A boost to biofuels

In the first decade of the 21st century, rising commodity prices were often linked to the growth of biofuels.

Demand for biofuels was said to be driven by the threat of global warming. In advanced economies, there was also the political advantage of supporting domestic production of strategically important agricultural commodities, aiming to reduce dependence on fossil-fuel imports from politically unstable countries.

The best-known examples are corn in the United States and rapeseed in the European Union.

Today, however, biofuel policies are under pressure in both regions. Low oil prices have curbed demand, and the unexpected rise of electric vehicles and renewable power offers more attractive ways to cut greenhouse-gas (GHG) emissions.

Long delays in deploying advanced biofuel technologies have pushed many companies into bankruptcy and slashed investment in what were once promising processes.

Finally, concerns about indirect land-use change and food security have led the EU to withdraw subsidies and wind down the policies that once supported the biofuel sector.

The United States is a net exporter of ethanol but imports roughly 20 percent of the biodiesel it consumes—fuel produced mainly from soy.

Several South American countries have adopted biofuel policies.

Their motivation has little to do with climate change; instead, they clearly aim to promote rural development and boost export sectors.

Brazil, Colombia, Peru and Ecuador have blending mandates that require distributors and retailers to mix a certain proportion of biofuel into conventional fossil fuels.

Gasoline, for example, is blended with ethanol made from sugarcane or corn. Biodiesel blends use soy or palm-oil derivatives, or waste oils and fats collected from the food chain.

Long history
Brazil has a long record of promoting bioenergy, especially sugarcane ethanol.

The Brazilian sugar industry is known for its efficiency and low GHG emissions.

Brazilian firms are leading efforts to produce cellulosic ethanol, and most mill operators use leftover biomass as process heat to generate electricity for domestic power markets.

Brazil is the world’s largest producer and exporter of ethanol and has recently begun exporting biomass pellets made from agricultural residues to North America and Europe to help cut coal-plant emissions.

A growing number of companies with landholdings in Mato Grosso are building biomass heat plants and plan to install carbon-capture and storage technologies in the medium term.

The rapid expansion of corn cultivation in Mato Grosso has also encouraged its use as a feedstock for ethanol.

Current output accounts for about four percent of national ethanol consumption but is expected to reach 20 percent (about 8 billion liters) by decade’s end.

In 2019, seven corn-ethanol plants were operating in Mato Grosso, three were under construction, and seven were at various planning stages.

A large facility that can produce 500 million liters per year requires an investment of US$ 100 million, will generate about US$ 200 million in gross revenue, and can create up to 8,000 direct and indirect jobs.

Corn-based ethanol production was valued at roughly US$ 1.3 billion in the 2020/2021 season, about half of which came from Mato Grosso.

Corn oil—which has chemical properties similar to soy oil—can be sold on vegetable-oil markets, while distillers dried grains with solubles (DDGS) are highly profitable because their protein- and vitamin-rich content makes an excellent livestock feed.

Building a sector
The rise of a corn-ethanol sector has solved a critical bottleneck for industrial agriculture: corn storage.

Unprocessed grain from the region is not competitive on global markets because of high transport costs, but it can be marketed domestically as an energy feedstock for biofuels.

Corn oil and DDGS, meanwhile, raise the value of meat products destined for export markets.

Brazil supports biodiesel production through a mandate that requires a 10 percent biodiesel blend in regular diesel. Most of the feedstock is soy oil—totaling 4.8 million cubic meters in 2019.

That amount equals roughly 18 percent of the nation’s soy-oil output and about half of the oil content in the soybeans Brazil processes. Mato Grosso produced 26 percent of that total.

By contrast, less than two percent of biodiesel demand is met with palm oil, representing under six percent of GDP in 2019.

Nearly all of it comes from Biocombustíveis do Brasil, which blends its output with conventional diesel at plants in Acre, Roraima, Rondônia, and Amazonas.

Information source: brasil.mongabay.com

\