Cellulosic Ethanol Becoming a Reality in Brazil

---

Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Second-generation ethanol has become a reality in Brazil, with three commercial plants with a combined production capacity of 160 million liters per year starting operations between 2014 and 2015.

Brazilian companies are carrying out the projects, betting on their strategic associations with foreign companies that have researched the development of cellulosic ethanol for more than 20 years. The Brazilian companies are looking to cellulosic ethanol they see limits to expansion of sugarcane-based ethanol production. The sugarcane plantations have been expanded as much as possible, and some places are struggling to increase cane yield per hectare. Also, ethanol producers have faced adverse weather conditions in recent years such as drought in northwest Brazil.

Producers now consider cellulosic ethanol is to be the saviour of the industry by increasing production through the use of bagasse, which until recently was not considered a worthwhile feedstock for ethanol.

There are three second-generation projects under development in Brazil, all funded by BNDES-National Bank of Economic and Social Development. GranBio is developing a project in the State of Alagoas, with an estimated cost of $170 million. The cellulosic ethanol plant is being built next to a conventional ethanol plant belonging Caeté, of the Joao Lyra Group. This project is already under final commissioning and it will be the first cellulosic-ethanol plant to operate commercially in Brazil; its inauguration is scheduled for June and it will have a production capacity of 82 million liters per year.

The second project is led by Raizen, a subsidiary of COSAN (NYSE:CZZ) (Sao Paulo, Brazil) and Royal Dutch Shell (NYSE:RDSB) (Netherlands), together with Iogen (Ottawa, Canada). The plant is completely integrated with Raizen's sugar and conventional ethanol unit at Costa Pinto, in the State of Sao Paulo. The $120 million plant will have a production capacity of 40 million liters per year.

Finally, Petrobras Biocombustível is developing a project that is now in the detailed engineering phase. It will likely be built next to the company's Boa Vista ethanol unit, located in the State of Goias. The investment value of this project is not yet been disclosed.

In addition to the projects that are already in advanced stages, the BNDES is evaluating three more projects, which are awaiting approval. One of them is owned by Agroindustrial Odebrecht (Salvador, Brazil), which is starting an experimental phase with Denmark-based partner Inbicon during the current sugarcane crushing season. Their aim is to be operating on a commercial scale in Brazil in 2016.

The expansion of the second-generation sector appears to be promising in Brazil. GranBio and Raizen plan to make multi-million-dollar investments and to build one cellulosic ethanol plant per year. The drawback of these projects is still the challenge of proving that the second-generation ethanol, can be cost-competitive when produced on a large scale, since the whole process is very intensive in technology and capital.

Industrial Info is monitoring 10 cellulosic ethanol projects in Brazil exceeding the 400 million dollars.

View Plant Profile - 1079505 3064021 1079652

View Project Report - 300113224 300079907 300091463 300120677 300091462 300109377

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.