The Fuel of the Future plan is one of the wisest energy and decarbonization policy decisions made by the Brazilian government in recent years. By assuming that ethanol is Brazil’s green fuel, the government is demonstrating to the world the country’s commitment to a clean energy matrix.
But this decision carries with it a series of economic repercussions, especially with regard to the challenges of meeting the increasing demand. One of them is the price of sugar.
When its price rises on the international market, there is a migration from sugarcane production to sugar, which reduces the supply of ethanol and thus puts pressure on fuel prices. To maintain balance and ensure that alcohol remains attractive to producers, the government must pay attention to this issue.
Subsidies in the form of tax breaks, producer credits, or direct payments based on the amount of ethanol produced can be beneficial. But the key element to ensuring a permanent supply of alcohol will be the development of tools that increase efficiency and reduce production costs.
To this end, the use of biotechnological solutions, such as enzymes, bacteria and yeast, and the improvement of the fermentation process, as well as the use of alternative biomass for the production of second generation ethanol, should always be on the sector’s agenda.
With increased ethanol production per hectare of sugarcane grown, it will be possible to meet the growing demand without putting pressure on prices. Moreover, by increasing the efficiency of the production process, production costs can be reduced.
Another important advance made by biotechnological yeasts and bacteria is the ability to ferment different types of sugars found in corn and alternative biomasses, such as agricultural waste (straw, bagasse, etc.).
This could lead to diversification of raw material sources for ethanol production, reducing exclusive reliance on sugarcane, and thus helping to stabilize biofuel prices.
It is important to remember that even with the expansion of farming areas, there are biological and environmental limits to sugarcane and corn production. Deforestation, climate change and competition for farmland with other food crops are just some of the challenges facing the industry. Hence the need for technologies that increase productivity without requiring major expansions of agricultural boundaries.
With the threat of extreme weather events, the market is paying more attention to the sector’s environmental, social and governance (ESG) practices. Companies that do not commit to decarbonisation will be subject to increased penalties.
In fact, studies show that biotech solutions can, through improved metabolic pathways, contribute to emissions reductions of up to 25% through the use of substrates and microbial consortia.
In December, sector giants such as LBDS, BP Bioenergy, RaĂzen, Neomille, SĂŁo Martinho, Azul Airlines and Braskem will meet to discuss new technologies for the sector.
This moment is important in demonstrating the synergy between companies to work to increase ethanol productivity and take advantage of diversification opportunities that will lead to renewable solutions, without sacrificing profitability. The “Fuel of the Future” plan was approved last month and should require investments worth R$130 billion, according to Unica.
With the sector working together, we will have the most exciting ethanol market on the planet, serving as an example not only for Brazil, but also as a green fuel for the entire world.
The future of ethanol in Brazil therefore depends on the balance between government policies, technological and biotechnological progress, and effective management of natural resources. Only in this way will it be possible to control ethanol inflation and ensure that the country continues to lead biofuel production in a sustainable manner.
*Fernanda Firmino is Business Director at Lallemand Biofuels & Distilled Spirits (LDBS) in Brazil – Originally published in AG Feed
