Brazil Biofuel Term Paper

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Brazil Biofuel

This work will discuss the biofuel developments in Brazil and the many issues surround it. It will serve as an introduction to biofuel efficacy and create a sense of the current epicenter of biofuel use and production. The work will discuss the history of biofuel use in Brazil, the effects it has had on culture and economy, the pros and cons of biofuel, the import and export market effects, cost differentiation, sugar vs. corn ethanol, auto technology in Brazil, and some limited discussion of U.S. And other international responses to Brazil's programs.

History of Biofuel in Brazil

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Brazil's history in the biofuel business is a long standing one, as the nation implemented some of the first legislative mandates that demanded the use of bio-fuel, in this case ethanol as an additive to standard petroleum fuel in the 1930s. At this time the fuel mix was mandated at 5%, but given the international climate the action was monumental and telling of future reaction to crisis, at this time the mandate was a reaction to sugar industry crisis and an economic recession. (Biodiesel in Brazil: Overview, 2005, p. 2) In response to the energy crisis of the 1970s a now highly populated Brazil again sought alternative fuels to create a less dependant foreign fossil fuel economic system. One of the main ways that Brazil sought to improve the market was to introduce bio-fuel, first at an infrastructural level and then at a consumer level. In response to this early response to fuel shortages and the obvious world dominance that can be demonstrated by fuel possession, not to mention potential environmental issues regarding fuel, Brazil has been the world's most advanced bio-fuel center for decades. In Brazil there are currently 300 sugar-ethanol mills operating and more than 60 in various stages of construction.(Mae-Won Ho, 2006 December 26, NP).

Term Paper on Brazil Biofuel This Work Will Discuss the Assignment

In addition to the world dominance on the issue of bio-fuel and its use Brazil also dominates the world on legislation that supports bio-fuel efforts. Creating in 1975 the Brazilian National Alcohol Program, this legislation regulated the use of ethanol and encouraged its production. (Biodiesel in Brazil: Overview, 2005, p. 2) "The program guaranteed that all gasoline sold in the country would be blended with 22% anhydrous ethanol and that the pump price would remain competitive with gasoline. Past sugarcane crop problems have slightly altered the percentage of ethanol in Brazilian gasoline, however, mandated levels have usually remained at around 20%. Then, on June 1, 2003, the Brazilian government raised the ethanol mix in gasoline from 20% to 25%." (Biodiesel in Brazil: Overview, 2005, p. 2)

Currently, about half of Brazil's sugarcane crop is converted into bio-ethanol production with the remainder continuing in the process to be made into sugar. Brazilian drivers can choose, at the pump to fuel with 100% ethanol, for a cost savings of nearly 50% at 30 thousand stations, nation wide or a petrol blend consisting of between 20 and 25% ethanol. Ethanol in fact maintains a strong presence in the nation with a 40% account of all non-diesel fuel consumption. "... In 2005, for example, Brazil produced 15.9 billion litres of bio-ethanol, more than one-third of the world's supply and second only to the United States. Brazil's bio-ethanol is the only large-scale bio-fuel program now able to expand without government subsidies. U.S.'s bio-ethanol from corn, in contrast, is heavily subsidized." (Mae-Won Ho, 2006 December 26).

According to Mae-Won Ho, Brazil is poised to double its bio-ethonal production in the next 10 years and its futures market rose by 62% in 2006, as a result of international demand for bio-ethanol, that includes increased demand in the European Union, the U.S., China, Japan, India and other nations. "It is also poised to vastly expand biodiesel production for export, using soya, palm oil and caster oil. Brazil is emerging as the biggest of The New Biofuel Republics in the world, and getting bigger all the time." (Mae-Won Ho, 2006 December 26)

How Brazil Import Export Market is Effected

Brazil has seen great opportunity in the rising international demand for bio-fuel and will likely continue to expand not only its sugar-based ethanol production but as has been seen recently attempt to save the economic status of other oil producing crops as well. The soybean industry is an example of just such a plan as soybeans are now being converted into biodiesel. New plants are in construction currently to convert soy beans into biodiesel, and many of them are plants that also produce ethanol from sugar. (Mae-Won Ho, 2006 December 26) The government has also stepped in to begin to create additional mandates, such as those previously seen with regard to ethanol for biodiesel created from crops experiencing economic downturns. "In addition, the Lula government recently passed legislation that will mandate a 2% blend of biodiesel from oilseed crops like soybean, sunflower or castor beans in all commercial sales of petroleum diesel by 2008 rising to 5% by 2013. A few hundred filling stations already offer blends. Brazil has about 10 biodiesel plants in operation and another 40 under construction." (Mae-Won Ho, 2006 December 26) This trend has created a desire to blend production, so the existing fuel producing companies can also take a share of the new production of biodiesel, in addition to the ethanol production they have profited from in the past, a trend that is supported by the government. (Mae-Won Ho, 2006 December 26) This brings us to a discussion regarding biodiesel, independently in Brazil. The effects of import and export markets for Brazil remain to be seen, from biodiesel.

History and Policy of bio-diesel in Brazil

Despite rising concerns regarding the environmental impact of biodiesel crop production, with regard to deforestation, as demand for biodiesel expands so does Brazil's production of it. Though its historical precedence is not that of ethanol, ethanol legislation and production has been used as a model for the production of other biofuel, which potentially effect the environment in other unforeseen ways, despite the fact that they reduce greenhouse gas in their use. According to Osava, soy bean growing has become one of the leading causes of deforestation of the, "Amazon and the Cerrado, a biome of savannahs and scrub forests that covers the extensive central area of Brazil..." (Osava, 2006).

Brazil has sought to diversify production of biofuel to include all those which could benefit them nationally and internationally. So, thirty years after the landmark creation of the Brazilian National Alcohol Program; "Brazil has now authorized the commercial use of a new fuel - biodiesel. This is a biodegradable product originating from sources such as vegetable oils, animal fats, industrial residues, and sewage. Under the PNPB (the National Biodiesel Production and Utilisation Programme)." The government has created real industry as well as supplementing a production chain, defined credit lines, technological structure and of coarse creating laws that govern this new biodiesel production, through the model of the Brazilian National Alcohol Program. "Over the next three years, Brazil will sanction the addition of 2% biodiesel to diesel oil, a mixture that will be compulsory from 2008 and which will increase to 5% in 2013" (Biodiesel in Brazil - Overview 2005). (Sweden is creating a similar model (Abuelsamid, 2007, NP) as are other nations, U.S., China, Argentina, Chili, included. (Ritter, 2007, NP) (McDonald, 2007, NP) (Masaki, 2007, NP)

Affects on Culture and Economy in Brazil

According to the experts there is a mixed reaction to ethanol and other bio-fuel production as the global implications of creating renewable resources derived fuel is markedly important for the health of the planet, and yet in Brazil the economy and culture have in some ways suffered as a result of the changes. Some of these changes include: replacement of food crops by sugarcane (increasing food prices), the sugarcane industry has created a large population of migrant workers causing crime, decreased biodiversity, decreased dependency on foreign oil. (Mae-Won Ho, 2006 December 26). The increase in independence, with regard to foreign fuel sources, for Brazil is a substantial benefit but the environmental concerns have not been answered, as will be explained further in this work. The trade offs that Brazil has had to endure are associated with a broad cultural understanding of the need for fuel independence, which is clearly a positive but in contrast concerns about crime and individual dependence on agricultural migration is a social pariah. Additionally, seeking to produce large profits has left the agricultural industry in dire straights with regard to the ability of producers to meet low cost food demands. Conversion to fuel crops leaves the nation with potential for dependency on other nations for food. All of this has a social and cultural impact on a national scale, as well as an international scale, as Brazil seeks to find a balance for meeting all of its needs rather than just that which is most immediately profitable. Much of this is yet to be determined, as Brazil may become a nation that takes a hit by becoming… [END OF PREVIEW] . . . READ MORE

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