A Sustainability Analysis of the Brazilian Bio-Ethanol
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2 A Sustainability Analysis of the Brazilian Bio-ethanol Arnaldo Walter (University of Campinas, Brazil) [email protected] Paulo Dolzan (University of Campinas) Oscar Quilodrán (University of Campinas) Janaína Garcia (University of Campinas) Cinthia da Silva (University of Campinas) Fabrício Piacente (University of Campinas) Anna Segerstedt (Leibniz Universität Hannover, Germany) Supported by Department for Environment, Food and Rural Affairs (DEFRA) British Embassy, Brasilia ENGLISH VERSION Campinas, November 2008 3 Statement This is an independent report, despite of being supported by Department for Environment, Food and Rural Affairs (DEFRA) and British Embassy, in Brasília. This report reflects the opinion of the authors and does not represent the position of the sponsors or of University of Campinas – Unicamp. 4 Summary Executive summary 6 Introduction 12 Chapter 1 – Current Production of Ethanol in Brazil and Perspectives – 13 Chapter 2 – Sustainability Principles and Criteria – Initiatives and Priorities for the Certification of Biofuels Production 29 Chapter 3 – Greenhouse Gas Balance 40 Chapter 4 – Land Use Change due to Ethanol Production – Direct Impacts 59 Chapter 5 – Land Use Change due to Ethanol Production – Indirect Impacts 90 Chapter 6 – Socio-Economic Aspects of Ethanol Production in Brazil 99 Chapter 7 – Other Environmental Aspects 132 Chapter 8 – Further Required Research and Recommendations 143 Chapter 9 – Conclusions 145 References 147 Annex A - Land Use Change due to Ethanol Production – Direct Impacts – complementary material 154 Annex B - Land Use Change due to Ethanol Production – Indirect Impacts – complementary material 169 Annex C - Socio-Economic Aspects of Ethanol Production in Brazil – complementary material 171 5 Executive Summary Biofuels Since the turn of the century, global interest in the production and consumption of biofuels (essentially ethanol and biodiesel) has been growing. This interest has been caused, in part, by environmental concerns, and specifically due to the need to mitigate greenhouse gas emissions (GHG) . Other factors include the rise of oil prices, interest in diversifying the energy matrix, security of energy supply and, in some cases, rural development. Recently, doubts have been raised about the actual benefits of biofuels regarding the mitigation of GHG emissions. Other questions have also been raised about potential environmental, social and economic impacts , such as disruption of food supply, risks of losing biodiversity, reduction of water quality and water availability, and a lack of direct benefit to those directly affected by biofuels production. Due to social sector pressure (mainly in Europe), sustainability criteria have been proposed in order to promote the effective sustainable production of biofuels. Theoretically, such criteria will differentiate between products with similar fuel properties, but with important differences in their supply chain. The adoption of sustainability criteria could result in certification of biofuels production . However, there are also concerns that a certification process could impose new barriers for the international trade in biofuels . Ethanol in Brazil From 2000 to 2007, the production of ethanol in Brazil increased an average of 11.4% per year. In 2007, the domestic market was close to 18 billion litres per annum, with more 3.5 billion litres exported. Internal consumption has grown continuously since the launch of flex-fuel vehicles in 2003 and their high domestic take-up. It is estimated that domestic consumption could reach 35 billion litres in 2015 and 50 billion litres in 2020. Future exports depend on how open the main consumer markets will become, but it is estimated that 15 billion litres could be exported annually by 2020. Currently, Brazilian sugarcane is almost equally used to produce sugar and ethanol. The bulk of sugarcane production (ethanol + sugar) is in the Centre-South region (87% in 2007), 60% of total production being in the state of São Paulo. Only 0.6% of sugarcane is produced in the states of the Amazon region, mainly for sugar manufacturing (0.2% of Brazilian ethanol is produced in the Amazon region) . Figure 1 shows the growth of sugarcane production (used to produce both sugar and ethanol) between 2001 and 2007 in different states and regions. Figure 2 shows the profile of ethanol production in 2007. In both figures, the concentration of sugarcane and ethanol production in São Paulo, the growing importance of Paraná, Minas and the states of Centre-West region, and the relatively small importance of sugarcane and ethanol production in the Amazon region can be observed. 6 80000 70000 60000 50000 40000 30000 20000 10000 0 2001 2002 2003 2004 2005 2006 2007 Annual growth of productionsugarcane t) (1000 São Paulo Paraná Minas Goiás MT do Sul Mato Grosso Northeast Amazon Others Source: UNICA (2008) Note: Growth calculated as difference of production between two consecutive years. Figure 1. Annual growth of sugarcane production in different states – 2001-2007 Source: UNICA (2008) Figure 2. Ethanol production in 2007 – % share of States and Regions Social and Environmental Sustainability Brazil is and will continue to be a key producer in the global ethanol market over the coming years. Local conditions for ethanol production are comparatively favourable taking into account factors such as land availability and climate, long-term experience, existing commercial technology (the so-called "first generation"), and the size of the domestic market. Nevertheless, 7 if the sustainability of Brazilian ethanol production was more widely recognised, these comparative advantages could be reinforced. The economic dimension of sustainability is not the focus of this report. It is internationally recognised that Brazilian ethanol is produced at the lowest cost and its feasibility does not depend on subsidies . However, environmental and social aspects need to be properly addressed, as there are knowledge constraints and controversy about many crucial issues. The analysis done in this report is based on the international sustainability criteria of biofuels currently under discussion, which prioritises the reduction of GHG emissions in comparison to fossil fuels (gasoline and diesel), considering their life cycles. Based on Europe Union initiatives and on policies adopted in the United Kingdom, Germany and the Netherlands which aim to ensure the sustainability of biofuels production, the following aspects were identified as crucial besides the emissions of GHG: a) land use change considering direct and indirect impacts; b) socio-economics benefits and impacts of ethanol production analysis at a regional level; c) potential impacts on water availability and quality; d) impacts of fertilisers and agro-chemical use alongside biomass production; e) soil impacts; and f) loss of biodiversity. Energy and GHG balances Ethanol produced from Brazilian sugarcane is the biofuel with the best energy balance. This can be illustrated as the ratio between renewable products (mainly ethanol) and the energy input as fossil fuel for Brazilian sugarcane ethanol is 9.3 (compared with 1.2-1.4 in the case of ethanol produced from American maize, and approximately 2.0 in the case of ethanol produced from European wheat). The balance of GHG emissions is also the best among all biofuels currently produced. Avoided emissions compared to gasoline are close to 86% given the way ethanol is used in Brazil (and considering a full life-cycle analysis). The consumption of Brazilian ethanol in Europe reduces avoided emissions to approximately 70% due to intercontinental transport and lower efficiency of European engines using ethanol. However, this result is much better than the avoided emissions in case of ethanol from maize and wheat (a maximum of 35%), and would ensure the criteria that may be applied in the short-term by the European Union or other individual European countries (30%-35% of avoided emissions) are fulfilled . These results are typical of ethanol production in state of São Paulo and neighbourhoods, as long as no GHG emissions due to land use change occur. Considering current commercial technologies, mechanical harvesting and enhancement of surplus electricity production from bagasse and sugarcane trash (e.g. leaves of the plant), the energy balance could rise to 11.6 by 2020, while net GHG emissions during in the life-cycle of ethanol production could be reduced by approximately 20%. Figure 3 shows estimated avoided emissions due to ethanol substitution for gasoline (the emission factor of gasoline was taken as 85 gCO 2eq/MJ) considering the use of current technology. The cases shown correspond to the consumption of ethanol produced from maize (USA), from wheat (Canada and Europe) and from sugarcane (produced in Brazil and consumed in Brazil or in Europe). 8 90% 80% 70% 60% 50% 40% 30% 20% 10% Avoided emissions compared to gasoline 0% Corn Wheat Cane (Brazil) Cane (Europe) Figure 3. Avoided GHG emissions in comparison with full life-cycle of gasoline Land use change In the Centre-South region, the growth of sugarcane production from 2006 to 2007 occurred mainly on former pasturelands (66%) and on land previously used for grain production (e.g. soybean, 18% and corn, 5.3%). The displacement of soybean by sugarcane cultivation in this region represents 1% of total area of soybean production in Brazil. In this region from 1996 to 2006, the intensification of cattle grazing released land, 10% of which was used for sugarcane expansion.