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CURRENCY SAVINGS FOR BRAZIL
Commercial
use of biodiesel starting with the 2% blend creates a potential
internal market of at least 800 million liters per year for the
new fuel in the next three years. This will benefit Brazil’s trade
balance by saving up to US$160 million per year thanks to the use of
B2 instead of imported diesel.
Brazil currently imports 10% of the
diesel it consumes. Because the many vehicles transport cargo and
passengers are powered by diesel, it is used more than any other
liquid fuel, accounting for 57.7% of the total at 38.2 billion
liters per year.
Biodiesel can also be used to
generate electricity for isolated communities that currently depend
on generators fired by regular diesel
oil. Local oilseeds can be
used as feedstocks to produce biodiesel in these areas.
Biodiesel will also create more jobs
in rural areas and in industry. Many more workers will be needed to
grow oilseeds, provide technical assistance to farmers, and build
and operate the industrial facilities that refine the oil and
produce the fuel, as well as in the transportation and distribution.
TECHNOLOGICAL DEVELOPMENT
Brazil pioneered the development of biodiesel
production technologies, granting a patent to researcher Expedito
Parente in 1980. The research did not continue because at that time
biodiesel was not competitive with petrodiesel.
Commercial use of biodiesel will
drive further technological development, speeding up the learning
curve and strengthening producers of related goods and services.
Brazil currently has the capability to
produce biodiesel of world-class quality. In addition, it has the
conditions to produce the world’s first ethanol-based biodiesel.
Other countries make biodiesel using methanol, mostly derived from
petroleum.
Brazil’s Ministry of Science and
Technology (MCT) has been allocated a budget of US$5.7 million to
invest in research on biodiesel and industrial processes in 2004-05.
The money is being pumped into the
creation of the Brazilian Biodiesel Technology Network (RBTB),
comprising 23 universities across the country alongside traditional
research institutions such as Petrobras’s Research Center - CENPES,
the National Technology Institute (INT), and the National Biofuel
Complex, currently being implemented at Piracicaba in São Paulo
State.
SOCIAL INCLUSION
Authorization
for the use of biodiesel, the onset of widespread distribution, the
differential tax regime recognizing the importance of
oilseed
production by family agriculture units – particularly castorbeans
and oilpalms in the North, Northeast and the semi-arid regions – and
the introduction of the “Social Fuel” seal are regulatory
instruments designed to promote social inclusion throughout the new
fuel’s production and value chain.
The Social Fuel seal, awarded by the
Ministry of Agrarian Development (MDA), establishes the conditions
for industrial producers of biodiesel to obtain tax benefits and
credit. In order to receive the seal, an industrial producer must
purchase feedstock from family farmers and enter into a legally
binding agreement with them to establish specific income levels and
guarantee technical assistance and training.
BRAZIL’S EXPORT POTENTIAL
With
the advent of commercial production, Brazil becomes a potential
exporter of biodiesel, which is already in commercial use in the
United States and the European Union. The EU aims to ensure that 2%
of all the fuel consumed in the region is renewable by 2005, but it
has limited acreage available for growing rapeseed, the main
feedstock produced in Europe, and industrial capacity is
insufficient to meet the stipulated demand. Despite these
constraints, the proportion of renewable fuels is set to reach 5.75%
by 2010 according to EU Directive 30, ratified by the European
Parliament in May 2003. Given the limitations for production growth
in Europe, Brazilian biodiesel enjoys an unprecedented opportunity
to build market share in the continent Europe.
GOOD FOR THE ENVIRONMENT
Biodiesel will help improve air quality in major cities by reducing
the amount of exhaust gas emitted by vehicles when the fuel is used
as a partial substitute for petrodiesel.
The use of biodiesel will also
enable countries to meet their commitments under the Climate
Convention and could be used to
obtain carbon credits in
accordance with the Clean Development Mechanism (CDM) established by
the Kyoto Protocol.
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