The future of oil and bioethanol in Brazil

Since the announcement, in 2007, of the pre-salt oil layer by the Brazilian Oil Company (Petrobras), there has been a lot of optimism about Brazil’s future economic development. Even before any extraction has been started off, pre-salt revenues have already been legally addressed to fund country-wide educational and health systems. Nevertheless, on one hand, the country formally subscribes to international negotiations on climate change to curb fossil fuel emissions; on the other hand, even though claiming to bear a clean energy matrix, it falls back on its newest oil reserves to support its future economic development. Nowadays, though, many leading economic countries have heavily invested in renewable rather than in fossil fuel energy sources. Moreover, alternative fossil options, such as shale gas, have become economically and technologically feasible. So, in this international context, is the ownership of a large oil reserve a blessing or a curse? The answer is given by a non-renewable resource multi-period model (Hotelling model). By drawing an optimal depletion price path along which extraction revenues would not dramatically rise or fall in response to a non-optimal programme, its objective is to prevent the “Dutch disease” and distortions in the oil volume to be eventually shared between the pre-salt reserve owner (government) and its exploiting companies. If market prices are higher than the optimal ones, the primary commodity is likely to be over-depleted and largely exported, thereby causing the exchange rate to over-appreciate and the demand for foreign, instead of domestic, goods to increase. Nonetheless, results show that optimal prices, quantities and economic lifetime of the resource critically rely on current estimates for the existing stock, oil prices and interest rates.

Energy Sources, Part B: Economics, Planning, and Policy, 2017

The technology involved for the recovery of heavy oils demands an insightful study of their technical and economic viability to make possible its implementation. Hence, this research proposes a study of the effects of managing the steam injection rate (Q inj), from the time the steam arrives to the producer well (steam breakthrough), in the oil recovery factor (RF), and net present value (NPV). For reaching these goals, numerical simulations were performed by using a heavy oil reservoir model representative of the Brazilian Northeast. By varying operational parameters, the behavior of the oil recovery factor and NPV was evaluated, for 15 years. Results showed that the injection of low steam injection rates, from the breakthrough time, resulted in improving the RF. Hence, this condition also promotes an improvement in the NPV, especially when there was injected 5 t/day after the breakthrough time.

2019

This thesis aims to study alternatives to biodiesel industry in Brazil, for 2030, taking in account the sustainability dimensions, namely economic, environmental, ecological, social, national and international politics, territorial, cultural, and technological, through the development of scenarios. In order to carry on this work, it was necessary to develop a cross-disciplinary research, since sustainability requires a long run vision and a comprehensive approach. Brazil is a large country (851 Mha), with soil and weather conditions that are suitable to produce oilseeds, and available land for agriculture and pasture. Thus, a simulation, using linear programming models, was made in order to verify the alternatives of feedstock to produce biodiesel. It was observed that it is possible to decentralize the market, reduce land use, and regionalize production, making better use of the availability of existing oil and waste today. A methodological discussion was also necessary to include sustainable dimensions on the scenario methods. Therefore, the environment, economics, technology, social, territorial, national and international institutional, cultural and political aspects were considered to identify the driving forces to develop the scenario storylines. This proposition was tested in an in-depth interview with the biodiesel market stakeholders. Based on the findings of the two approaches, the simulations and the interviews, it was possible to obtain future alternatives, where the biodiesel production chain could be a catalyst for environmental improvement and social inclusion as well as being economically viable and contribute to energy security. The set of four scenarios for the biodiesel industry in Brazil, for 2030, was built as the final result of the work. They are: a) Business as usual (BAU)-considering the continuation of the current industry dynamics; b) Step-by-step (SBS), bringing sustainability to environmental gains, social and regional integration. It is based on environment conservation and better use of degraded and marginal lands; c) Abundance (ABC) that takes advantage of technological breakthrough added to environmental and regional bias on the biodiesel production; and d) Scarcity (SCR)representing a deterioration of the current situation, with little environmental care, without recovering of degraded lands, and few technological advances in biodiesel production. The SBS and ABC scenarios show alternatives for the biodiesel industry that includes the sustainable dimensions. However, the other scenarios show possibilities that are also plausible. A Delphi survey assessed the coherency and plausibility of the scenarios. ABC scenario-was evaluated as more coherent and plausible than the SCR scenario. It may suggest that it is easier to believe in a technological breakthrough than the climate change consequences.

Energy Policy, 2014

A large share of Brazil's current investments is concentrated in the development of petroleum resources in new frontiers. Perspectives for large offshore pre-salt fields are particularly good. However, challenges are also huge. On one hand, pre-salt resources development will draw vast amounts of economic and human resources and pose significant macroeconomic risks. On the other hand, the petroleum industry can generate multiplicative effects into the country's economy and, even more importantly, generate rents that can be diverted towards the promotion of renewable energy sources. This paper simulates the rent generation of Brazil's petroleum development up to 2030 according to: the country's current fiscal regime, projections of petroleum supply and a probability analysis of Brent price evolution, and assesses how these economic resources, if properly allocated, can pave the way for an increased use of renewables in Brazil. Findings show that an ambitious energy innovation program based on a target-oriented agency plus a program for solar development would cost less than half the minimum average annual petroleum rent free for investing in renewables between 2013 and 2030. The remaining budget could improve the security of ethanol fuel supply, by avoiding the negative impacts of sugar prices spikes on Brazil's ethanol production.

Editora Blucher eBooks, 2023

As seen in previous chapters, Brazil created sustainable biofuels production models, both for ethanol and biodiesel. However, these models need to be revised or adapted to allow further expansion of biofuels. This could be done either by modifying existing ones or the development of new market models. Sugarcane ethanol is the most important biofuel in Brazil. Its economics were heavily linked to the sugar market. During the last few decades, the success of new ethanol-built distillery, was directly associated with joint production of sugar. This model currently has its limitations. Also, criticism related to biofuel and food competition, although not necessarily applicable in the case of sugarcane ethanol, do raise some concerns. Brazil also faces important criticism related to land use, particularly with deforestation in the Amazon region and beef cattle ranches in pastureland. Therefore, there could be a way out by reconciling all these issues by introducing different production models. 4.2. NEW PRODUCTION MODELS FOR BIOFUELS Bioenergy, specifically biofuels, were developed from existing feedstocks together with conversion technologies. This was the case for ethanol, biodiesel, and biogas and will probably be a good start for biokerosene and other fuels. Therefore, biofuels developed from adaptations, somehow inherited positive and negative features of their "mother" raw material and their "mother" conversion technology. In other words, biofuels were not designed from zero, in which environmental sustainability criteria were of little concern. Should biofuels have been conceived with environmental sustainability in mind, the outcome would have been different.

Biofuels - Economy, Environment and Sustainability, 2013

For its part, natural gas has been the cause of disputes, in recent years, between Russia and Europe, between Argentina and Chile, and, lately, between Bolivia and Brazil. An important new factor is the increasing participation of shale gas in North America. In 2000 only 1% of natural gas produced in the USA was shale gas, with its share growing to 20% in 2010 and projected to reach 46% in 2035, due to its low cost. The share of natural gas in the Brazilian energy matrix is not significant, although it shall became more important with the import of LNG by ships as well as with the pre-salt natural gas production. Where electricity is concerned, there were serious instances of rationing in 2001, lasting for many months in Brazil and California-in both cases due to lack of adequate power sector regulation. Energy deregulation played an important part in the process of economic liberalization in the course of financial globalization, which is at the root of the global crisis, which first hit the USA in 2008, and worsening in 2009, it spilled over and reached South America, in particular, Brazil. The energy crisis has been further aggravated by the overlap of an environmental crisis and a financial one, as a result of climate change, due to the intensification of global warming from greenhouse gas (GHG) emissions, such as carbon dioxide from the burning of fossil fuels. Global warming has become a major global political problem, because it bears on society choices which must not be left to business alone to make. The Nobel Peace Prize of 2008 awarded to the Intergovernmental Panel on Climate Change (IPCC) followed the release, in 2007, of its Fourth Assessment Report which caused great concern around the world. The repercussions of the high international oil prices on the world economy have been significant, although today's share of oil in the world economy is less than at the time of the 70s oil crises. At a global level, this share in the cost of products is generally half of what it was at that time. Some particular factors contributed to this strong variation in the oil market: a. The forecasted decline in world output, despite major discoveries in the Brazilian presalt, and increased oil consumption, especially in developing countries, led by China b. The global geopolitical instability, especially in the Middle East oil producing regions, and the strong dependence of OECD countries on oil imports. To a lesser extent, this instability is felt in South America as in the case of the political tensions between the USA and Venezuela.

Editora Blucher eBooks, 2023

Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the participating parties. The results, analysis, conclusions or recommendations expressed in this book are based upon research projects, published documents, technical presentations, and data gathering conducted by the authors. Finally, the opinions, hypothesis, and conclusions or recommendations expressed in this book are the responsibility of the authors and do not necessarily reflect the vision of FAPESP. The main challenge for Brazil is political rather than technological, social, or economic, since the country has the scientific and technological know-how, natural and human resources, and research capability to deal successfully with various energy future scenarios. But there are clearly some important scientific and technological gaps, and the need to rethink present economic biofuels-related models that will require political actions. When this is the case, the corresponding recommendations are made. This book will try to answer some of these questions particularly with a wide readership in mind. To inform the international community about the historical development of biofuels in the country, the new emerging reality, and perspectives and potential impacts of new biofuels scenarios. 10 Today the sugarcane ethanol productivity is estimated about 7,000 litres/ha/yr.

Editora Blucher eBooks, 2023

Typically, every time Brazil faces an energy crisis (oil increase or water/electricity shortages) ends up with a new emphasis to expand RE, in particular biofuels. This was the case during the energy crisis of 1920s, WWII, 1973, 1979, 2007, and now in 2022. Different reasons precipitated these crises, all of them affecting Brazil, both from the energy or the economic points of view. The difference now is that new increase of oil prices, due to the Russian war on Ukraine, coincides with an energy transition process that will take decades. Energy wise, Brazil is currently a country with a relatively low per capita use. According to IEA (2021) the country is the world's 8 th largest energy consumer but the 69 th largest energy per capita. 1 In addition, traditionally, Brazil has made considerable progress in renewable energies, both for electricity production and transport. In the Brazilian energy matrix, the contribution of renewables was 48.1% in 2020. In electricity production, 83% is renewable 2 and in transportation, ethanol represents 43% of fuel in light vehicles, and biodiesel 10% of fuel in heavy vehicles. (MME, 2021). Brazil is, therefore, the greatest renewable energy economy in the world (see Table 3.1). This, of course, discourages the consumer, particularly those located far from the production regions. Flex fuel engines do not represent, in practice, an economic advantage to the consumers. And so, it seems, would be the case for 2G ethanol in the near future unless the economics can be improved significantly. Corn ethanol, on the contrary, is expanding fast, benefiting consumers from Mato Grosso and Goiás states. Nevertheless, productivity will have to improve significantly to be able to compete with sugarcane ethanol producing regions. This chapter assesses the present status of biofuels in Brazil with the objective of analysing its possible role in the energy transition which the world is going through. 5 https://www.braskem.com.br/imgreen/bio-based-en 10 Today the sugarcane ethanol productivity is estimated about 7,000 litres/ha/yr.

World Development, 2011

Through the assessment of three decades of the Alcohol Program in Brazil, the paper shows that adequate public policies regarding biomass production can deliver direct benefits like energy security improvement, foreign exchange savings, and local employment generation, reduced urban air pollution and avoided CO 2 emissions. Moreover, the paper shows that Brazilian produced ethanol has faced economies of scale, technical progress and productivity gains and is no longer dependent on subsidies to be competitive. The paper also examines the potential in Brazil for fostering other biofuels, namely biodiesel obtained from vegetable oils, as well as their implications on sustainable energy development.

2014

In principle, there is no contradiction between exploiting the deepwater oil reserves (pre-salt) and the commitment towards a low-carbon economy, if the intelligent management of royalties and production strategies is guaranteed. Furthermore, investments in second-generation ethanol, with a greater technological content are needed and the exploitation of the pre-salt has to be accompanied by an expansion of the technological capacity. The income generated this way could be channeled to foster structural reforms in the fields of education and social infrastructure and to contribute to the transition to a low-carbon economy.