The interest from the oil companies in Brazilian ethanol, both in production and distribution, is growing. Following British oil company BP PLC, which announced in 2008 investments of US$1 billion in a Brazilian biofuel project, Royal Dutch Shell PLC is striking a deal with Brazil´s sugar and biofuel giant Cosan to create a $21 billion a year ethanol joint venture.  Shell would contribute $1.63 billion in cash to the venture over two years. It would be the Anglo-Dutch major’s first significant foray into biofuels and the largest move by a Western energy company so far into ethanol production and distribution.

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A worker in Mozambique holding jatropha seeds. Efforts to make jatropha-based biofuel have met with mixed success.

A Brazilian start-up is testing the possibility of implementing a large-scale biofuels project using jatropha, a family of hardy, succulent plants.

The company, BioVentures Brasil, is getting $1 million from the InterAmerican Development Bank for a pilot project on about seven hectares (17 acres) in Bahia, in northeastern Brazil, where it hopes to eventually develop a plantation on 20,000 hectares (49,400 acres) of mostly abandoned cattle-grazing land. The pilot will determine whether the species can adapt to the area’s soil and climate, as well as other factors like how best to work with local communities.

Efforts to make jatropha-based biofuel have met with mixed success elsewhere. A project in Ghana, for example, appears to be moving forward. But in Tanzania, where hopes were also high for a large jatropha-based biofuel project, the government reportedly suspended all biofuel investments recently after concerns arose over food shortages.

Ivan Nuñez, a banker with the I.D.B. who helps vet biofuels investments, said that multilateral lenders like the I.D.B. and the World Bank had turned more cautious on biofuels after their effects on the price and availability of food became apparent. He also noted that commercial long-term financing for such projects had also diminished as oil prices declined from their heights in the summer of 2008.

Still, the I.D.B. sees promise in biofuels, according to Mr. Nuñez, and it is backing seven such projects — two involving waste, three involving sugarcane and two involving jatropha, including the one in Bahia. The bank, however, is treading carefully. It recently created a stricter “Biofuels Sustainability Scorecard’’ to help project developers gauge issues of concern like food security, water management, biodiversity, carbon emissions and indigenous rights.

“We’re very interested in biofuels as long as they don’t compete with food,’’ said Sergio Rivera-Zeballos, the I.D.B. investment officer working on the BioVentures project. “We’re interested in jatropha because it can grow on degraded lands that are not in use for food production and because if it’s successful it could lead the way for a sustainable crop in other locations.’’ 

BioVentures is backed by EuroVentures, a London- and Sao Paulo-based investment firm active in Brazilian energy projects, and Grupo Vigna Brasil, a Brazilian agribusiness consultancy.

BioVentures hopes to eventually raise about $150 million from investment firms that specialize in agribusiness, and from strategic investors in power production or fuel distribution and refining “who see the benefits of potential carbon credit and sustainability aspects of such a project,’’ Guillaume Sagez and Adrian Calvert, two EuroVentures partners, said in an e-mail. The company aims to sell the fuel to Brazilian and European firms, which would use the jatropha oil to generate electric power.

This month, the company is planting jatropha curcas seeds, a species cited by Goldman Sachs as having among the best potential for biodiesel production. They were supplied by Brazil’s secretary of agriculture, the partners said.

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The NREL/Petrobras agreement will help achieve the goals of the United States and Brazil memorandum of understanding to advance cooperation on biofuels signed by the U.S. Secretary of State Condoleezza Rice and Brazil Foreign Minister Celso Amorim on March 9, 2007. “

By bringing Brazilian expertise together with some of the leading U.S. biofuels researchers at NREL, we will increase our knowledge and be able to more quickly commercialize renewable biofuels in the global marketplace,” said NREL Director Dan E. Arvizu.

Petrobras and NREL have common interests in the development of advanced next generation biofuels technologies through biochemical and thermochemical routes from biomass.  NREL conducts R&D related to technoeconomic, environmental and sustainability evaluation of advanced biofuels in support of the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) and other partners.

Petrobras’ research and development center (CENPES) conducts research on bagasse to ethanol, vegetable oil conversion to diesel oil components (H-Bio) and production of biomass-derived petroleum-like fuels using thermochemical technologies.

“The use of residues can substantially increase ethanol production without a correspondent increase of the planted area, boosting the existing process’ production by using its own residues,” said CENPES Executive Manager, Carlos Tadeu da Costa Fraga.

The agreement identifies four major areas of advanced biofuels research collaboration: biochemical production processes, thermochemical processes, economic and sustainability analysis from lignocellulosic biomass and evaluation of intermediate blends of ethanol and gasoline. (source: National Renewable Energy Laboratory)

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According to a report released in June by the Organization for Economic Cooperation and Development, ethanol from sugar cane is the cleanest fuel in the world, with its production and consumption reducing emissions of greenhouse gases by up to 90 percent compared with gasoline. The process of transforming sugar cane into ethanol requires eight times less energy than corn.

Unlike corn, which accounts for the bulk of U.S. ethanol, sugar cane is also grown in areas where it is less likely to compete with grains such as wheat or other varieties of maize that are vital to global food supplies. Sugar-based ethanol’s negligible impact on world food supplies is one of the major reasons it has been embraced without controversy in Brazil, even as critics in the United States have assailed their domestic corn-based industry for driving up global grain prices.

Sugar ethanol is also more efficient. The cost of producing ethanol from corn is three times the cost of ethanol from sugar cane. An acre of sugar cane can also yield more than twice as much ethanol as an acre of corn.

Read the article in full here.

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