Ethanol prices in Brazil plummet, government considers increasing blend from 23 to 25%
Quicknote biofuel economics
The Brazilian government is mulling the hike of an obligatory 23% ethanol mix in all gasoline to 25% with increased urgency as local prices plunge, an Agricultural Ministry official told Dow Jones Newswires Brasil. The União das Indústrias de Cana-de-Açúcar (UNICA) had already announced [*Portuguese] the possibility of such a move last week.
Average Sao Paulo mill ethanol prices for hydrous ethanol, a gasoline substitute, on Friday plummeted to their lowest point in two years in nominal terms, according to the local Cepea-Esalq index.
"With this fall of prices, the ministers that make up the Inter-ministerial Council of Sugar and Ethanol, or Cima, are already talking about the possibility of raising the mix back to 25%," said Alessandre Strapasson, the general coordinator at the Agricultural Ministry's sugar and ethanol department.
However, Strapasson added that he had no forecast yet for when the obligatory ethanol mix might be pushed back to 25%. "It's possible it will be in June," he said. The higher mix would help the domestic market consume an additional 40 million liters of ethanol monthly, or just under 500 million liters of ethanol per year, sustaining prices.
Record sugar cane harvest
This month alone, local prices have fallen roughly 30% for both hydrous and anhydrous ethanol, with the onset of Brazil's enormous 2007-08 sugarcane harvest (May-April) and increased ethanol output, said a spokeswoman at the Center for Advanced Studies in Applied Economics, or Cepea.
On Friday, hydrous ethanol prices [*Portuguese] at the Sao Paulo mill gate averaged just under 0.61 reais per liter (€0.23/US$0.31) without taxes, down 10.5% from the week before. Anhydrous ethanol prices also dropped to 0.76 reais per liter (€0.29/US$0.39) without taxes, down 13.7% from the week before. In gasoline equivalent terms, a liter of hydrous ethanol without taxes now costs €0.29/liter, anhydrous ethanol €0.38/liter (hydrous ethanol: US$1.52/gallon, anhydrous ethanol: US$1.92/gallon).
Export boost
Local traders and analysts generally note that there is a bright side to tumbling local prices: the export market has perked up in recent weeks, with buyers from the U.S., European Union and Asia once again looking for deals:
bioenergy :: biofuels :: energy :: sustainability :: harvest :: sugar cane :: ethanol :: gasoline :: Brazil ::
On the local ethanol market, meanwhile, slipping Sao Paulo ethanol prices at the mill gate have not yet reached the consumer at the gas station, which has kept demand stable for the moment, said traders.
Despite the big fall so far, "there is space - though not much - for prices to fall still further," said Julio Maria Borges, the director of local sugar consultancy JOB Economia. Borges forecasts ethanol output from Brazil in the 2007-08 season to hit a record 20.5 billion liters, up 14.9% from the year-ago period.
Brazil's Agricultural Ministry forecasts ethanol output at over 20 billion liters this harvest, with about 3.8 billion or 4 billion liters destined for the export market, said Strapasson. Brazil is the world's leading ethanol exporter, but No. 2 ethanol producer after the U.S.
Article continues
The Brazilian government is mulling the hike of an obligatory 23% ethanol mix in all gasoline to 25% with increased urgency as local prices plunge, an Agricultural Ministry official told Dow Jones Newswires Brasil. The União das Indústrias de Cana-de-Açúcar (UNICA) had already announced [*Portuguese] the possibility of such a move last week.
Average Sao Paulo mill ethanol prices for hydrous ethanol, a gasoline substitute, on Friday plummeted to their lowest point in two years in nominal terms, according to the local Cepea-Esalq index.
"With this fall of prices, the ministers that make up the Inter-ministerial Council of Sugar and Ethanol, or Cima, are already talking about the possibility of raising the mix back to 25%," said Alessandre Strapasson, the general coordinator at the Agricultural Ministry's sugar and ethanol department.
However, Strapasson added that he had no forecast yet for when the obligatory ethanol mix might be pushed back to 25%. "It's possible it will be in June," he said. The higher mix would help the domestic market consume an additional 40 million liters of ethanol monthly, or just under 500 million liters of ethanol per year, sustaining prices.
Record sugar cane harvest
This month alone, local prices have fallen roughly 30% for both hydrous and anhydrous ethanol, with the onset of Brazil's enormous 2007-08 sugarcane harvest (May-April) and increased ethanol output, said a spokeswoman at the Center for Advanced Studies in Applied Economics, or Cepea.
On Friday, hydrous ethanol prices [*Portuguese] at the Sao Paulo mill gate averaged just under 0.61 reais per liter (€0.23/US$0.31) without taxes, down 10.5% from the week before. Anhydrous ethanol prices also dropped to 0.76 reais per liter (€0.29/US$0.39) without taxes, down 13.7% from the week before. In gasoline equivalent terms, a liter of hydrous ethanol without taxes now costs €0.29/liter, anhydrous ethanol €0.38/liter (hydrous ethanol: US$1.52/gallon, anhydrous ethanol: US$1.92/gallon).
Export boost
Local traders and analysts generally note that there is a bright side to tumbling local prices: the export market has perked up in recent weeks, with buyers from the U.S., European Union and Asia once again looking for deals:
bioenergy :: biofuels :: energy :: sustainability :: harvest :: sugar cane :: ethanol :: gasoline :: Brazil ::
On the local ethanol market, meanwhile, slipping Sao Paulo ethanol prices at the mill gate have not yet reached the consumer at the gas station, which has kept demand stable for the moment, said traders.
Despite the big fall so far, "there is space - though not much - for prices to fall still further," said Julio Maria Borges, the director of local sugar consultancy JOB Economia. Borges forecasts ethanol output from Brazil in the 2007-08 season to hit a record 20.5 billion liters, up 14.9% from the year-ago period.
Brazil's Agricultural Ministry forecasts ethanol output at over 20 billion liters this harvest, with about 3.8 billion or 4 billion liters destined for the export market, said Strapasson. Brazil is the world's leading ethanol exporter, but No. 2 ethanol producer after the U.S.
Article continues
Wednesday, May 30, 2007
Carbon negative biofuels: Dynamotive to test biochar to boost crop yields, water quality, and sequester carbon
Dynamotive develops fast-pyrolysis technologies that turn biomass into a liquid (pyrolysis oil, bio-oil) by heating it rapidly in the absence of air (earlier post and here; on recent innovations in pyrolysis, see here). During the pyrolysis process, a carbon-rich byproduct known as 'black carbon', 'agrichar' or 'biochar' is obtained.
Going carbon-negative
If this biochar, an inert form of carbon, is stored in soils, while the rest of the products are used as fuels, the system results in carbon-negative biofuels (earlier post). As biomass grows, it takes CO2 out of the atmosphere and stores it. When turned into biofuels, carbon-neutral energy is obtained. But if a part of the biomass is turned into an inert form of carbon and stored in soils, the remaining fuels actually become carbon-negative. Contrary to other renewables like wind, solar or nuclear, which are all slightly carbon positive and thus contribute to climate change, only biomass can yield a genuine carbon-negative energy system that allows CO2 emissions from the past to be cleaned up.
The project, initially involving 14 tons of Dynamotive-produced biochar, is centered in Iowa’s Corn Belt, and aims to replicate ancient Amazonian Indian and West African soil fertilization practices known as 'terra preta' (black earth), which are considered among the most fertile in the world.
The project is led by Heartland BioEnergy LLC, based in Webster City, Iowa. Heartland proposes to build a biorefinery in central Iowa that would include a BioOil and biochar plant developed in partnership with Dynamotive and several agriculture equipment companies:
bioenergy :: biofuels :: energy :: sustainability :: carbon-negative :: biomass :: pyrolysis :: bio-oil :: biochar :: agrichar :: terra preta ::
Heartland works closely with the U.S. Department of Agriculture’s National Soil Tilth Laboratory, Iowa State University and Iowa Soybean Association in studies coordinated by the Prairie Rivers of Iowa RC&D, an organization that addresses regional environmental issues and economic development opportunities.
“Not only has Dynamotive’s biochar the potential to raise high-yield rates of corn another 20%, but we believe there is a real possibility the char trial could also result in evidence that could point the way to dramatic improvements in water quality, which could have far-reaching beneficial consequences,” said Dr. Lon Crosby, of Heartland BioEnergy.
President of Dynamotive USA, Andrew Kingston, said: “By enhancing productivity of the land and crop yields, sequestering carbon by putting it back into the soil, and producing alongside ethanol and biodiesel our BioOil that displaces hydrocarbon fuel use in industrial applications, we aim to show, with our partners, a virtuous circle of land, crop, fuel and environment management. The Amazonian Indians created the most fertile soils in the world, and today we may be able to benefit from adopting their land management methods.”
Dr. Crosby said the field trials will involve three strips of corn crop land 800 feet long and 30 feet wide. One strip will have no char applied, but the second one will have 2.5 tons of char applied per acre, and the third one will have 5 tons. Further tests will follow.
For several decades, scientists have recognized that the most productive soils in Europe have a char base, classifying these lands as “black carbon” based. The role of char was poorly understood and believed to be an indirect effect, resulting from the routine burning of crop residues from naturally productive soils over centuries. Recent research from South America has shown that the application of char to low productivity soils can turn them into highly productive soils.
Dr. Crosby continued: “Subsequent research has shown that the char, per se, is playing an active role in changing bulk density, modifying soil structure, regulating water storage ability and loosely binding soil nutrients so they are retained and released for plant growth. Outside of the black carbon soils of Europe and the terra preta soils of South America, biochar is a minor soil constituent. However, when scientists have looked, they have found it, suggesting that char was, at one point, an important soil constituent in many soils. It has been found at low levels in native prairie soils in the U.S. and Canada. This suggests that char application can significantly enhance soil productivity.”
Heartland BioEnergy’s proposed biorefinery is expected to serve as the prototype for a series of biorefineries strategically located across the Corn Belt that would use up to 17% of the 10 million dry tons of annually available cornstalk biomass within a 50-mile radius. Cornstalks represent the single largest source of annually renewable energy in the U.S., and Iowa will produce over 40 million tons of cornstalks harvestable on an annual and sustainable basis.
About BioOil
BioOil is an industrial fuel produced from cellulose waste material. When combusted it produces substantially less smog-precursor nitrogen oxides (‘NOx’) emissions than conventional oil as well as little or no sulfur oxide gases (‘SOx’), which are a prime cause of acid rain. BioOil and BioOil Plus are price-competitive replacements for heating oils #2 and #6 that are widely used in industrial boilers and furnaces. They have been EcoLogo certified, having met stringent environmental criteria for industrial fuels as measured by Environment Canada’s Environmental Choice Program. BioOil can be produced from a variety of residue cellulosic biomass resources and is not dependent on food-crop production.
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posted by Biopact team at 6:14 PM 2 comments links to this post