The sweet hereafter

Biofuels are now seen as polluting and as a threat to forests and food production. But Brazil is still pinning its hopes on becoming a big player in sustainable sugarcane ethanol and related technology. Jan Rocha reports
Jan Rocha
The Guardian,
Wednesday May 28 2008
Article history
Brazil's ambitious plans for supplying the world with renewable sugarcane ethanol have been put on hold as criticism of biofuels escalates. Instead of being seen as a solution, biofuels have become the new villains of the energy scene and are now blamed for everything from hunger to climate change itself.
"A few years ago, we thought biofuels were heaven, but now we think they are hell," says Anders Wijkman, an MEP from Sweden, which is the only European country that already imports Brazilian ethanol for its public transport system. "I think the truth is somewhere in between."
Last year, Brazilian exports of ethanol fell by 14%. Work on two giant pipelines planned to carry ethanol from the canefields of Goias to the ports of Paranagua and São Sebastião has been suspended, and the question being raised is whether the bio-boom is over before it has begun. Are the big-name foreign investors such as George Soros and the pension funds, who were falling over themselves to buy up land in central Brazil to plant sugar cane, backing the wrong horse? Are biofuels really less sustainable and more polluting than fossil fuels?
The view from Brazil, which has vast space, a burgeoning economy and a growing population hungry for development, is very different from that in Europe. With oil at over $120 (£61) a barrel, they say the answer can only be "no". Ethanol is just $35 a barrel, and for most countries - especially poor oil-importing countries in Africa, where high fuel prices have already led to a drop in real income - the economic argument is all important. As the number of vehicles in the world tops a billion, the oil companies themselves admit that biofuels will be essential for meeting the growing demand for fuel, probably providing 10% of transport needs by 2030. Today, they account for only 1%.
Moreover, the demand for fuel is expected to double by mid-century, thanks not only to the gas-guzzling rich countries' inability to reduce their already high consumption, but to population growth and higher incomes in the large emerging economies.
There is conflicting research on sugar cane's contribution to greenhouse gases (GHGs). According to Friends of the Earth's biofuels campaigner, Kenneth Richter, research shows that growing and processing some crops in certain countries can release more GHGs than they save. Meanwhile, the Smithsonian Institute - reviewing recent research into 26 biofuel products - gave sugar cane black marks for polluting rivers and producing GHG from nitrogenous fertilisers and annual burning.
However, Brazil's government research company, Embrapa, has found that where sugar cane replaces soy or cattle pasture, it absorbs much more CO2 because it has a greater capacity than other crops to convert the gas into biomass. For Mark Lundell, a World Bank expert on biofuels, other factors such as the type of crop, production technology, energy inputs into processing, transportation to refineries and product markets, and alternative land uses also affect the environmental impact - and Brazilian sugar cane comes out well when compared with US maize or Malaysian palm oil.
Import tariff
The American ethanol made from maize is not only heavily subsidised but is also protected from its much cheaper sugar cane competitor by a steep import tariff - so much so that Federal Reserve chairman, Ben Bernanke, has called for the tariff's reduction to allow cheaper fuel to help in his battle with inflation.
But above all, biofuels are seen as a threat to tropical forests and food production. In Indonesia, palm oil plantations have replaced rainforest, and there are fears that sugar cane will invade the Amazon region, or have a domino effect, pushing soy and cattle into virgin forest, causing more deforestation.
Marcos Jank, president of Unica, the sugar cane industry association, points out that the humid climate of the tropical forest does not suit sugar cane, and that it grows best in the temperate south-eastern state of São Paulo, where productivity is higher and technology is most up to date. Mechanisation will soon eliminate the practice of burning the cane, cutting emissions - and thousands of jobs.
Brazilian officials laugh at the idea that sugar cane will push out food production in a land where at least 90m hectares of arable land is said to be still available for farming outside the rainforest, and where sugar cane covers only 5% of Brazilian farmland. Jank claims that increased productivity will soon double the current yield of 7,000 litres per hectare and that production could be raised by 50%, with an additional 10m-15m hectares of land.
The problem is that while the Amazon rainforest might be safe, another invaluable ecosystem, the cerrado of central Brazil, could be at risk. And Lundell believes that rainforest deforestation will be difficult to avoid if sugar cane production demands more than 20m hectares.
But social sustainability is much harder to defend. In 2007, over half of nearly 6,000 workers found by government inspectors in slave-like conditions were sugar cane cutters, most of them in the traditional plantations of the north-east. In another big cane-growing area, Mato Grosso do Sul, Guarani Indians, who have lost most of their land to cattle ranchers, provide cheap, exploited labour.
Harvested by women
The babassu palm, whose oil was used to part-fuel Richard Branson's Boeing 747, grows mostly in the poor and backward states of Maranhño and Piaui, and is harvested exclusively by women. If it joins the list of desirable renewables, will these 300,000 women, who often support large families with their hard-earned income, reap some of the reward or will they lose their livelihood to multinational companies with machines?
These indirect impacts, the so-called full life cycle effects - change of land use, ecosystem degradation, poverty impact, the fate of small producers - have to be factored in to the biofuel equation. Some form of certification of environmental and social sustainability is seen as the answer, and will be on the agenda at the next G8 meeting in Tokyo, in July.
If it can meet the demand for sustainability, Brazil, which already enjoys a huge competitive advantage because of its abundant land, good climate and advanced technology, stands to become a major player in the new world of renewable energy.
The country's experience with ethanol goes back to the 1970s, when Brazil - a big oil importer - was hit hard by the oil shock. The military government launched a huge, subsidised state programme to produce fuel from sugar cane. An unexpected side benefit was the avoidance of 600m tonnes of carbon emissions between 1974 and 2004, and a measurable improvement in the air quality of the big cities such as São Paulo, with a fall in respiratory diseases.
As the price of oil collapsed, ethanol fell out of favour. But now it is back. Nearly all new cars leaving the factories are "flex" or dual-fuel models, able to detect and run on any mixture of petrol and ethanol, whatever the percentage of each; 80% of Brazil's ethanol goes to its own market.
While the Americans tax it and the Europeans condemn it, Brazil is looking at other export markets, not only for its ethanol but for its highly advanced ethanol technology. Cuba is already a customer and now the state development bank, BNDES, plans to finance the export of ethanol knowhow to Africa, where the hopes of countries such as Ghana are pinned on the jatropha plant.
'People still bash us'
There is a misunderstanding that Brazil is obsessed with exporting biofuels. In fact, we export only 10% of our production, and that is only to Sweden. The reason we do not export more is because demand is growing so fast in Brazil. More than 50% of all the vehicle fuel used in Brazil is now ethanol. Biofuels are worth tens of billions of dollars a year to us. They provide 18% of all our energy and employ 50 times more people than the oil industry.
The debate about biofuels is out of control. We have so much land that is badly used. People still bash us, but there is really no link between ethanol [from sugar cane] and food displacement. Nor are biofuels being grown in the Amazon. Soya can be planted there, and that is a worry.
The UN is worried about biofuels and food shortages because food aid is now much more expensive. They are used to low-cost food and need money. The countries that need food aid have a major problem, but it is the food subsidies in Europe and the US that are distorting the markets. Biofuel prices are not affecting commodities, but support for them is.
· Andre Aranha Correa do Lago, head of the energy department in Brazil's foreign ministry, was talking to John Vidal.