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Reuters
6 days ago
- Business
- Reuters
Brazil corn ethanol boom covers demand as country hikes biofuel mandate
SAO PAULO, June 27 (Reuters) - Growth of Brazil's corn ethanol sector has become key to meeting the country's growing demand for the renewable fuel under a new government mandate to use more ethanol in gasoline, even as sugarcane-based ethanol output has stagnated. Brazil is the world's largest producer of ethanol from sugarcane, but output has flattened since the turn of the decade, while corn ethanol production has more than tripled, according to data from sugar and ethanol industry group UNICA. In the 2024/25 cycle, corn ethanol output in Brazil's center-south region rose nearly 31% from the year before to 8.19 billion liters, according to an UNICA report. On Wednesday, Brazil's government approved a measure hiking the mandatory blend of ethanol in gasoline to 30%, from 27% previously, which will require well over 1 billion more liters of ethanol per year. "Thanks to corn ethanol, we are increasing the blend to 30%, right? If it weren't for this increase in production, we wouldn't be able to implement this policy," said Guilherme Nolasco, president of the corn ethanol industry group UNEM. Brazil's government initially put off raising the ethanol blend in gasoline this year, which some attributed to concerns it could push up prices. By the time officials confirmed the move this week, they were touting it as a way to bring down prices at the pump. Amance Boutin, business development manager at consultancy Argus, said the decision to implement the new biofuel mandate from August is a vote of confidence in the capacity of the corn ethanol sector to keep ramping up production. At the same time, cane growers in Brazil, which is also the world's top exporter for sugar, are expected to maintain their preference for producing the foodstuff over fuel, said Gabriel Barra, director and head of Latin American equity research for oil and gas, petrochemicals and agribusiness at Citibank. "Sugar will continue to take a large part of this mix from sugarcane processing," Barra said. "Ethanol will most likely continue to lose this competition." In March, Citi forecast corn ethanol production in Brazil would hit 16 billion liters by 2032, a sentiment echoed by UNEM's Nolasco. "We have the capacity to double current production by 2032," Nolasco said. According to UNEM, corn ethanol represents 23% of current ethanol production in Brazil and it expects it to grow to account for 40% of the fuel's output over the next decade. At an industry event in Sao Paulo this month, UNICA Chief Executive Evandro Gussi said Brazil is not concerned about whether ethanol comes from sugar, corn or another source, as long as it has low carbon emissions and does not deprive the country of needed food. "In terms of biofuel and ethanol. Brazil … is not the land of 'either' - either this or that," said Gussi, adding he expected both corn- and cane-based ethanol production to grow. Some in Brazil's corn sector are already pushing to expand other crops for use in ethanol production, with sorghum a viable option for farmers who miss the planting window for the country's second corn crop. Increasing the output from sugarcane crops will be crucial to luring fresh investments and boosting the sugar-energy sector, said Cesar Barros, CEO of sugarcane research company CTC, blaming the recent doldrums on a lack of innovation. By contrast, corn has benefited from years of research and development by major multinationals, Barros said. Corn is the crop of choice for the world's biggest ethanol producer, the U.S. "In the same 20-year horizon in which corn doubled its productivity in Brazil, sugar cane practically stagnated, with average productivity increasing very little," Barros said. In April, following years of research, CTC announced the launch of a number of new products that it said will help double the output of sugarcane on Brazilian fields by 2040. "Doubling sugarcane productivity in the next 20 years will ... enable new investments, whether in new plants or in increasing capacity," Barros said.
Reuters
29-05-2025
- Business
- Reuters
Wartsila bets flexibility key for ethanol power generation in Brazil
SAO PAULO, May 29 (Reuters) - Finland's Wartsila( opens new tab is betting that a more nimble way to generate power with ethanol will prove viable in Brazil where similar efforts by major firms floundered a decade ago. Wartsila announced a partnership in March with a power plant in the northeast Brazilian city of Recife, where a four-megawatt engine will burn ethanol for 4,000 hours during a two-year pilot starting in April 2026. The Finnish company billed its efforts as a world-first trial in generating electricity with an ethanol-powered engine. But similar experiments by Brazilian corporate heavyweights Petrobras ( opens new tab and Vale ( opens new tab sputtered out amid high costs and low uptake, according to people who worked on those projects. Brazil is the world's second-largest producer of ethanol, after the United States, producing the biofuel largely from sugarcane and increasingly from corn. Brazil has used ethanol to power cars for decades, leading to volatile prices affected by sugar and petroleum markets. In 2010, Petrobras teamed up with General Electric, before the U.S. manufacturer split into three separate public companies, to convert a gas turbine at the state-run oil producer's power plant in Juiz De Fora to run on ethanol. "Ethanol was very sexy, everyone gets very hyped about it," a person with knowledge of the project told Reuters on condition of anonymity. The plant returned to running on natural gas shortly after the 1,000-hour test was completed, as higher costs made ethanol untenable as a fuel in the long run, the person added. Petrobras confirmed the turbine in Juiz De Fora now runs on natural gas. Vale Solucoes em Energia (VSE), a startup majority-owned by the mining giant, invested some $600 million in clean energy, including ethanol-powered electricity, VSE's former Chief Executive James Pessoa said in an interview. VSE built smaller ethanol-based generators for electricity which were used in Rio de Janeiro and Amazonas state, Pessoa said, adding that another was built at Brazil's Antarctic research station. VSE was shuttered by 2013. Pessoa said he had not seen any further development since then of ethanol-powered generators like those produced by VSE. "The technology exists," he said, adding that Brazil could have millions of heavy ethanol engines powering the country. "But in practical terms, there are zero (in operation)." Wartsila plans to test ethanol as a fuel for one of its 32M engines, which is larger than the VSE generators but far smaller than the plant converted by Petrobras, seeking efficiency at a more flexible scale. While running a turbine on ethanol 24-7 is more costly than natural gas, those plants cannot provide the flexibility needed by a grid like Brazil's, which is mostly powered by renewables, Jorge Alcaide, Wartsila's managing director in Brazil and head of its energy business in the southern America region, said in an interview. The engine will "follow the wind" and start up quickly when renewable sources like wind and solar fall off, said Alcaide. Wartsila declined to reveal its spending on the pilot. "Thermal power plants in Brazil should be used in the standby model," he said. "We need thermal to be available, it's like insurance."
