Heitor Moura 2007 Energy In Brazil
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ENERGY IN BRAZIL Presented at a private seminar in Brasilia, in February, 2008
Heitor Moura [email protected]
§ § § § § § § § § §
The energy supply chain Consumption Production Trade Oil Hydrelectric energy Natural gas Eolic energy Nuclear energy Composition of energy supply
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Supply from domestic or foreign sources
§
Domestic or foreign demand
§
All mediating transportation, storage and commercial distribution networks
§
“Supply chain” most commonly refers to physical units, but necessarily involves economic considerations, such as prices, cost and capital disbursements, as well as regulatory aspects.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
FEBRUARY 2008
§
Apart from a small slow-down in the 80s, energy consumption in Brazil has been regularly growing at rates higher than world average.
§
This difference between World and Brazilian growth rates was greater in the 70s and 90s than it is now.
§
The high rates in the 70s were associated to the fast economic growth of the period. On the other hand, the low average in the 80s reflects the decade’s slow economic performance.
6%
World - sale of energy 5% Average annual growth.
§
Energy consumption Average annual growth rates
Brazil - final consumption
4% 3% 2% 1% 0%
% 70s
% 80s
% 90s
% 00s
SOURCE: United States-IEA-DOE e Brazil-MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
5%
This difference, however, varied markedly from decade to decade.
Non renewable
4% Average growth rates.
§
During the last 36 years, consumption of energy from renewable sources has been growing on average at a slightly lower rate (2,8% p.a.) than consumption from non-renewable sources (3,0% p.a.).
3%
2%
1%
Average growth rates
0%
%75>85
Total energy consumption
%85>95
%95>05
%04>06
100.000
Consumption (1.000 tpe).
§
Renewable
Renewable SOURCE: Brasil-MME Balanço Energético Nacional
10.000 1970
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Non renewable
1975
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
The growth in energy consumption is cyclic, following the ups and downs of the economy in general.
Annual growth rates 5%
Renewable sources Non renewable sources
4% 2-year moving growth rate.
§
3% 2% 1% 0% -1%
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
-2%
1973
1978
FEBRUARY 2008
1983
1988
1993
1998
2003
§ §
The main non-renewable sources of energy in Brazil are crude oil and natural gas.
§
Though growing at essentially the same long-term rates, other renewable energy (eolic, solar and nuclear) still represent only a small portion of total energy produced.
Of the renewable energy sources, hydrelectric power and sugar-cane related energy have shown the greatest increase over the last 36 years.
Non-renewables Crude oil Natural gas Other non-renewable
100.000
Production (1.000 TPE)
Production (1.000 TPE)
100.000
Renewables
10.000
10.000
1.000
Hydrelectric Wood Sugar-cane products
1.000 1970
1975
1980
1985
1990
1995
2000
2005
100 1970
Other renewable 1975
SOURCE: Brasil-MME Balanço Energético Nacional ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
1.000.000 Net imports Final consumption
1000 TPE
§
Despite continued growth in final consumption, Brazil’s reliance on imports of energy is today at a historical low, around 10% of consumption. This reduction in energy dependence over the last 3 decades came in two main surges:
§ §
100.000
in the late 70s and early 80s, and since the mid 90s 10.000 1970
Net imports / final consumption
§
1975
1980
1985
1990
1995
2000
2005
1990
1995
2000
2005
60%
50%
40%
30%
20%
10%
0%
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1970
FEBRUARY 2008
1975
1980
1985
§
Lower dependence on imports occured mostly due to the increase in the production of non-renewable energy, mainly oil.
§
This increase eliminated total dependence on non-renewable sources, though this does not mean elimination of imports.
Consumption less production (1.000 TPE)
Development (1.000 TPE) Renewable consumption
1.000.000
Non renewable
Renewable production
1.000 TPE
Renewable
50.000
Non renewable consumption
40.000
Non renewable production
1.000 TPE.
30.000
100.000
20.000 10.000 0
10.000 1970
1975
1980
1985
1990
1995
2000
2005
-10.000 1970
1975
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
§
§ §
Energy imports until the mid 80s were mainly oil.
Energy imports (1.000 TPE)
During the 90s coal and oil products increased, while crude oil imports were reduced. Since 2000, natural gas imports have become significant. Brazil has also purchased uranium during peak moments of its nuclear program. These imports have become steadier since 2000.
70.000 60.000 50.000 1.000 TPE
§
40.000 30.000 20.000 10.000 0
1970
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
Oil Electricity Alcohol
1985
1990
Coal and coke Uranium Vegetable coal
FEBRUARY 2008
1995
2000
Oil products Natural gas
2005
Two main product groups are exported:
§ § §
crude oil oil products
This is due to the peculiar Brazilian crude production and refining characteristics:
§ §
§
Brazilian crude is mostly heavy (low API); most economic refining options produce a greater proportion of gasoline than can be consumed domestically;
50%
Energy exports as percentage of imports
Exports / Imports (%)
§
60%
Energy exports as a percentage of import requirements have increased in 3 phases since the 70s.
40% 30% 20% 10% 0%
1970
Density of crude produced in 2005
there is a regular need for Balanço importation of diesel and fuelSOURCE: Brasil-MME Energético Nacional
1975
1980
1985
1990
2000
2005
35% 30% 25% 20% 15% 10% 5% 0%
10>15 15>20 20>25 25>30 30>35 35>40 Degrees API
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1995
40% Percentage of total production
§
FEBRUARY 2008
40>
Until 1980, exports were irregular and in small volumes.
§
From 1980 to 1999, the main exports were fuel oil and gasoline in excess from Brazil’s refining mix.
§
Since 2000, fuel oil exports have become much more important than gasoline’s, while crude oil volumes increased significantly, to over half of total energy exports.
Energy exports (1.000 TPE) 35.000 30.000 1.000 TPE
§
25.000 20.000 15.000 10.000 5.000 0 1970
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
Fuel oil Diesel Ethanol
FEBRUARY 2008
1985
1990
Oil Kerosene
1995
2000
2005
Gasoline Other exports
§
Petrobras forecasts a growing surplus in oil products for the coming years, from production in new offshore fields.
§
This forecast is based on tested fields coming into production, less gradual depletion of old fields.
§
Recent discoveries of very deep deposits (Tupi), combined with continuous improvement in exploration and production technology, warrants optimism for Brazilian oil reserves and production over the next decade.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
30%
§
§
Brazil / World
The jump in the country’s share of World oil production, as well as in its share of South and Central American production, reflects this greater output.
Brazil’s share in oil production
Brazil’s share in World production has been growing more rapidly than its share in World reserves.
3,0% 20%
2,5% 2,0% 1,5%
10%
1,0% 0,5% 0% 0,0% 1965 1970 1975 1980 1985 1990 1995 2000 2005
Proved reserves
2,5%
Brazil’s share in oil production and reserves
The recent discoveries in the Santos basin, though, will certainly increase its share of reserves by a significant percentage
3,5%
Oil production 2,0%
1,5%
1,0%
0,5%
SOURCE: BP Energy Review 0,0% 1980
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1985
1990
1995
2000
2005
Brazil / World %
Brazil / South + Central Amer. %
§
Brazil increased its oil production markedly during two periods: in the 80s and from 1996 to 2003.
Brazil / World (%)
§
4,0%
Brazil / South + C America
§
Brazil’s proved reserves can maintain current levels of crude production for another 12-13 years.
§
The forecast for an additional 50% increase in total production over the next decade requires new descoveries and their development.
§
Analysis of the geological conditions of Brazil suggest an estimate of undiscovered reserve of about 4 times current proved reserves.
Brazil’s estimated crude production
SOURCE:MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras forecasts, already for 2010, a greater increase in oil product than growth in demand and refining output.
§
So Brazil will probably continue to export part of its crude production, and a growing volume of refined oil products.
Production, demand and refining
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Itaipu dam
SOURCE: Itaipu ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Brazil is considered to have the World’s third largest potential of hydrelectric energy.
§
Canada’s potential is about 40% of this estimated energy.
The World’s hydrelectric potential
SOURCE: World Energy Council / MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Canada is the World’s largest producer of hydrelectric energy.
§
Brazil holds third place, after the USA.
§
Norway and Brazil are the countries which produce most of their electricity from hydrelectric plants.
World’s largest producers of hydrelectric energy Production versus percentage of electricity generated by hydrelectric plants
Hydrelectric energy production
100 Percent of electric energy generated
350.000
250.000 200.000 150.000 100.000 50.000
a
c Sw e ed en
an
CANADA 60
SWEDEN
40 RUSSIA
INDIA 20
0 10.000
FRANCE
CHINA
FEBRUARY 2008
USA
JAPAN 100.000 GWh / year
SOURCE: World Energy Council / MME ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
BRAZIL
80
Fr
In di
C hi na R us si a N or w ay Ja pa n
az il Br
U SA
an ad
a
0
C
GWh per year
300.000
NORWAY
1.000.000
§
Brazil’s main dams are concentrated in the Southeastern region,
§
but there are small plants spread over the entire country.
Main hydrelectric power plants of Brazil
Electric power plants of all sizes and source
SOURCE: ANEEL
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
The concentration of electric generation in the Southeast implies in the necessity of an important transmission network.
§
The far North receives power from Venezuela.
§
Itaipu binational dam is owned 50/50 with Paraguay, but most of its energy has been bought by Brazil.
§
Reaching an agreement on new transfer prices between Paraguay and Brazil is an upcoming negotiation.
Electricity transmission network
SOURCE: Brazil-National System Operator
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras forecasts a large increase in natural gas production and consumption at over 19% p.a..
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
Natural gas is Brazil’s main energy source traded with its neighbours.
§
This trade, however, requires long-term political and contractual stability to
It also has the greatest growth potential due to South America’s large gas reserves.
Main natural gas reserves in LatAm
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Natural gas pipeline network
FEBRUARY 2008
§
Brazil has an important eolic energy potential, as measured by speed and regularity of prevailing winds.
Eolic potential of Brazil
SOURCE: CBEE
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
§
Only a small part of this potential, however, has been harnessed. Brazil’s share of the World’s installed eolic capacity is small, and has been increasing at lower rates than World total and that of main eolic energy users. Energy-generation eolic equipments still face important import tariffs.
Growth of World eolic energy capacity Installed MW 100.000 Germany Spain
MW installed capacty
§
10.000
SOURCE: Tolmasquim-Windpower Monthly-New Energy
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
USA Denmark India Italy
1.000
Netherlands
UK Brazil
100
World
10
1998
1999
2000
FEBRUARY 2008
2001
2002
2003
Existing nuclear plants Angra 1 and Angra 2 in Rio de Janeiro State
Planned Angra 3 plant
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Production of electricity from uranium began in 1984.
§
Brazil’s share of nuclear energy peaked at below 2% in the early 2000s.
§
The planned construction of a third plant is as yet undefined and generates much polemic.
Share of nuclear energy in total domestic supply 2,0%
Share in total domestic supply
§
1,6%
1,2%
0,8%
0,4%
0,0% 1970
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
FEBRUARY 2008
1985
1990
1995
2000
2005
§
Since 1970, the composition of Brazil’s energy supply has changed in clear directions:
§
reduction in the share of wood and charcoal
§
increase in the share of electric power
§
increase in the share of natural gas
§
increase in the share of cane products
Composition of total domestic supply of energy
SOURCE: MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
Environment Economic development
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
§ §
Social development Technology and scale
FEBRUARY 2008
§
Supply from domestic or foreign sources
§
Domestic or foreign demand
§
All mediating transportation and storage networks
§
“Supply chain” refers primarily to physical units, but necessarily involves economic considerations, such as prices, cost and capital disbursements.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
FEBRUARY 2008
§
§
§
What environmental resources are affected, transformed or destroyed for the production, transportation and consumption of energy. What resources and energy are wasted at any stage of the supply chain. To what extent are technologies in actual use the most efficient given current technological knowledge.
DESTRUCTION OF NATURAL RESOURCES
WASTE
INEFFICIENT TECHNOLOGY
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
EMISSIONS
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
EMISSIONS
EFFICIENT TECHOLOGY
FEBRUARY 2008
§
International agreements
§ §
National regulations
§
Physical and infrastructure context
§ §
Technological context
§
Property and capital context
§ § §
Labor context
EMISSIONS
DESTRUCTION OF NATURAL RESOURCES
Subnational regulations
Economic considerations
WASTE
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
EMISSIONS
Trade barriers Cultural practices INEFFICIENT TECHNOLOGY
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
EFFICIENT TECHOLOGY
FEBRUARY 2008
§
CONSTRUCTION and OPERATION
§
§
CONSUMPTION OF OIL PRODUCTS
§ §
Brazilian environmental law requires important previous study, public discussion and regulatory approval before building and before operation of any activity with environmental impact.
Carbon and particle emissions
THE SPECIAL ROLE OF PETROBRAS
§ § § § §
Largest company in Brazil Important international oil company It has decided on becoming an “energy” company as its strategy aim. Investment capacity Capacity to form public opinion
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
NEGATIVE ASPECTS
§ § § § § §
Construction of dams, flooding of large areas Transmission lines Population relocation Effect on biodiversity Effect on fish migration
POSITIVE ASPECTS
§ § § § §
Regularization of water flow Increased navigability of rivers Economic and leisure use Source for urban water supply Source for irrigation water
Itaipu Flooded area: 1350 km2 Protected areas: 109.000 ha
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
On average, Brazilian dams flood 0,52 square kilometers for each MW of installed capacity.
Relation between generation capacity and KW per flooded area, for 46 largest dams
Least invasive
Most invasive
SOURCE: IAEA / Brazilian Dam Committee (CBDB)
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
MITIGATION
§ § § § § § §
Repopulation of river fauna Reforestation Creation of new conservation units Actions in surrounding towns
Relation between hydrelectric potential and development of this potential 70%
Building of water locks
PARANÁ RIVER
Biological monitoring of river basin 60% Percent developed
§
COMPENSATION
50%
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
SOUTHEAST ATLANTIC
30% 20% 10%
SOURCE: Tolmasquim
SÃO FRANCISCO RIVER
40%
TOCANTINS RIVER NORTHEAST ATLANTIC
0% 1.000
EAST ATLANTIC URUGUAI RIVER
10.000
AMAZON RIVER
100.000
Potential for energy generation (MW)
FEBRUARY 2008
1.000.000
§
POSITIVE ASPECTS
§
§
These are considered as essentially friendly to the environment.
NEGATIVE ASPECTS
§
Solar plates and batteries use metals which require special disposal after life span.
§
Large eolic systems may affect certain bird populations.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Petrobras wind farm in Northeastern Brazil, Mossoró-RN
FEBRUARY 2008
§
NEGATIVE ASPECT
§ § § §
Risk of nuclear accident High construction cost Very negative public perception of risk
POSITIVE ASPECT
§
Low operational cost (about 8 times lower than conventional thermoelectric power plants)
§
No carbon emissions
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
CO2 emissions §
Brazil ranks low both in emissions per GDP and in emissions per capita, among the World’s 15 greatest CO2 emittors.
Relation between “environmental quality” of development (CO2/GDP) and intensity of emissions (CO2 per capita) The World’s top 15 CO2-emitting countries
SOURCE: IAEA / World Resources Institute
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Should we produce biofuels?
§ §
Climate change is now a fact The question is mostly addressed indirectly:
§ §
§
as an alternative to fossil fuels (end of oil, pollution) as a competitor for resources which should be dedicated to food
§ §
The question is frequently seen only in a geopolitical setting
§
The public is bombarded with contradictory information.
Though advertising clean energy, oil majors look at biofuels as unwanted competitors
What biofuel to produce?
§ § §
Great variety of biofuels
§
Lack of understanding of the agricultural and industrial contexts of each raw material
Lack of understanding of their characteristics and Lack of understanding of the meaning of these characteristics as to efficiency, carbon emissions etc.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Where and how much to produce of it?
§
There are rigid physical limits which restrict possible regions for each raw material.
§
These physical limits are being more and more affected by greater weather impredictability.
§ §
There are varying economic limits to production.
§
There are fluctuations in the commodity markets (oil, oil products, biofuels, non-fuel products from same raw materials) which condition their production and their sale markets on a daily basis.
§
General economic conditions affect fuel and energy earlier and with more impact than they do most other industries.
There rigid regulatory restrictions on production, domestic distribution and international trade of biofuels.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Under what environment-protection conditions should it be produced?
§ § § § § § §
The “conventional wisdom” The research industry The public-opinion industry The stakeholders The regulatory complex The field
Under what land-holding and labor conditions should it be produced?
§ § § §
Existing regulations versus their practical application Economic considerations How much can regulations stretch economic facts? “Global harmonization”: why, who, how, cui bono?
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Inputs
§ § § § § § §
land water sunlight fertilizers and pest control chemicals labor mechanization
Outputs
§ §
air pollution (field-burning, industrial smoke)
§ § §
reduction in biodiversity
water pollution (fertilizers, chemicals, vinass,...) products revenue, employment, development
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
24 hours of night-time
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy consumption increased significantly in 2001-06 as compared to 1996-2001.
§
This increase occured outside OECD countries and mostly in China.
SOURCE: BP Energy Review
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy consumption is concentrated in developed countries.
§
Gas per capita consumption is highest in Canada, Russia e Saudi Arabia.
§
Oil per capita consumption is highest in the USA, Saudi Arabia, Holland and Island.
SOURCE: BP Energy Review
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Primary energy
FEBRUARY 2008
9%
§
This technological step reflected in reduction of energy consumption per GNP unit during the 70s.
Average growth (% p.a.).
§
In the 70s, GNP increased 4% p.a. more than energy consumption, indicating technological progress.
% 80s
7%
% 90s
6%
% 00s
5% 4% 3% 2%
Since then, this indicator has remained stable, while consumption per capita continues growing.
1% 0%
FInal energy consumption 180 Energy consumption (1970 = 100)
§
% 70s
8%
FONTE: Brasil-MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
GDP
Population
Consumption per unit of GDP Consumption per capita
160 140 120 100 80 60 40
1970
1975
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
There is a clear relation between GDP per capita and energy consumption per capita.
§
In the 70s, when growth was strong, so was increase in energy consumption.
§
During the 80s and early 90s, when the Brazilian economy stagnated, so did energy use.
§
§
Since 1996, both have continue their increase, but at lower rates than during the previous period of growth. Job creation in the energy sector is a main objective.
Relation between economic development (GNP per capita) and energy consumption per capita 6,0 5,5
1980
2000
2006
5,0 GDP per capita.
§
1990
4,5 4,0 3,5 3,0 2,5
SOURCE: MME
1970
2,0 0,700
0,800
0,900
1,000
1,100
Domestic supply of energy per capita
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1,200
1,300
OECD BRAZIL
§
OIL %
43 %
42
§
COAL %
20 %
7
§
NUCLEAR %
11 %
2
§
GAS %
21 %
8
OECD
BRAZIL World consumption of selected products 1,8
bilhões t/ano
1,6 1,4 1,2 1 0,8 0,6 0,4 0,2
SOURCE: IEA and MME for 2002
0 Trigo e Soja
Cimento
Aço
Plásticos
Madeira
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Social cost of alternative electricity sources
§
Generation from cane bagass is lowest, but very close to hydrelectric power plants, large or small, and coal thermo-electric plants.
§
The high share of taxes in cane-bagass equilibrium tariff, though, shows that government could reduce this tariff significantly through fiscal policy.
§
Nuclear and eolic energy remain much more expensive.
Cane bagass
Cane bagass
Hydrelectric plant
Hydrelectric plant
Small hydrelectric
Small hydrelectric
Coal
Coal
Natural gas
Natural gas
Nuclear
Nuclear
Eolic Eolic
0%
20%
40%
60%
80%
100%
Percent of equilibrium tariff
0
20
40
60
Equilibrium tariff (US$/MWh)
Generation
Taxes
Connection
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
SOURCE: Tolmasquim
FEBRUARY 2008
80
100
§
Technology for new sources
§ § § §
cellulosic ethanol ...
More efficient technology for existing sources
§ § § § § §
fuel cells
solar plates eolic energy generation tidal force geothermic sources
More efficient energy use Agricultural technology
§ § § §
Plant varieties Use of water Use of fertilizers Output control
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ § § §
What are biofuels? The sugar-cane supply chain Tecnology and scale in sugar-cane The inevitable linkage
CORN
BEET
CANE ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
JATROPHA FEBRUARY 2008
HYDRAULIC WAVES GEOTHERMIC
through direct use THERMO-SOLAR
SOURCES OF RENEWABLE ENERGY
through energy conversion
TIDES EOLIC CURRENTS PHOTOVOLTAIC
through biomass
VEGETABLE BIOMASS VEGETABLE BIOMASS FOR FROM STRAW, WOOD, STRAW, WOOD, COAL, COAL, CHIPS OR CHIPS OR BRICKETS BRICKETS
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
BIOMASS INTENSIVE IN STARCH, CARBOHYDRATES, CELULOSE OR LIPIDS FOR BIOFUELS
FEBRUARY 2008
FORESTAL OR AGRICULTURAL RESIDUES FOR DIRECT BURNING OR BIOGAS
COST OF ELECTRICITY – US$ / KWh Low
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
High
FEBRUARY 2008
SOURCE: FAO-Global Bioenergy Partnership ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
SOURCE: FAO-Global Bioenergy Partnership ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Biofuels sources are partially the same as food raw materials.
§
There are clear natural limits to the agricultural production of biofuel raw-materials (land, water).
§
This restiction imposed on the production its raw materials means that biofuels cannot cover, given current technologies, more than 15% or 20% of the energy demand currently supplied by fossil fuels.
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Today they are usually used in combinations with fossil fuels: ethanol-gasoline blends and biodiesel-diesel blends.
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Use of raw materials not used as essential for food
§ § § § § § §
rape seed (canola) castor oil (mamona) palm oil (dendê, babaçu,...) cotton seed oil (algodão) sunflower seed oil (girassol)
Use of land not used for food agriculture
§ § § §
jatropha (pinhão manso)
how can this be evaluated? how can it be inspected? what are the secondary cross effects? (water, pollution etc.)
Unmasking the hidden agendas
§
Poverty and lack of food has always been present. What was being done before, what is being done now and what must we do in the future?
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
In the G-8, Canada, France, Germany and the USA are the countries which have the largest shares of biofuels in total primary energy supply (between 2% and 5%).
§
Large biofuels producers, such as Brazil, India and China, though, have much greater shares (from 20% to 30%).
SOURCE: FAO-Global Bioenergy Partnership
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
BIODIESEL PRODUCER AUTOMOBILE MAKER AGRICULTURAL INPUTS
RESIDUES
CANE PRODUCER
FUEL DISTRIBUTOR
SUGAR, ETHANOL AND ENERGY PRODUCER
FUEL RESELLERS
ELECTRIC UTILITY
CONSUMER
FOOD INDUSTRY
TRADING COMPANIES SUB
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
CAR RESELLERS
INDUSTRY WHOLESALE RETAIL
CAPITAL GOODS
Source: CANAPLAN
FUEL RESELLERS
.
PRODUCTS
WHOLESALE AND RETAIL
FEBRUARY 2008
INFRASTRUCTURE
FOREIGN MARKET
§
Sugar-cane agriculture
§ § § § §
Plant varieties Minimum water requirements Effect of irrigation Minimum sunlight requirements Maturation and harvest under low rainfall
Just rainfall
With irrigation
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Harvesting cane by hand
§ § § § § § §
traditional for 5 centuries best after burning the field any topography intensive in labour hard labour conditions difficult for large scale
Mechanical harvesting
§ § § § §
does not require burning requires flat topography highly intensive in capital very low use of labour allows large scale
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Sugar and ethanol industry
§
design for maximum sugar, maximum ethanol or intermediary combinations
§
requires lowest distance from field to plant, due to cane degradation after burning and cutting
§
important industrial economies of scale up to 4-5 milion tons of cane per harvest
§
in Brazil, plants are in use during only part of the year
§
there is a great variety of sizes, ages and technologies
§
as there are multiple intermediary processes in the mill, each phase may use different technologies and may be designed for different product mixes.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Increased scale translates into lower investment and operational costs, with diminishing returns to scale.
§
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Cumulative scale has led to steadily declining average cost of cane and of ethanol. SOURCE: W.Bake. http://www.chem.uu.nl/nws/www/publica/publicaties2006/NWS-I-200614.pdf FEBRUARY 2008
§
Current production cost of ethanol are below the equivalent of US$ 30 per barrel.
SOURCE: J.Goldemberg ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
§
Energy potential of the sugar cane: 1/3
JUICE
608 x 103 kal
1/3
BAGASS
598 x 103 kal
1/3
STRAW
512 x 103 kal
Future uses:
§ §
bagass and straw for energy
1718 x 103 kal 100%
1 TON of CANE
bagass and straw for cellulosic ethanol
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
equal to 1,24 barrels of oil equivalent
1983: All gasoline in Brazil must contain 22% anhydrous ethanol.
2007: 69% of new cars and light vehicles sold in the country are flex-fuel.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Cars sold are now almost all flex-fuel
Percent flex-fuel in total sales
Domestic sales in Brazil of flex-fuel vehicles 100%
94,0 %
80%
84,3 %
60% 57,4 %
40% Cars
20%
Light commercials All vehicles
SOURCE: Anfavea
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
0% jan/06
mai/06
set/06
FEBRUARY 2008
jan/07
mai/07
set/07
§
The distribution of cane between sugar and ethanol is dependent on their relative prices, but shows a definite tendency towards greater ethanol production and consumption.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Ethanol vessel being loaded at Rio de Janeiro, Petrobras Ilha d’Água terminal May 2007 ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Brazilian ethanol production in 2007 will be largest ever, but mostly destined for domestic consumption.
§
With lower purchases by the US, Europe is still Brazil’s option, though the Far East remains important for beverage and industrial ethanol.
SOURCE: Kingsman ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
OBTAINING RAW-MATERIALS
INDUSTRIAL PRODUCTION
DOMESTIC MARKETING
INTERNATIONAL LOGISTICS
FOREIGN DISTRIBUTION
CRUDE OIL
OIL TRADERS
OIL MAJORS OIL PRODUCTS
ETHANOL
BIODIESEL
PL A N TE R S
MILLS
LOCALS
RECENT BIOFUEL FUNDS BIODIESEL PRODUCERS
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
OIL MAJORS IN BRAZIL
ETHANOL TRADERS
VEGOIL TRADERS
FEBRUARY 2008
LOCALS
§
Agricultural aspects:
§ § § § §
type of land and climate required input and labour requirements possible productivity per area natural fuel-potential of raw materials
Economic considerations:
§ §
requirements and cost of land, capital investments, inputs and labour possibilities and costs of agricultural technology
§ §
Industrial extraction technologies
§ §
Adaption of motors
Product “design” (technical requirements, policy limits, blending characteristics) Adaption to climates
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Understand the technologies: agricultural and industrial
§
Understand how production and consumption of each product affects the environment
§
Decide how each positive and negative characteristics should be given priority or penalized
§
Understand how technologies and products are associated to certifications and trade barriers
§
Evaluate how supposed (positive or negative) characteristics are publicized and are used as policy drivers.
§
Understand the focal origin of fuel and biofuel regulations: the state-owned oil company, the oil majors, independent (?) research institutes, independent (?) environmental NGOs
§
Understand the policy drivers and stakeholders behind fuel and biofuel trade barriers.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ § § §
Actual proven requirements and effects of each energy option.
§
Certainty that purely economic considerations will continue as the main driver of production and consumption.
§ §
Certainty that current decisions will “discount” future costs by high factors.
Public perception of these requirements and effects. Commercial, political and ideological use of the science–perception gap. Difficulty or impossibility of “fair” understanding, discussion and decision on such themes.
As the difference between “correct” and expensive options versus “egoistic” and cheaper options increases, more stringent regulation and stronger police action will grow in importance.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy companies are investing all over the World
§ § § § § § § § §
Oil companies increase their exploration and development activities
§
Universities and research institutes increase their clean energy activities.
Equipment suppliers to oil companies increase production Oil companies seek clean energies as marketing ventures Oil companies seek clean energies as strategic objectives Biofuel companies invest in production and distribution Fuel distribution companies integrate biofuels into their network Clean energy companies develop new markets Equipment suppliers for clean energies increase production Clean energy companies invest in research and development of new technologies and products.
§
Investors and fund managers look to energy business as a rapid-growth sector.
§
Governments and legislators seek to understand the energy sectors and review regulations. ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
IEA has forecasted various scenarios of demand for oil and its products.
§
Even considering the opening to production of new oil fields, there will be still much unmet demand requirements.
§
Annual capital investments in the oil industry are estimated increasing from US$ 400 billion today to over US$ 1 trillion in the next decade.
SOURCE: Platts
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Industry specialists foresee annual growth rates of over 15% in investments in clean energy technologies during the next decade, of which:
§ § § §
biofuels:
14,7 % p.a.
wind energy:
13,0 % p.a.
solar energy:
16,1 % p.a.
fuel cells:
27,3 % p.a.
SOURCE: Clean Edge
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Some hypothesis adopted by Petrobras in its strategic planning:
§ § § §
It will produce heavy oils of decreasing quality
§
There will a reduction in consumption of fossil fuels as motors become more efficient and alternative fuels are substitutes for fossil fuels.
§
Economic margins will be low.
There will be greater availability of natural gas. There will be lower consumption of fuel oils. There will be a greater pressure from society for the production of clean fuels.
.
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras aims to direct at least 0,5% of its total investments to clean energies:
§ § §
biodiesel and biomass eolic photo-voltaic
§
By 2010, it aims to produce 96 MW of power and 2.300 barrels per day of biodiesel.
§
Ethanol and biodiesel are now part of the strategic objectives of the company.
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Light vehicle emission levels in Brazil had reached US standards by 2000.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
§
From current risks
§ § § §
internal security for production and distribution
§
need for operational reserves
protection from foreign price fluctuations protection from extreme weather fluctuations (hydrelectric power generation)
From future risks
§ § §
autonomy from international trade
change to renewable sources increased generation capacity for growing demand
Environmental risks
§
urban air pollution
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL
Heitor Moura [email protected]
Presented in February, 2008
Heitor Moura [email protected]
§ § § § § § § § § §
The energy supply chain Consumption Production Trade Oil Hydrelectric energy Natural gas Eolic energy Nuclear energy Composition of energy supply
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Supply from domestic or foreign sources
§
Domestic or foreign demand
§
All mediating transportation, storage and commercial distribution networks
§
“Supply chain” most commonly refers to physical units, but necessarily involves economic considerations, such as prices, cost and capital disbursements, as well as regulatory aspects.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
FEBRUARY 2008
§
Apart from a small slow-down in the 80s, energy consumption in Brazil has been regularly growing at rates higher than world average.
§
This difference between World and Brazilian growth rates was greater in the 70s and 90s than it is now.
§
The high rates in the 70s were associated to the fast economic growth of the period. On the other hand, the low average in the 80s reflects the decade’s slow economic performance.
6%
World - sale of energy 5% Average annual growth.
§
Energy consumption Average annual growth rates
Brazil - final consumption
4% 3% 2% 1% 0%
% 70s
% 80s
% 90s
% 00s
SOURCE: United States-IEA-DOE e Brazil-MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
5%
This difference, however, varied markedly from decade to decade.
Non renewable
4% Average growth rates.
§
During the last 36 years, consumption of energy from renewable sources has been growing on average at a slightly lower rate (2,8% p.a.) than consumption from non-renewable sources (3,0% p.a.).
3%
2%
1%
Average growth rates
0%
%75>85
Total energy consumption
%85>95
%95>05
%04>06
100.000
Consumption (1.000 tpe).
§
Renewable
Renewable SOURCE: Brasil-MME Balanço Energético Nacional
10.000 1970
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Non renewable
1975
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
The growth in energy consumption is cyclic, following the ups and downs of the economy in general.
Annual growth rates 5%
Renewable sources Non renewable sources
4% 2-year moving growth rate.
§
3% 2% 1% 0% -1%
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
-2%
1973
1978
FEBRUARY 2008
1983
1988
1993
1998
2003
§ §
The main non-renewable sources of energy in Brazil are crude oil and natural gas.
§
Though growing at essentially the same long-term rates, other renewable energy (eolic, solar and nuclear) still represent only a small portion of total energy produced.
Of the renewable energy sources, hydrelectric power and sugar-cane related energy have shown the greatest increase over the last 36 years.
Non-renewables Crude oil Natural gas Other non-renewable
100.000
Production (1.000 TPE)
Production (1.000 TPE)
100.000
Renewables
10.000
10.000
1.000
Hydrelectric Wood Sugar-cane products
1.000 1970
1975
1980
1985
1990
1995
2000
2005
100 1970
Other renewable 1975
SOURCE: Brasil-MME Balanço Energético Nacional ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
1.000.000 Net imports Final consumption
1000 TPE
§
Despite continued growth in final consumption, Brazil’s reliance on imports of energy is today at a historical low, around 10% of consumption. This reduction in energy dependence over the last 3 decades came in two main surges:
§ §
100.000
in the late 70s and early 80s, and since the mid 90s 10.000 1970
Net imports / final consumption
§
1975
1980
1985
1990
1995
2000
2005
1990
1995
2000
2005
60%
50%
40%
30%
20%
10%
0%
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1970
FEBRUARY 2008
1975
1980
1985
§
Lower dependence on imports occured mostly due to the increase in the production of non-renewable energy, mainly oil.
§
This increase eliminated total dependence on non-renewable sources, though this does not mean elimination of imports.
Consumption less production (1.000 TPE)
Development (1.000 TPE) Renewable consumption
1.000.000
Non renewable
Renewable production
1.000 TPE
Renewable
50.000
Non renewable consumption
40.000
Non renewable production
1.000 TPE.
30.000
100.000
20.000 10.000 0
10.000 1970
1975
1980
1985
1990
1995
2000
2005
-10.000 1970
1975
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
§
§ §
Energy imports until the mid 80s were mainly oil.
Energy imports (1.000 TPE)
During the 90s coal and oil products increased, while crude oil imports were reduced. Since 2000, natural gas imports have become significant. Brazil has also purchased uranium during peak moments of its nuclear program. These imports have become steadier since 2000.
70.000 60.000 50.000 1.000 TPE
§
40.000 30.000 20.000 10.000 0
1970
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
Oil Electricity Alcohol
1985
1990
Coal and coke Uranium Vegetable coal
FEBRUARY 2008
1995
2000
Oil products Natural gas
2005
Two main product groups are exported:
§ § §
crude oil oil products
This is due to the peculiar Brazilian crude production and refining characteristics:
§ §
§
Brazilian crude is mostly heavy (low API); most economic refining options produce a greater proportion of gasoline than can be consumed domestically;
50%
Energy exports as percentage of imports
Exports / Imports (%)
§
60%
Energy exports as a percentage of import requirements have increased in 3 phases since the 70s.
40% 30% 20% 10% 0%
1970
Density of crude produced in 2005
there is a regular need for Balanço importation of diesel and fuelSOURCE: Brasil-MME Energético Nacional
1975
1980
1985
1990
2000
2005
35% 30% 25% 20% 15% 10% 5% 0%
10>15 15>20 20>25 25>30 30>35 35>40 Degrees API
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1995
40% Percentage of total production
§
FEBRUARY 2008
40>
Until 1980, exports were irregular and in small volumes.
§
From 1980 to 1999, the main exports were fuel oil and gasoline in excess from Brazil’s refining mix.
§
Since 2000, fuel oil exports have become much more important than gasoline’s, while crude oil volumes increased significantly, to over half of total energy exports.
Energy exports (1.000 TPE) 35.000 30.000 1.000 TPE
§
25.000 20.000 15.000 10.000 5.000 0 1970
SOURCE: Brasil-MME Balanço Energético Nacional
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
Fuel oil Diesel Ethanol
FEBRUARY 2008
1985
1990
Oil Kerosene
1995
2000
2005
Gasoline Other exports
§
Petrobras forecasts a growing surplus in oil products for the coming years, from production in new offshore fields.
§
This forecast is based on tested fields coming into production, less gradual depletion of old fields.
§
Recent discoveries of very deep deposits (Tupi), combined with continuous improvement in exploration and production technology, warrants optimism for Brazilian oil reserves and production over the next decade.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
30%
§
§
Brazil / World
The jump in the country’s share of World oil production, as well as in its share of South and Central American production, reflects this greater output.
Brazil’s share in oil production
Brazil’s share in World production has been growing more rapidly than its share in World reserves.
3,0% 20%
2,5% 2,0% 1,5%
10%
1,0% 0,5% 0% 0,0% 1965 1970 1975 1980 1985 1990 1995 2000 2005
Proved reserves
2,5%
Brazil’s share in oil production and reserves
The recent discoveries in the Santos basin, though, will certainly increase its share of reserves by a significant percentage
3,5%
Oil production 2,0%
1,5%
1,0%
0,5%
SOURCE: BP Energy Review 0,0% 1980
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1985
1990
1995
2000
2005
Brazil / World %
Brazil / South + Central Amer. %
§
Brazil increased its oil production markedly during two periods: in the 80s and from 1996 to 2003.
Brazil / World (%)
§
4,0%
Brazil / South + C America
§
Brazil’s proved reserves can maintain current levels of crude production for another 12-13 years.
§
The forecast for an additional 50% increase in total production over the next decade requires new descoveries and their development.
§
Analysis of the geological conditions of Brazil suggest an estimate of undiscovered reserve of about 4 times current proved reserves.
Brazil’s estimated crude production
SOURCE:MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras forecasts, already for 2010, a greater increase in oil product than growth in demand and refining output.
§
So Brazil will probably continue to export part of its crude production, and a growing volume of refined oil products.
Production, demand and refining
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Itaipu dam
SOURCE: Itaipu ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Brazil is considered to have the World’s third largest potential of hydrelectric energy.
§
Canada’s potential is about 40% of this estimated energy.
The World’s hydrelectric potential
SOURCE: World Energy Council / MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Canada is the World’s largest producer of hydrelectric energy.
§
Brazil holds third place, after the USA.
§
Norway and Brazil are the countries which produce most of their electricity from hydrelectric plants.
World’s largest producers of hydrelectric energy Production versus percentage of electricity generated by hydrelectric plants
Hydrelectric energy production
100 Percent of electric energy generated
350.000
250.000 200.000 150.000 100.000 50.000
a
c Sw e ed en
an
CANADA 60
SWEDEN
40 RUSSIA
INDIA 20
0 10.000
FRANCE
CHINA
FEBRUARY 2008
USA
JAPAN 100.000 GWh / year
SOURCE: World Energy Council / MME ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
BRAZIL
80
Fr
In di
C hi na R us si a N or w ay Ja pa n
az il Br
U SA
an ad
a
0
C
GWh per year
300.000
NORWAY
1.000.000
§
Brazil’s main dams are concentrated in the Southeastern region,
§
but there are small plants spread over the entire country.
Main hydrelectric power plants of Brazil
Electric power plants of all sizes and source
SOURCE: ANEEL
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
The concentration of electric generation in the Southeast implies in the necessity of an important transmission network.
§
The far North receives power from Venezuela.
§
Itaipu binational dam is owned 50/50 with Paraguay, but most of its energy has been bought by Brazil.
§
Reaching an agreement on new transfer prices between Paraguay and Brazil is an upcoming negotiation.
Electricity transmission network
SOURCE: Brazil-National System Operator
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras forecasts a large increase in natural gas production and consumption at over 19% p.a..
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
Natural gas is Brazil’s main energy source traded with its neighbours.
§
This trade, however, requires long-term political and contractual stability to
It also has the greatest growth potential due to South America’s large gas reserves.
Main natural gas reserves in LatAm
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Natural gas pipeline network
FEBRUARY 2008
§
Brazil has an important eolic energy potential, as measured by speed and regularity of prevailing winds.
Eolic potential of Brazil
SOURCE: CBEE
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
§
Only a small part of this potential, however, has been harnessed. Brazil’s share of the World’s installed eolic capacity is small, and has been increasing at lower rates than World total and that of main eolic energy users. Energy-generation eolic equipments still face important import tariffs.
Growth of World eolic energy capacity Installed MW 100.000 Germany Spain
MW installed capacty
§
10.000
SOURCE: Tolmasquim-Windpower Monthly-New Energy
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
USA Denmark India Italy
1.000
Netherlands
UK Brazil
100
World
10
1998
1999
2000
FEBRUARY 2008
2001
2002
2003
Existing nuclear plants Angra 1 and Angra 2 in Rio de Janeiro State
Planned Angra 3 plant
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Production of electricity from uranium began in 1984.
§
Brazil’s share of nuclear energy peaked at below 2% in the early 2000s.
§
The planned construction of a third plant is as yet undefined and generates much polemic.
Share of nuclear energy in total domestic supply 2,0%
Share in total domestic supply
§
1,6%
1,2%
0,8%
0,4%
0,0% 1970
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
1975
1980
FEBRUARY 2008
1985
1990
1995
2000
2005
§
Since 1970, the composition of Brazil’s energy supply has changed in clear directions:
§
reduction in the share of wood and charcoal
§
increase in the share of electric power
§
increase in the share of natural gas
§
increase in the share of cane products
Composition of total domestic supply of energy
SOURCE: MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ §
Environment Economic development
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
§ §
Social development Technology and scale
FEBRUARY 2008
§
Supply from domestic or foreign sources
§
Domestic or foreign demand
§
All mediating transportation and storage networks
§
“Supply chain” refers primarily to physical units, but necessarily involves economic considerations, such as prices, cost and capital disbursements.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
FEBRUARY 2008
§
§
§
What environmental resources are affected, transformed or destroyed for the production, transportation and consumption of energy. What resources and energy are wasted at any stage of the supply chain. To what extent are technologies in actual use the most efficient given current technological knowledge.
DESTRUCTION OF NATURAL RESOURCES
WASTE
INEFFICIENT TECHNOLOGY
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
EMISSIONS
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
EMISSIONS
EFFICIENT TECHOLOGY
FEBRUARY 2008
§
International agreements
§ §
National regulations
§
Physical and infrastructure context
§ §
Technological context
§
Property and capital context
§ § §
Labor context
EMISSIONS
DESTRUCTION OF NATURAL RESOURCES
Subnational regulations
Economic considerations
WASTE
DOMESTIC PRODUCTION
EXPORTS
INTERNAL SUPPLY
IMPORTS
CONSUMPTION
EMISSIONS
Trade barriers Cultural practices INEFFICIENT TECHNOLOGY
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
EFFICIENT TECHOLOGY
FEBRUARY 2008
§
CONSTRUCTION and OPERATION
§
§
CONSUMPTION OF OIL PRODUCTS
§ §
Brazilian environmental law requires important previous study, public discussion and regulatory approval before building and before operation of any activity with environmental impact.
Carbon and particle emissions
THE SPECIAL ROLE OF PETROBRAS
§ § § § §
Largest company in Brazil Important international oil company It has decided on becoming an “energy” company as its strategy aim. Investment capacity Capacity to form public opinion
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
NEGATIVE ASPECTS
§ § § § § §
Construction of dams, flooding of large areas Transmission lines Population relocation Effect on biodiversity Effect on fish migration
POSITIVE ASPECTS
§ § § § §
Regularization of water flow Increased navigability of rivers Economic and leisure use Source for urban water supply Source for irrigation water
Itaipu Flooded area: 1350 km2 Protected areas: 109.000 ha
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
On average, Brazilian dams flood 0,52 square kilometers for each MW of installed capacity.
Relation between generation capacity and KW per flooded area, for 46 largest dams
Least invasive
Most invasive
SOURCE: IAEA / Brazilian Dam Committee (CBDB)
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
MITIGATION
§ § § § § § §
Repopulation of river fauna Reforestation Creation of new conservation units Actions in surrounding towns
Relation between hydrelectric potential and development of this potential 70%
Building of water locks
PARANÁ RIVER
Biological monitoring of river basin 60% Percent developed
§
COMPENSATION
50%
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
SOUTHEAST ATLANTIC
30% 20% 10%
SOURCE: Tolmasquim
SÃO FRANCISCO RIVER
40%
TOCANTINS RIVER NORTHEAST ATLANTIC
0% 1.000
EAST ATLANTIC URUGUAI RIVER
10.000
AMAZON RIVER
100.000
Potential for energy generation (MW)
FEBRUARY 2008
1.000.000
§
POSITIVE ASPECTS
§
§
These are considered as essentially friendly to the environment.
NEGATIVE ASPECTS
§
Solar plates and batteries use metals which require special disposal after life span.
§
Large eolic systems may affect certain bird populations.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Petrobras wind farm in Northeastern Brazil, Mossoró-RN
FEBRUARY 2008
§
NEGATIVE ASPECT
§ § § §
Risk of nuclear accident High construction cost Very negative public perception of risk
POSITIVE ASPECT
§
Low operational cost (about 8 times lower than conventional thermoelectric power plants)
§
No carbon emissions
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
CO2 emissions §
Brazil ranks low both in emissions per GDP and in emissions per capita, among the World’s 15 greatest CO2 emittors.
Relation between “environmental quality” of development (CO2/GDP) and intensity of emissions (CO2 per capita) The World’s top 15 CO2-emitting countries
SOURCE: IAEA / World Resources Institute
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Should we produce biofuels?
§ §
Climate change is now a fact The question is mostly addressed indirectly:
§ §
§
as an alternative to fossil fuels (end of oil, pollution) as a competitor for resources which should be dedicated to food
§ §
The question is frequently seen only in a geopolitical setting
§
The public is bombarded with contradictory information.
Though advertising clean energy, oil majors look at biofuels as unwanted competitors
What biofuel to produce?
§ § §
Great variety of biofuels
§
Lack of understanding of the agricultural and industrial contexts of each raw material
Lack of understanding of their characteristics and Lack of understanding of the meaning of these characteristics as to efficiency, carbon emissions etc.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Where and how much to produce of it?
§
There are rigid physical limits which restrict possible regions for each raw material.
§
These physical limits are being more and more affected by greater weather impredictability.
§ §
There are varying economic limits to production.
§
There are fluctuations in the commodity markets (oil, oil products, biofuels, non-fuel products from same raw materials) which condition their production and their sale markets on a daily basis.
§
General economic conditions affect fuel and energy earlier and with more impact than they do most other industries.
There rigid regulatory restrictions on production, domestic distribution and international trade of biofuels.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Under what environment-protection conditions should it be produced?
§ § § § § § §
The “conventional wisdom” The research industry The public-opinion industry The stakeholders The regulatory complex The field
Under what land-holding and labor conditions should it be produced?
§ § § §
Existing regulations versus their practical application Economic considerations How much can regulations stretch economic facts? “Global harmonization”: why, who, how, cui bono?
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Inputs
§ § § § § § §
land water sunlight fertilizers and pest control chemicals labor mechanization
Outputs
§ §
air pollution (field-burning, industrial smoke)
§ § §
reduction in biodiversity
water pollution (fertilizers, chemicals, vinass,...) products revenue, employment, development
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
24 hours of night-time
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy consumption increased significantly in 2001-06 as compared to 1996-2001.
§
This increase occured outside OECD countries and mostly in China.
SOURCE: BP Energy Review
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy consumption is concentrated in developed countries.
§
Gas per capita consumption is highest in Canada, Russia e Saudi Arabia.
§
Oil per capita consumption is highest in the USA, Saudi Arabia, Holland and Island.
SOURCE: BP Energy Review
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Primary energy
FEBRUARY 2008
9%
§
This technological step reflected in reduction of energy consumption per GNP unit during the 70s.
Average growth (% p.a.).
§
In the 70s, GNP increased 4% p.a. more than energy consumption, indicating technological progress.
% 80s
7%
% 90s
6%
% 00s
5% 4% 3% 2%
Since then, this indicator has remained stable, while consumption per capita continues growing.
1% 0%
FInal energy consumption 180 Energy consumption (1970 = 100)
§
% 70s
8%
FONTE: Brasil-MME
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
GDP
Population
Consumption per unit of GDP Consumption per capita
160 140 120 100 80 60 40
1970
1975
FEBRUARY 2008
1980
1985
1990
1995
2000
2005
There is a clear relation between GDP per capita and energy consumption per capita.
§
In the 70s, when growth was strong, so was increase in energy consumption.
§
During the 80s and early 90s, when the Brazilian economy stagnated, so did energy use.
§
§
Since 1996, both have continue their increase, but at lower rates than during the previous period of growth. Job creation in the energy sector is a main objective.
Relation between economic development (GNP per capita) and energy consumption per capita 6,0 5,5
1980
2000
2006
5,0 GDP per capita.
§
1990
4,5 4,0 3,5 3,0 2,5
SOURCE: MME
1970
2,0 0,700
0,800
0,900
1,000
1,100
Domestic supply of energy per capita
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
1,200
1,300
OECD BRAZIL
§
OIL %
43 %
42
§
COAL %
20 %
7
§
NUCLEAR %
11 %
2
§
GAS %
21 %
8
OECD
BRAZIL World consumption of selected products 1,8
bilhões t/ano
1,6 1,4 1,2 1 0,8 0,6 0,4 0,2
SOURCE: IEA and MME for 2002
0 Trigo e Soja
Cimento
Aço
Plásticos
Madeira
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Social cost of alternative electricity sources
§
Generation from cane bagass is lowest, but very close to hydrelectric power plants, large or small, and coal thermo-electric plants.
§
The high share of taxes in cane-bagass equilibrium tariff, though, shows that government could reduce this tariff significantly through fiscal policy.
§
Nuclear and eolic energy remain much more expensive.
Cane bagass
Cane bagass
Hydrelectric plant
Hydrelectric plant
Small hydrelectric
Small hydrelectric
Coal
Coal
Natural gas
Natural gas
Nuclear
Nuclear
Eolic Eolic
0%
20%
40%
60%
80%
100%
Percent of equilibrium tariff
0
20
40
60
Equilibrium tariff (US$/MWh)
Generation
Taxes
Connection
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
SOURCE: Tolmasquim
FEBRUARY 2008
80
100
§
Technology for new sources
§ § § §
cellulosic ethanol ...
More efficient technology for existing sources
§ § § § § §
fuel cells
solar plates eolic energy generation tidal force geothermic sources
More efficient energy use Agricultural technology
§ § § §
Plant varieties Use of water Use of fertilizers Output control
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ § § §
What are biofuels? The sugar-cane supply chain Tecnology and scale in sugar-cane The inevitable linkage
CORN
BEET
CANE ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
JATROPHA FEBRUARY 2008
HYDRAULIC WAVES GEOTHERMIC
through direct use THERMO-SOLAR
SOURCES OF RENEWABLE ENERGY
through energy conversion
TIDES EOLIC CURRENTS PHOTOVOLTAIC
through biomass
VEGETABLE BIOMASS VEGETABLE BIOMASS FOR FROM STRAW, WOOD, STRAW, WOOD, COAL, COAL, CHIPS OR CHIPS OR BRICKETS BRICKETS
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
BIOMASS INTENSIVE IN STARCH, CARBOHYDRATES, CELULOSE OR LIPIDS FOR BIOFUELS
FEBRUARY 2008
FORESTAL OR AGRICULTURAL RESIDUES FOR DIRECT BURNING OR BIOGAS
COST OF ELECTRICITY – US$ / KWh Low
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
High
FEBRUARY 2008
SOURCE: FAO-Global Bioenergy Partnership ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
SOURCE: FAO-Global Bioenergy Partnership ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Biofuels sources are partially the same as food raw materials.
§
There are clear natural limits to the agricultural production of biofuel raw-materials (land, water).
§
This restiction imposed on the production its raw materials means that biofuels cannot cover, given current technologies, more than 15% or 20% of the energy demand currently supplied by fossil fuels.
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Today they are usually used in combinations with fossil fuels: ethanol-gasoline blends and biodiesel-diesel blends.
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
GASOLINE BLENDING BLENDED GASOLINE
FEEDSTOCK PRODUCTION
FUEL ETHANOL
FUEL ETHANOL TRADE FUEL ETHANOL
FUEL DISTRIBUTION
BLENDING + DISTRIBUTION CONSUMPTION
VALUE-CHAIN SECTOR
PRODUCT
SUGAR + ETHANOL INDUSTRY GASOLINE
BLENDED GASOLINE
SUGAR
GASOLINE
PRODUCT TRADE
FEEDSTOCK EXTRACTION
FEEDSTOCK PROCESSING
SUGAR TRADE
DIESEL SUGAR
CANE BEET CORN OTHER
OIL FUEL TRADE
GASOLINE
FUEL CONSUMPTION
OIL REFINERY
CRUDE OIL
CORN OTHER
FOOD AND NON-FOOD AGRIINDUSTRIES
DIESEL
BLENDED BIODIESEL
BIODIESEL BLENDING
FOOD + BEVERAGE CONSUMPTION
AGR
AGRICULTURE
FOSSIL EXTRACTION
SEED / NUT B100
SUGAR, ETHANOL, CORN, VEGOIL PRODUCTS
FOOD DISTRIBUTION
VEGOIL
BIODIESEL TRADE
NON-FOOD DISTRIBUTION
B100 BIODIESEL INDUSTRY
VEGOIL
VEGOIL
VEGOIL TRADE
VEGOIL INDUSTRY
NON FOOD AGRIPRODUCTS CONSUMPTION
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Use of raw materials not used as essential for food
§ § § § § § §
rape seed (canola) castor oil (mamona) palm oil (dendê, babaçu,...) cotton seed oil (algodão) sunflower seed oil (girassol)
Use of land not used for food agriculture
§ § § §
jatropha (pinhão manso)
how can this be evaluated? how can it be inspected? what are the secondary cross effects? (water, pollution etc.)
Unmasking the hidden agendas
§
Poverty and lack of food has always been present. What was being done before, what is being done now and what must we do in the future?
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
In the G-8, Canada, France, Germany and the USA are the countries which have the largest shares of biofuels in total primary energy supply (between 2% and 5%).
§
Large biofuels producers, such as Brazil, India and China, though, have much greater shares (from 20% to 30%).
SOURCE: FAO-Global Bioenergy Partnership
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
BIODIESEL PRODUCER AUTOMOBILE MAKER AGRICULTURAL INPUTS
RESIDUES
CANE PRODUCER
FUEL DISTRIBUTOR
SUGAR, ETHANOL AND ENERGY PRODUCER
FUEL RESELLERS
ELECTRIC UTILITY
CONSUMER
FOOD INDUSTRY
TRADING COMPANIES SUB
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
CAR RESELLERS
INDUSTRY WHOLESALE RETAIL
CAPITAL GOODS
Source: CANAPLAN
FUEL RESELLERS
.
PRODUCTS
WHOLESALE AND RETAIL
FEBRUARY 2008
INFRASTRUCTURE
FOREIGN MARKET
§
Sugar-cane agriculture
§ § § § §
Plant varieties Minimum water requirements Effect of irrigation Minimum sunlight requirements Maturation and harvest under low rainfall
Just rainfall
With irrigation
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Harvesting cane by hand
§ § § § § § §
traditional for 5 centuries best after burning the field any topography intensive in labour hard labour conditions difficult for large scale
Mechanical harvesting
§ § § § §
does not require burning requires flat topography highly intensive in capital very low use of labour allows large scale
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Sugar and ethanol industry
§
design for maximum sugar, maximum ethanol or intermediary combinations
§
requires lowest distance from field to plant, due to cane degradation after burning and cutting
§
important industrial economies of scale up to 4-5 milion tons of cane per harvest
§
in Brazil, plants are in use during only part of the year
§
there is a great variety of sizes, ages and technologies
§
as there are multiple intermediary processes in the mill, each phase may use different technologies and may be designed for different product mixes.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Increased scale translates into lower investment and operational costs, with diminishing returns to scale.
§
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
Cumulative scale has led to steadily declining average cost of cane and of ethanol. SOURCE: W.Bake. http://www.chem.uu.nl/nws/www/publica/publicaties2006/NWS-I-200614.pdf FEBRUARY 2008
§
Current production cost of ethanol are below the equivalent of US$ 30 per barrel.
SOURCE: J.Goldemberg ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
§
Energy potential of the sugar cane: 1/3
JUICE
608 x 103 kal
1/3
BAGASS
598 x 103 kal
1/3
STRAW
512 x 103 kal
Future uses:
§ §
bagass and straw for energy
1718 x 103 kal 100%
1 TON of CANE
bagass and straw for cellulosic ethanol
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
equal to 1,24 barrels of oil equivalent
1983: All gasoline in Brazil must contain 22% anhydrous ethanol.
2007: 69% of new cars and light vehicles sold in the country are flex-fuel.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Cars sold are now almost all flex-fuel
Percent flex-fuel in total sales
Domestic sales in Brazil of flex-fuel vehicles 100%
94,0 %
80%
84,3 %
60% 57,4 %
40% Cars
20%
Light commercials All vehicles
SOURCE: Anfavea
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
0% jan/06
mai/06
set/06
FEBRUARY 2008
jan/07
mai/07
set/07
§
The distribution of cane between sugar and ethanol is dependent on their relative prices, but shows a definite tendency towards greater ethanol production and consumption.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
Ethanol vessel being loaded at Rio de Janeiro, Petrobras Ilha d’Água terminal May 2007 ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Brazilian ethanol production in 2007 will be largest ever, but mostly destined for domestic consumption.
§
With lower purchases by the US, Europe is still Brazil’s option, though the Far East remains important for beverage and industrial ethanol.
SOURCE: Kingsman ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
OBTAINING RAW-MATERIALS
INDUSTRIAL PRODUCTION
DOMESTIC MARKETING
INTERNATIONAL LOGISTICS
FOREIGN DISTRIBUTION
CRUDE OIL
OIL TRADERS
OIL MAJORS OIL PRODUCTS
ETHANOL
BIODIESEL
PL A N TE R S
MILLS
LOCALS
RECENT BIOFUEL FUNDS BIODIESEL PRODUCERS
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
OIL MAJORS IN BRAZIL
ETHANOL TRADERS
VEGOIL TRADERS
FEBRUARY 2008
LOCALS
§
Agricultural aspects:
§ § § § §
type of land and climate required input and labour requirements possible productivity per area natural fuel-potential of raw materials
Economic considerations:
§ §
requirements and cost of land, capital investments, inputs and labour possibilities and costs of agricultural technology
§ §
Industrial extraction technologies
§ §
Adaption of motors
Product “design” (technical requirements, policy limits, blending characteristics) Adaption to climates
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Understand the technologies: agricultural and industrial
§
Understand how production and consumption of each product affects the environment
§
Decide how each positive and negative characteristics should be given priority or penalized
§
Understand how technologies and products are associated to certifications and trade barriers
§
Evaluate how supposed (positive or negative) characteristics are publicized and are used as policy drivers.
§
Understand the focal origin of fuel and biofuel regulations: the state-owned oil company, the oil majors, independent (?) research institutes, independent (?) environmental NGOs
§
Understand the policy drivers and stakeholders behind fuel and biofuel trade barriers.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§ § § §
Actual proven requirements and effects of each energy option.
§
Certainty that purely economic considerations will continue as the main driver of production and consumption.
§ §
Certainty that current decisions will “discount” future costs by high factors.
Public perception of these requirements and effects. Commercial, political and ideological use of the science–perception gap. Difficulty or impossibility of “fair” understanding, discussion and decision on such themes.
As the difference between “correct” and expensive options versus “egoistic” and cheaper options increases, more stringent regulation and stronger police action will grow in importance.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Energy companies are investing all over the World
§ § § § § § § § §
Oil companies increase their exploration and development activities
§
Universities and research institutes increase their clean energy activities.
Equipment suppliers to oil companies increase production Oil companies seek clean energies as marketing ventures Oil companies seek clean energies as strategic objectives Biofuel companies invest in production and distribution Fuel distribution companies integrate biofuels into their network Clean energy companies develop new markets Equipment suppliers for clean energies increase production Clean energy companies invest in research and development of new technologies and products.
§
Investors and fund managers look to energy business as a rapid-growth sector.
§
Governments and legislators seek to understand the energy sectors and review regulations. ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
IEA has forecasted various scenarios of demand for oil and its products.
§
Even considering the opening to production of new oil fields, there will be still much unmet demand requirements.
§
Annual capital investments in the oil industry are estimated increasing from US$ 400 billion today to over US$ 1 trillion in the next decade.
SOURCE: Platts
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Industry specialists foresee annual growth rates of over 15% in investments in clean energy technologies during the next decade, of which:
§ § § §
biofuels:
14,7 % p.a.
wind energy:
13,0 % p.a.
solar energy:
16,1 % p.a.
fuel cells:
27,3 % p.a.
SOURCE: Clean Edge
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Some hypothesis adopted by Petrobras in its strategic planning:
§ § § §
It will produce heavy oils of decreasing quality
§
There will a reduction in consumption of fossil fuels as motors become more efficient and alternative fuels are substitutes for fossil fuels.
§
Economic margins will be low.
There will be greater availability of natural gas. There will be lower consumption of fuel oils. There will be a greater pressure from society for the production of clean fuels.
.
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Petrobras aims to direct at least 0,5% of its total investments to clean energies:
§ § §
biodiesel and biomass eolic photo-voltaic
§
By 2010, it aims to produce 96 MW of power and 2.300 barrels per day of biodiesel.
§
Ethanol and biodiesel are now part of the strategic objectives of the company.
SOURCE: Petrobras
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
Light vehicle emission levels in Brazil had reached US standards by 2000.
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
§
§
From current risks
§ § § §
internal security for production and distribution
§
need for operational reserves
protection from foreign price fluctuations protection from extreme weather fluctuations (hydrelectric power generation)
From future risks
§ § §
autonomy from international trade
change to renewable sources increased generation capacity for growing demand
Environmental risks
§
urban air pollution
ENERGY IN BRAZIL – A PRESENTATION BY HEITOR MOURA
FEBRUARY 2008
ENERGY IN BRAZIL
Heitor Moura [email protected]
Presented in February, 2008
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