline Diesel

Recent Changes to Vehicle Fuels Use (Brazil)

Millions of m3

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

1975: Pro-alcohol2003: Flex-Fuel

2004: Biodiesel

US$ Millions of m³

Source: BP Statistical Review 2009/ MME 2010

Price of oil (US$)

Consumption of ethanol in Brazil (m3)

Consumption of gasoline in Brazil (m3)

1.4 billion barrels of oil shipped

1.4 billion barrels of oil shipped

Emissions avoided of more than 900 million

tonnes of CO2

Emissions avoided of more than 900 million

tonnes of CO2

US$ 20 billionUS$ 20 billion

Total demand for Otto cycle (with LPG)

Total demand for Otto cycle (without LPG)

Gasoline consumption

Fuel demand for Otto cycle vehicles

年

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

Market: 1 billion liters/year

Market: 2.4 billion liters/year

Biodiesel: The New Biofuel in Brazil

Targets planned by the government:Targets planned by the government:

Law no. 11.097/2005:Law no. 11.097/2005:

to toAs of

Authorized Obligatory Obligatory

Jan-Jun Jul – Dec Jan – Jun Jul –Dec Jan –

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

Other purposes

Other purposesExport Export

FuelFuel

Ethanol: Ethanol: Strong expansion of Strong expansion of internal market internal market

Biodiesel: Biodiesel: Guarantee of supply Guarantee of supply of B5 with of B5 with diversification of diversification of raw materials raw materials

Source: MME / PDE 2009 – 2018 (preliminary results)

Source: MME / PDE 2009 – 2018 (preliminary results)

Billion

s of lite

rs

Billion

s of lite

rs

Principal areas of sugarcane

planting

91% of sugarcane production

9% of production

Source: NIPE-Unicamp, IBGE, CTC, UNICA, EPE and MAPA

production in 2009:26 billion liters

production in 2009:26 billion liters

Amazon Forest

Location of production plants (in operation / design / being installed)

Twice the distance between Shanghai

and Beijing

Twice the distance between Shanghai

and Beijing

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

Biofuels versus fossil fuels

... in Brazil

In the world

Data refers to 2008 (Source: BP / MME)Light and medium derivates considered:

Diesel, Gasoline and KAV

0.08 x 1012 liters/year

3.3 x 1012 liters/year

69 x 109 liters/year

24 x 109 liters/year

Fossil fuels

Biofuels

Biofuels

Fossil fuels

Biofuels and Oil• The world will continue to use oil in the coming decades, with increasing environmental restrictions• Biofuels will have an increasingly important role, whether in mixtures or as replacements for fossil fuel. Biofuels, not just in Brazil’s opinion, are the best option to reduce the carbon content of fuels.• Biofuels are increasingly part of the investment portfolio of large oil companies. Petrobras, Shell and BP are examples of this.• The growing use of biofuels in the world is not a threat to investments in E&P, to the contrary, contribute to enabling the exploration of non-conventional oil. • With the Pre-Salt resources, Brazil has the potential to become an important actor in the geo-political world and to maintain its policy of incentives in the production and use of biofuels.

Principal partnerships with the Oil Industry • PETROBRAS: Investments of the order of US$ 2.8 billion in production of biofuels. Partner with Tereos.• BP: Investments of more than US$ 1 billion in Brazil for ethanol fuel production. Partners with Energy Biosciences Institute in California, with DuPont in the United Kingdom and joint venture with Verenium.• CHEVRON: Joint venture with Weyerhaeuser. Partners with the Technological Institute of Georgia and with the University of California in Davis (R&D).• EXXON MOBIL: Investments of US$ 600 million in biofuels with Synthetic Genomics.• SHELL: Partners with COSAN in Brazil, Iogen in Canada, Choden in Germany, Virent Energy Systems in the USA and investments in Codexis in the USA.• TOTAL: Investments in Gevo Biofuels, in the USA. Source: Ecomii (2010)

Biofuel: Investments and Partnerships

• 1970-2020: 50 years in perspective• The share of biofuels in Brazil• Ethanol: from Pro-alcohol to Copenhagen• Biodiesel: the new biofuel in Brazil• The expansion of production in Brazil• Biofuels and the Oil Industry • Biofuels and the Consumer• Conclusions

Positive Externals for Biofuels

• Renewable energy source• Best CO2 balance in the life-cycle• Contributes to energy security• Distribution of income, principally at the agricultural stage• Biofuels industry is not concentrated (multiplicity of companies,

actors and countries)• Reduction of principal pollutant emissions • Higher job and income generation in the production chain

Conclusions• With the use of biofuels, Brazil shows that it is possible to obtain:

• protection of consumer interests in the supply, guarantee of the supply, price/tariff and the quality of energy obtainable

• diversification and energy security

• expansion of internal energy supply as a pre-requisite of social and economic growth

• mitigation of emissions of pollutants and greenhouse effect gases