Emerging Markets Insight is a newsletter from Emerging Markets Online, a
business
intelligence
and market
research firm serving the needs of
clients in biofuels, oil, gas, government, R&D, and economic
development initiatives. Check back for the latest news from
Emerging Markets Online
A new wave of investment will transform sugars and cellulosic
carbohydrates into hydrocarbon fuels
Shell, BP, Bunge, LS9, Dow and Amyris are collectively investing
more than $20 billion (€16 billion) into advanced, sustainable
biofuels in Brazil. This new relationship between Brazilian, US and
EU public and private industries is kicking off a new era in
international biofuels investment.
The Next Wave Bossa Nova – meaning the new wave, mixing oil traditions with new
trends – is an evolutionary art form. In the case of the agri-fuels
business, Brazil’s new wave of advanced, sustainable biofuels
investments represents a heady mixture of sugars and cellulosic
carbohydrates into ethanol and hydrocarbon fuels, renewable diesel,
biochemicals, biobutanol, biopolymers, and advanced, lowcarbon
drop-in replacement fuels.
For more than 30 years, Brazil has lead the world in sustainable
biofuels production. And at the dawn of a new decade, Brazil is
emerging as a world leader in advanced, sustainable biofuels
investments, along with new technologies from private sector
partners in the US and EU. In 2010, Brazil’s progress in private
sector biofuels investment is charging ahead, while EU and US
government policies are effectively reducing ethanol biofuels
targets due to political uncertainty and slower growth related to
cellulosic biofuel feedstock production economics.
Sustainable policies matter
Based on US, EU and UN sustainability government policy standards,
Brazil’s sugarcane ethanol is environmentally, economically, and
politically achievable today. Paradoxically, using the same
sustainability criteria, cellulosic biofuels in the US and the EU
are not yet economically achievable in substantial volumes.
As the US and EU governments continue to debate sustainability
criteria, the Obama’s US EPA administration has already scaled back
2010 cellulosic biofuels targets during an election year, as ethanol
subsidies and tax credit benefits are challenged by the imminent
arrival of the E10 blend wall in the US. This uncertain policy
environment in the US and EU has private investors looking to
greener pastures, and entering into a new dance mixing emerging
technologies and sustainable feedstocks with Brazil. Investment
trends US/EU/UN sustainability criteria have ironically lead to
positive investment outcomes in Brazil during a challenging economic
recession worldwide. Sustainable sugars lead the charge. During this
time, a consolidation among Brazil’s sugarcane production facilities
and conglomerates lead to favourable terms for first generation sugar
cane ethanol acquisitions, and attractive conditions for
next-generation, integrated cellulosic biorefineries. These reasons
explain the new wave of investments in Brazil, where Shell and BP
have entered into to multi-billion dollar ventures (Shell-Cosan JV
at $12 billion, BP’s $8 billion through 2015) heralding this new
trend of emerging markets technology-feedstock ventures.
US and the EU dance with Brazil
Another wave of nextgeneration renewable drop-in fuel companies
Amyris, LS9, Solazyme and Dupont are also investing in and
partnering with Brazil’s sugarcane fermentation biorefineries.
Why? Because their emerging technologies from cellulosic microbes
(yeast, algae, fungus and bacteria) can use the same ethanol
fermentation facilities in the US corn belt and in Brazil’s
sugarcane belt to produce bio-crude, green diesel, petrol and biojet.
The simplicity is astounding.
Here’s the big idea. Take an existing, stranded ethanol factory or
conglomerate. Buy it for a substantial discount. Start with cheap
sugar. Drop in a new Amyris, LS9, Solazyme, Gevo, Solazyme or Cobalt
microbe/ bug in the same fermentation vat and what do you get? An
integrated biorefinery that can use cheap, sustainable sugars to
produce renewable diesel, aviation fuel, and biobutanol – fuels that
are compatible with existing petroleum pipelines, storage, petrol
stations, and vehicle engines today.
In the near future, these fermentation-based biorefineries will be
able to convert multiple inputs from cellulosic sugars- bagasse,
switchgrass, wood chips, municipal solid waste, and glycerin – into
a diverse set of outputs, including renewable diesel, aviation fuel,
biocrude oil, biochemicals and biopolymers with significant GHG
reductions and carbon emissions compared to petrochemical
hydrocarbons.
Integrated biorefineries in sight The future benefits of these integrated cellulosic biorefineries,
especially in Brazil, will demonstrate leadership, proof of concept,
and much-needed economic certainty that is challenged by US and EU
cellulosic biofuels economics, mandates and markets today. This will
benefit the other big emerging markets of China and India as the
dance progresses.
Long before the Olympics arrive in Rio in 2017, Brazil’s leadership
in sustainable biofuels, coupled with advanced technologies from US
and EU industry partners, will illuminate evolutionary pathways in
achieving successfully integrated, diversified, biorefineries.
In particular, India, the world’s second largest sugar producer, and
the world’s most populated nation, is most likely to benefit from
this progress along with China and other key emerging market nations
interested in attracting increased investment and emerging
technologies for sustainable growth.
More Original Articles By
Emerging Markets Online:
Published in Biofuels International and Biofuels
Digest:
Consulting Services
