Is Brazil trading green biofuel for dirty fossil fuels?
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Is Brazil trading green biofuel for dirty fossil fuels?

Brazil is home to the 60 percent of the Amazon Basin — the world’s largest and most biodiverse tropical rainforest. Back in 1992, it was the host country for the groundbreaking U.N. Earth Summit, which took place in Rio de Janeiro amid great fanfare and high hopes.

Renewable means currently account for 82 percent of Brazil’s electricity demands; 77 percent via hydroelectric generation.

Brazil is also the world’s second largest producer of ethanol fuel — behind only the United States. And despite significant flaws in terms of environmental policies and struggles to enforce them, Brazil’s exemplary long-term use of sugar cane ethanol as a source of fuel for vehicles has set it apart from the rest of the world. Its enforcement of a minimum 18 percent (fluctuating) of ethanol in all gasoline sales (the U.S. uses 10 percent corn ethanol) is impressive for such a large country with so much road traffic, both private and public.

Cars running on pure biofuel have been used in Brazil since 1978, and the latest version of a popular agricultural airplane, the Embraer EMB 202 Ipanema, runs entirely on ethanol.

As with all means of energy production, Brazil’s sugar cane ethanol industry does have a negative environmental impact. Large-scale farming of any kind degrades and pollutes soil and water. Increased drought and climate change also mean it is vulnerable to changing weather patterns.

Still, in terms of pollution and greenhouse gas emissions, ethanol fuel has major advantages over fossil fuels.

Goodbye ethanol, hello offshore drilling?

While Brazil’s proven oil reserves are far below those of the world’s major oil producing countries like Saudi Arabia or Venezuela, discoveries of large offshore oil fields have signaled a shift in the country’s energy policies.

According to Reuters, the Brazilian government may be pressuring the debt- and scandal-ridden semi-public energy corporation Petrobras to consider selling off biofuel assets in order to further invest in offshore drilling operations.

The company, whose $125 billion of debt is the biggest of any oil company and the third-largest of any non-financial enterprise, plans to sell as much as $13.7 billion of assets by the end of 2016.

(via Reuters)

Sources say Petrobras will most likely sell off its ethanol plants, while holding on to its more profitable biofuel distribution and sales businesses.

The future of biofuels

Historically, the biofuel business has lost steam when oil prices fall. The Second World War and the oil crisis of the 1970s helped cause major sugar ethanol booms in Brazil. But the Brazilian government’s recent efforts to cap Petrobras’ oil prices have kept gasoline costs artificially low, resulting in a plummeting ethanol market.

A spot of good news for the ethanol industry is that the sugarcane harvest has jumped by 5.5 percent this month.

Evidence indicates that some biofuels known as “first generation,” such as palm oil biodiesel, are actually worse for the environment than fossil fuels. The United States’ main source of ethanol is corn, which not only puts fuel in competition with food, but also requires a lot of energy to produce, making it expensive and environmentally unsound to produce.

But Brazil’s sugar cane biofuel is a tried and tested success. Ethanol has played its part in making Brazil a positive example in reducing greenhouse gas emissions. It is something the state should support and encourage, rather than sell off to the private sector in order to finance dirty fossil fuels. According to experts, biofuels have a future in commercial aviation and in contributing to global energy needs. Brazil should continue to lead the way in this important and dynamic sector.

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