Marcos Jank
Brazilian View: Growth potential and struggle against protectionism
Marcos Jank, the president of Unica (Sugar Cane Industry Union, SP - Brazil), talking about the current biofuel situation in Brazil, believes that demand can be created by stimulating the use of this fuel and reminds us of the importance of continuing to fight for reductions in protectionism.
Biofuel Magazine - How does the Brazilian mar ket see biofuel growth these days?
Marcos Jank - Brazil has vast potential in this sector, so much so that ethanol currently represents more than 40% of all vehicular fuel used in the country The potential to increase consumption the word over is also very great especially in the United States and Europe, owing to the importance of biofuel to the planet's energy grid and its contribution towards reducing global warming, which has motivated consumers and governments to step up the worldwide search for renewable fuels.
Biofuel Magazine – How can we generate demand for our ethanol output?
Marcos Jank – To create demand we need stimulate domestic market growth and open new markets. In the case of the domestic market for the first time we've launched a country wide advertising campaign to encourage the use of alcohol in flex cars. However, we also need to unify the ICMS (Tax on Goods and Services) rates for the entire national territory, establishing a treatment for renewable fuels similar to the one currently given to vehicular diesel oil and natural gas. In order to increase international demand for alcohol over the next six months Unica will be installing a network of three representative offices for the Brazilian sugar cane Industry in Washington, Brussels and in some capital in Eastern Asia, probably Tokyo or Beijing These Unica foreign offices are the beginning of a permanent dialogue of our sector with the world, in which we’ll show the advantages of ethanol produced with sugar cane in terms of productivity, cost and energetic, social and environmental balance compared with its fossil and renew able fuel competitors We intend to participate in the strong international schedule of conferences on biofuels together with the legislative and executive branches of the great nations and economic blocks, the media, Non-Governmental Organizations, civil society and the creators of commercial agreements like those which are being developed with the USA and the European Union.
Biofuel Magazine - What is your expectation in terms of investments in the sector in Brazil in the coming years/decades?
Marcos Jank - It is estimated that approximately US$ 17 billion will be invested over the next five years, with US$ 14 billion going towards the construction of new plants and the rest for the expansion of existing ones. It's been predicted that at least 86 new plants will begin to operate by 2012 / 2013.
Biofuel Magazine - How open is the foreign market regarding Brazilian ethanol exports?
Marcos Jank - We've seen growth In our ethanol exports. From April to September of 2007 Brazil exported almost two billion liters of ethanol while in the same period in 2006, the exported volume was equal to 1.80 billion liters. However, I believe our first big challenge is to consolidate ethanol as a global energetic commodity in the biofuel area by increasing production, consumption and sales of the product in many countries. It's necessary to fight the myths and prejudices agali7st the Brazilian sugar-alcohol sector; which have spread at great speed throughout the world after the USA and the EU decided to double or triple their production of biofuel.
We have to stimulate ethanol production growth and consumption in a larger number of countries, supporting mandatory mixture mechanisms and establishing universal standards for the product. The word biofuel market is still taking its first steps. It is unacceptable that we still see the world's fossil fuel market entirely free while the renewable fuel market, which represents humanity's dream for the 21st century, is still strongly protected.
Biofuel Magazine - Which countries are potential importers of Brazilian ethanol?
Marcos Jank - In terms of future potential we have Japan, Korea, China and certainly the increase in volume exported to the United States and the European Union.
Biofuel Magazine - How would you rate the Federal Government's role in the encouragement of biofuel production?
Marcos Jank - It is fundamental that the government and UNICA take on the role of protagonists in worldwide discussions, with other governments, businesspeople and NGOs, on the problems of global warming, climactic change, carbon credits, natural resources economy, biotechnology and other important issues, including the debate on proper mechanisms for social-environmental certification processes. We have an open dialogue with the Federal Government, which has been tirelessly working to open foreign markets to Brazilian ethanol We've also discussed the necessity for investments in the area of transport and dock-terminal logistics and about the need to consolidate the ICMS (Tax on Goods and Services) rates for the entire national territory
Biofuel Magazine - Regarding environmental sustainability, what do you think can be done to reduce sugar cane burning?
Marcos Jank - In São Paulo the sugar-alcohol sector has already assumed a governmental commitment to completely eliminate the burning of sugar cane straw waste by 2017 Last October 22nd, 96 sugar and alcohol production units confirm their voluntary adherence to the Agroenvironmental Protocol of the Sugar-Alcohol Indus try and received a "Certificate of Agroenvironmental Conformity”. With this protocol the burning of the cane straw waste in mechanized areas, which was to end in 2021, will be completely eliminated bv 2014. In the non-mechanized areas this elimination will be brought forward even more radically: from 2031 to 2017 What’s more, all new areas occupied by sugar cane, from 2007 on, will be fully harvested without the use of fire. The protocol also deals with other enormously relevant subjects, such as soil and water re source conservation, protection of riparian forests, natural spring recuperation, reductions in atmospheric emissions and care in the use of agrochemicals.
Unica is as much concerned about questions of environ mental sustainability as it is about social sustainability Eliminating burning cannot be achieved abruptly due to the large number of rural workers employed in the manual cutting process, the need to adapt areas for mechanized harvest (appropriate varieties, systemization of the sugar cane fields etc) and the availability of equipment. The differences in environmental and social interests have been made compatible by the gradual elimination of burning. For this reason, we are going to begin a retraining pro gram for the sectors labor force, training tractor operators and boiler operators, looking to take advantage of some of the labor that will be available after mechanization. We will have 50,000 new jobs in planting and harvesting and 20,000 new jobs in the sugar-alcohol industry in 2020
Biofuel Magazine - What is your opinion about statements that growth in the sugar-alcohol sector may accidentally harm the cultivation of other crops in Brazil?
Marcos Jank - There is no conflict between sugar cane and other crops. Brazil has large agricultural properties focused on a variety of activities, such as sugar cane, soy com, flowers, fruits etc, in every region of the country Brazil covers an area of 850 million hectares, a large part of which is economical/y suitable for agricultural production, while still maintaining large forest areas containing different biomes. The areas currently used for agricultural cultivation total approximately 63 million hectares (just 74% of the territory with 22 million of these cultivated in soybeans and 13 million in corn) while the areas used as pastures correspond to 200 million hectares, a portion of which is somewhat degraded At the same time, the area occupied by sugar cane, to produce ethanol, represents a mere 0.8% of the national territory Currently in Brazil, approximately seven million hectares are planted with sugar cane - 50% for ethanol and 50% for sugar. Sugar cane occupies a minuscule area - 2% of the country’s cultivable area, three times less than the area planted with soy and 30 times less than the area used for pastures. Now, the arrival of sugar cane in the Central-West marks the beginning of a new cycle of land-use intensification and diversification. The price offered for the leasing of land used for sugar cane is going to eliminate the last pockets of farming inefficiency, on the small as well as the large estates. Soy com, cotton and sugar cane should all compete for land use according to their relative prices, logistic conditions and crop rotation, causing an inevitable intensification in the production of meat and milk. However, the expansion of sugar cane should be seen as a factor which diversifies income for producers and intensifies agricultural activity in inefficient areas.
Biofuel Magazine - How can we show society that it is possible to maintain this sustainability with ethanol production?
Marcos Jank - The supply increase will result from the installation of new units, an expansion of existing units and an increase in agricultural productivity. For the most part, this increase in supply will take place in a vertical fashion, owing to the greater productivity of new sugar cane varieties and the undeniable role employed by technological advances. In the case of ethanol, a new technological frontier is the use of cellulose (heap of straw, fodder, wood scraps etc) for its production. in Brazil, for example, ethanol production from bagasse and sugar cane straw waste will be able to double productivity in the coming years. Therefore, in the case of second generation fuels, these production increases shouldn't coincide with an enlargement of cultivated areas.
It's also important to highlight the use of bioelectricity, generated using the biomass available in the plant itself Were talking about clean, totally renewable electricity with a low environmental impact lower construction time, and is available right in the heart of facilities that consume the most energy precise/y in the driest months of the year (so, aside from being clean and renewable, it's highly complementary to hydroelectricity's seasonal nature). With appropriate public policy, involving direct connection, fast environmental licensing and appropriate pricing, the sector could supply 75% of the nation's electricity needs, that is, equivalent to almost two Itaipús (the largest dam in the world).
Biofuel Magazine - Is the Brazilian government in negotiations with the United States about the adoption of an ethanol production quota in Brazil? What are the issues there?
Marcos Jank - We need to understand that sustainability and global warming are systemic subjects, which need to be dealt with globally Unfortunately, many countries are dealing with the subject with a domestic, isolationist focus, centered on self-production using inefficient raw materials, as in the USA, where the expansion of ethanol is based on com.
A cooperation agreement was signed this year, which is focused on research collaboration by the Brazilian and North American governments. We understand that negotiations for the Brazilian ethanol quota are a medium to long-term project and were working with the Brazilian government on the matter.
