Biofuel Market in Brazil
In the path of growth and sustainability, Brazil has gained credibility in recent years and become essential for the agenda of any major investor in the biofuel market. This article presents an overview of the market in Brazil.
In the path of growth and sustainability, Brazil has gained credibility in recent years and become essential for the agenda of any major investor in the biofuel market. This article presents an overview of the market in Brazil.
The Brazilian biofuel market experienced strong growth in recent years and exports have doubled since 2003, resulting in a significant increase of Brazilian participation in world trade. This type of renewable fuel has being studied since the beginning of the 20th century, mainly in Europe. In Brazil, only after the first oil crisis – in the 70s – did the production of biofuels and their usage gain great importance.
Definition of Biofuels
Biofuels are renewable energy sources derived from plant and animal products. The main raw materials for biofuels production are:
- mamona
- palm oil
- sunflower
- peanut
- soy
- sugar cane
- beet
- corn
- cassava
- firewood
- animal fat
- and others
The processing of this organic matter produces and oil, that could be mixed with petroleum-based liquids or used pure. The main biofuels are:
- ethanol
- methanol
- biodiesel
- biogas
- vegetable oil
- charcoal
Biodiesel in Brazil
The two main liquid biofuels used in Brazil are ethanol and biodiesel. Biodesel is made from vegetable oils or animal fats, mainly used in buses and trucks. With the launch of the government National Program for Production and Uses, known as PNPB, biodiesel has significantly advanced in the country.
Germany, United States and Brazil are currently the world's largest markets for biodiesel. Other important markets are France, Spain, Italy and Argentina. Brazil has a biodiesel industry, with more than 50 plants able to produce it and market it, and with an installed capacity of more than six million cubic meters.
Biodiesel: Types and Mixes
In Brazil, biodiesel is regularly sold – mixed with diesel fuel – at more than 30,000 filling stations throughout the country. Its production jumped from 69 million liters in 2006 to 2.8 billion liters in 2012, according to GNP data.
The mix of biodiesel with diesel began in December 2004 to be used in Brazil. The mixes can vary according to the percentage of biodiesel concentration as the table below shows. In 2008, the mandatory mix of 2% in the whole country came into effect. The percentage was increased successively until it reached 5% in 2010.
| Types of Biodiesel | Concentration of Biodiesel |
| B2 | 2% |
| B25 | 25% |
| B36 | 36% |
| B100 | 100% |
The Brazilian Production Capacity
According to data provided by the Brazilian government, in 2011 56 industrial producers of biodiesel were authorized to produce and market biofuels. The units were responsible for the production of a total capacity of 6 billion liters per year.
Of this capacity, approximately 78% - which is equivalent to 4.7 billion liters per year – comes from producers possessing the Social Fuel Seal. The Seal is a part of the PNPB and it is a certificate issued by the government. It is awarded to producers that fill the requirements for the inclusion of family agriculture in the biodiesel production chain.
Since the launch of PNPB at the end of 2011, Brazil produced 8.3 billion liters of biodiesel, which reduced diesel imports by 5.3 billion USD, contributing positively to the Brazilian trade balance.
The Ethanol Market
Brazil is recognized worldwide for its pioneering introduction of a biofuel produced from cane sugar, ethanol. Since the 70s – when the government program Pro-alcohol was launched – ethanol had become an important energy source for the country.
Currently, Brazil is the second largest producer of ethanol in the world with 33.2% of world production. The country is also the largest exporter of this product with 37% of global market share. Predictions are that in five years, Brazil will account for half of world trade in ethanol.
In 2007 to 2008, 22.5 billion tons of alcohol were produced and 3.6 billion tons exported. According to Industry Union of Cane Sugar, known as UNICA, the forecasts for 2012 are that Brazil will produce 65.3 billion tons of ethanol and export 15.7 billion tons.
Ethanol production per Region
Brazilian ethanol represents the best and most advanced option in the world for the sustainable production – on a large scale – of biofuels. The country has the lowest cost of production and higher yield in liters per hectare which makes Brazil a natural candidate to lead the economically competitive production and the worldwide exportation of ethanol.
In Brazil, ethanol is produced in the northeast and mid-south. The mid-south region is responsible for approximately 90% of national production, with the state of São Paulo being responsible for 60% of ethanol production. The other 10% is produced in the northeast coastal region.
Steel Industry: Firewood and Charcoal used as sources
Currently, the less developed economies of the world still have in their energy matrixes comprised of more than 90% firewood as an energy source. Since the 30s Brazil has reversed this situation. In the early 40s, the country had more than 80% firewood in its energy matrix.
In 2011, this indicator was already less than 10%. Big part of the firewood extracted in Brazil is transformed into charcoal, a product with higher carbon concentration. The country is the only nation in the world that uses charcoal in the steel industry.
Currently, 34% of the firewood is converted into charcoal and 28% have direct use in industry. Another 27% are also used for cooking food. Charcoal is used in steelmaking as a heat source and as a reducing agent for iron ore. Brazil is the largest producer of iron via charcoal, about 60% of the pig iron produced in the country is exported.