Brazil Plans to Triple Ethanol Exports in 7 Years

By Shigeru Sato and Hector Forster
March 14, 2007 02:46 EDT - Bloomberg.com

Brazil plans to almost triple ethanol exports in the next seven years and will need investments of about $13.4 billion to boost output, said the nation's Agriculture Minister Luis Carlos Guedes Pinto.

Brazil plans to more than double production of ethanol to 35 billion liters, Guedes said via a translator in an interview with Bloomberg News in Tokyo. Exports may account for as much as 10 billion liters, he said.

Brazilian President Luiz Inacio Lula da Silva's government is boosting exports of biofuels, made from sugar cane and soybeans, to help the nation expand crops output and discourage poor farmers from migrating to cities. Japan, under pressure to set out decisive measures and cut emissions of greenhouse gases, will expand use of environmentally friendly fuel.

Brazil expects to build 89 new ethanol production plants in the next seven years, Guedes said. The nation's sugar cane output may rise to 627 million tons from 427 million tons during the next 7 years, he said.

In a meeting with Japanese business leaders in Brasilia on March 7, Guedes said that the South American nation can ensure supply to Japan should the Asian country mandate gasoline containing 3 percent of the biofuel.


Ethanol for Japan

Nippon Oil Corp., Japan's biggest oil refiner, and domestic rivals plan next month to start test-sales of gasoline blended with ethyl tertiary butyl ether, a fuel additive made from crop- produced ethanol and the chemical isobutylene.

Brazil needs to sign medium- and long-term supply contracts with Japan, in order for the South American nation to export ethanol to the Asian country, Guedes said. Before starting exports of the fuel, an ethanol plant project requires a three- year lead time to grow sugarcane for the new plant.

Guedes stressed Japan and Brazil should cooperate and help Southeast Asian countries embark on projects to produce ethanol for automotive fuel, and diversify supply sources of the biofuel in the global market.

Prime Minister Shinzo Abe's government plans to boost the country's ethanol use to 500,000 kiloliters (3.1 million barrels) in 2010, as part of efforts to achieve an emissions reductions target set under the Kyoto Protocol. Under the accord, Japan pledged to cut greenhouse gases 6 percent by 2012 from 1990 levels to help combat climate change.

In fiscal year ended March 31, 2006, Japan emitted 8.1 percent more greenhouse gases including carbon dioxide than it did in 1990, according to the environment ministry.


Talks with Itochu

During his three-day visit to Tokyo, Guedes met with executives of Itochu Corp., Japan's fourth-largest trading company, to exchange views on ethanol businesses, he said at a press conference after the interview with Bloomberg News, without elaborating.

Itochu and Indonesian partner PT Molindo Raya may start producing ethanol from two proposed plants in the Southeast Asian nation in the second half of next year. The plants in Lampung at the northern tip of Sumatra and Pacitan in East Java province will start production in the third and fourth quarters of 2008, Alhilal Hamdi, head of a government team promoting biofuel, said by telephone yesterday.

Itochu will complete a feasibility study to build ethanol plants in Indonesia and Thailand by the year-end before deciding to go ahead with the projects, spokesman Masahide Kitagawa said on March 12.

Guedes is due to leave Tokyo today, and heads for Jakarta to hold a seminar on biofuel, he said. Earlier this week, the minister had a meeting with Japan's Agriculture Minister Toshikatsu Matsuoka and discussed issues related to bioethanol and livestock trade.


Originally posted on Bloomberg (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1aRbSp18ly0)

Business and Investment - Biofuel

by Ika Krismantari
March 09, 2007 - The Jakarta Post

The Finance Ministry is preparing a package of incentives to support the government's ambitious program to produce 200,000 barrels of biofuel a day by 2010, a senior official says.

Unggul Priyanto, the director for energy resources development at the Agency for the Assessment and Application of Technology (BPPT), said Thursday in Jakarta that the Finance Ministry was in the process of formulating two types of incentives to be offered to investors involved in biofuel projects.

The planned incentives, he said, consisted of tax breaks and subsidies on loan interest.

According to the proposal, the tax breaks will be given during the first years of operation of companies involved both in feed-stock production and in biofuel production, while the interest subsidies would be provided so as to ensure that investors would not have to pay loan interest of more than 10 percent a year.

"We hope we can attract more investors with these kinds of incentives," Unggul told The Jakarta Post on the sidelines of a seminar on renewable energy at BPPT headquarters.

Against a backdrop of declining oil production, Indonesia is going all out to attract both domestic and foreign investment to develop alternative energy sources.

In January, the government signed 58 agreements worth US$12.4 billion with 59 foreign and local energy firms for the development of oil palm plantations and processing facilities.

Among the investors are China's major energy firm, CNOOC, which plans to invest a total of $5.5 billion in partnership with a local company, Sinar Mas Agro Resources. Meanwhile, Malaysia-based Genting Biofuels Asia plans an investment of up to $3 billion on similar project.

The chairman of the government's biofuel development committee, Alhilal Hamdi, has said that Indonesia is hoping to produce about 200,000 barrels of oil equivalent in biofuel per day by 2010.

In order to achieve this target, the government has set aside Rp 1 trillion to cover the cost of interest subsidies on agriculture-related loans, and the cost of procuring seedlings, while another Rp 10 trillion has been earmarked for improving agricultural infrastructure.

Some 6.5 million hectares of uncultivated land have been designated for the development of biofuel-feedstock plantations. Based on the program, the government hopes that locally produced biofuel will be able to replace 10 percent of the country's total oil-based fuel needs, which last year reached 70 million kiloliters.

In its blueprint, the government is aiming for biofuel utilization accounting to 2 percent of total energy use, or the equivalent of about 5.29 million kiloliters (kl) of oil, between 2005 and 2010, increasing to 3 percent, amounting to 9.84 million kl between, 2011 and 2015, and 5 percent, amounting to 22.26 million kl, between 2016 and 2025.

The biofuel development program covers the promotion of biodiesel, bioethanol, biokerosene and pure plant oil (PPO).


Originally posted on The Jakarta Post (http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20070309.L02)