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Essay Instructions: Introduction
The term “biofuels” invokes an image of renewability and abundance. Converting plant biomass into clean-burning fuel, like ethanol, presents an attractive alternative to using fossil fuels such as oil, gas, and coal. However, the agro-industrial trend to produce biofuels made from corn, sugarcane, and other crops, formerly grown primarily for food, is drawing a considerable amount of negative attention, particularly from regions of the world dependant on these crops for sustenance.

Canadian farmers now find themselves in a “sellers market”. They are now in a position to charge and receive substantially more money for crops sold to biofuel producers than to food processors. The shortage of staple crops is causing a significant increase in food prices, yet the interest in securing an adequate and environmentally friendly fuel supply is strong. Additionally, emerging methods of extracting energy from agricultural waste (i.e., cellulose) may become realistic alternatives to food-based biofuels if the necessary technologies are pursued; yet the technology to do so may prove to be too difficult to implement on a large scale needed to significantly reduce fossil fuel use.


Work Required
In this project, you will play the role of the Canadian Minister of Agriculture. You are asked to take a firm stance on the issue of biofuels and prepare an announcement outlining how your party, if re-elected in the current election, will invest hundreds of millions of dollars to support biofuels. What will your plan be? Should the Government of Canada support or prohibit the use of food crops or biofuel production? Should you rather support an alternative way to make biofuels, or should you allow the free market to prevail? Present an informed argument supporting your opinion on this issue using information reported in the articles provided as well as other sources your staff has researched. Remember that there is no right or wrong answer here. Your point of view will be valid as long as it is based on facts and supported by strong and clear arguments.


To help this task, you are given the following articles:

http://www.smithsonianmag.com/specialsections/ecocenter/biofuel.html
http://jacusers.johnabbott.qc.ca/~biology/NYA/Wald(2007)SciAm(Jan2007)_42-49(Bioethanol).pdf


**You can also use any other documentation to develop your opinion. All documents used should be included in the reference list.


Your announcement should contain the following elements:
- Introduction :
- Introduce the topic being debated
- Define biofuels
-Presentation of your plan (see questions above)
-Alternative sides of the issue should be presented
- Your own view on the issue should be logically stated and supported by research
- Documentation & Reference list
- Documents used should be cited properly in your announcement
- Documents used should be properly referenced in a list


Other evaluation criteria:
- Clarity of writing
-Use of English (grammar and spelling)
- Use complete sentences. Avoid contractions or slang. Proof read your paper; do not rely solely on spell check
- Presentation
- Your announcement should be approximately 750 typed words


Style of Writing:

The writing style should be simple and clear.

- Be CLEAR: Short, informative sentences convey material most clearly. Long, complicated sentences can be difficult for the reader to understand. A sentence should typically convey one central idea.
- Be OBJECTIVE: Information must be presented in an unbiased manner. Your opinion should be supported by facts.
- Be ACCURATE: Present the facts as they are. Use the precise terms to say exactly what you mean.
- Be BRIEF: Avoid unnecessary information and repetition.

Essay Instructions: Essay Question --
Please write a report on the investment case for 2nd generation biofuels-their feasibility, expected date of industrial scale introduction, costs, subsidies (if any), etc.

My opinion--
Biofuels can be a very good market but in order for it to be a profitable industry, gas prices must go up in order to turn a profit. The Biofuel market also has a good potential for job creation on both blue colar and white colar levels.
There are faxes for this order.

Essay Instructions: ENTREPRENEURSHIP AND INNOVATION
BIOFUELS ? off into the wild, green yonder

Spooked by the spike in oil prices in 2008 and warily eyeing the latest spurt in fuel charges, airlines have noted that the cost of not going green are growing. In particular, they fret about the painful levies on carbon-spouting planes to be imposed under the European Union?s emissions trading scheme (ETS). From 2012 all airlines operating in the EU will be expected to cut emissions to 3% below the average annual figure for the period between 2004 and 2006, and by a further 2percentage points in 2013.Although most emissions allowances up to the cap will be allocated to airlines for free,15% will have to be acquired in auctions. Any further emissions will require trading in additional permits.
Little wonder, then, that the queue of carriers hopping on the biofuel bandwagon is growing. Lufthansa, Ryanair and easyjet are only the latest reported to be seeking a deal with solena, an American producer of aviation biofuels. At the start of January it emerged that Quantas, the Australian flag carrier, will work with the same company to build a commercial-scale aviation biofuel plant on the outskirts of Sydney. Solena is already building a similar plant in London, which is scheduled to produce around 70m liters (16m gallons) of biofuel a year from 2014.Burning this instead of the equivalent amount of kerosene would reduce BA?s carbon emissions by about 2% a year, as much as is produced annually by all flights going in and out of London?s(admittedly) city Airport.
The reason for Solena?s sudden popularity is that by making biofuels from waste, the company has dodged some of the problems that have bedeviled production of crop-based varieties. These include inadequate supplies of biomass to meet even today?s demand, and the related worries about how the push for more such crops may encourage land-clearance and lead to rising food prices. To illustrate the point, greenpeace, an environmental lobby group, calculated that a test flight by Virgin Atlantic in 2008 that powered one engine of a Boeing 747-400 with a 20% biofuel mix of babassu oil and coconut oil used the equivalent of 150,000 coconuts. If all four engines were powered by biofuels alone, 3m coconuts would have been required, leading the group to dismiss the exercise as a ?high altitude greenwash??.
Then there is the long list of exacting technical and commercial specifications aviation biofuels will need to meet. They must pack a lot of energy into a small volume, remain liquid at -50 degree C, come in chemically identical form all over the world, mix well with existing fuels, and improve, or at least match, those fuels efficiency. All that without requiring any serious tweaks to existing aircraft.
One-off tests of ?drop-in?? biofuels, ie, ones that can be mixed with standard kerosene, have been conducted successfully by airlines, including Qatar airways, continental, united, Air New Zealand and Japan Airlines. Lufthansa has gone further. In November 2010 it announced plans to carry out a six-month trial of the longer-term effects of biofuels on aircraft engines. Beginning in April, one engine on an Airbus A321 plying the route between Hamburg and Frankfurt route will run on a 50-50 mix of biofuel and Kerosene.
Until more such tests have been carried out successfully, the 50-50 mix is all that certifying agencies will permit, so a wholly plant derived aviation fuel remains a distant prospect. However, now that the ETS and other considerations have registered on the International Air Transport Association?s (IATA?S) radar, that industrial lobby group reckons biofuel could account for 6% of all aircraft fuel by 2020, reducing carbon emissions by over 4%, or more than 20m tonnes, from current levels.
The technology does not come Cheap. IATA predicts that an investment of $10billion-15 billion will be needed to reach the 2020 target. The plants in London and Sydney are expected to cost $300m apiece. However, for an industry that is coming to see biofuels as a hedge againast tighter environmental regulation, rising fuel costs and damage to reputation, it may be a price worth paying.
Source: The Economist (Feb, 2011)

INSTRUCTIONS TO ASSIGNMENT :
1. Based on the case study given, answer all the following questions.
2. You are required to search for reliable sources (journal papers etc. to support your view and give the due acknowledgement.

Question 1 : (35 marks)
a. What are the main drivers of using biofuel in the airlines industry ? (10 marks)
b. Airlines in Europe and Australia are planning to use aviation biofuel in future to enhance their corporate performance. Use the model advocated by Prajogo and Ahmed (2006) to critically evaluate what are the main factors may affect the innovation performance ? (25 marks)

Question 2 : (35 marks)
a. What are the possible risks of using biofuel in the airlines industry ? (10marks)
b. Discuss about the level of risks acceptance in the context of innovation process management. (5 marks)
c. Use the model ?critical factors for Innovation success?? advocated by Van De Panne et al. (2003), critically evaluate the marketing aspect of ??commercial Viability?? for the use of biofuel in airlines industry. (20marks)

Requirement :
1. 1 ? line spacing with font times new roman 11
2. Include table of contents and insert page numbers at every page

Essay Instructions: Research Assignment:
Information on Brazil and their use of bio-fuels. (research is completed, just needs to be organized and written into a research paper)

1. the history; when, how, why Brazil made the decision
to try bio-fuels
2. History and policy of biodiesel in Brazil
3. the affects on culture and economy of Brazil
4. How/if they changed over from dependence on oil to
bio-fuels (has it been successful and if so how
successful)
5. effects to the environment (research not done)
6. Pro’s of bio-fuels
7. Con’s of bio-fuel (sugar and land consumption)
8. how this affects imports and exports of Brazil,
including oil imports
9. cost of oil vs cost of ethanol
10. sugar ethanol vs corn ethanol
11. who is investing in Brazil’s biodiesel and sugar
fields
12. the automobile technology and how Brazil changed cars
from oil fuels to ethanol (bio-fuels)
13. what other countries (Sweden) have followed in
Brazils foot steps and how
14. what is the US response to Brazil’s bio-fuels and how
does the US compare to bio-fuel consumption,
processing and sugar vs corn


Teacher comments:

Last Month National Geographic has an excellent segment about biofuels especially related to superiority of sugar (Brazil) over Corn (the USA). That would make a slick reference. Keep the context of International business in mind and discuss the business constraints that Brazil had leading up to their early entry into Bio fuels. Consider the business of "fuel" - a quick definition of "Cartel" would be nice. Also maybe discuss the automobile technology and how Brazil changed the car to match the fuel (rather than making the fuel to match the car). Finally, you could mention one more country (hint: Sweden) that took a similar route but in a different way. Great topic - go for it and have fun. My suggestions are just to keep the paper well rounded. I look forward to hearing the written proposal/paper outline


6 references
8 to 10 pages
A graphic or 2 would be nice
Paper must include:
Executive summary
All references cited in APA format
Reference page in APA format


Below is my research that needs to be organized into a research paper:

1. The history; when, how, why Brazil made the decision to
try bio-fuels

Brazil’s bio-ethanol program goes back to the oil crisis in the 1970s, and has been the world’s most advanced bio-fuels market for decades. There are currently nearly 300 sugar-ethanol mills in operation, with 60 or more under construction (Mae-Won Ho, 2006 December 26).

The use of ethanol to fuel automobiles was initiated in response to the oil shock of 1973, and as an alternative to oil to promote self-sufficiency. In 1975, for example, the government created the Brazilian National Alcohol Program to regulate the ethanol market and encourage the production and use of fuel ethanol. The program guaranteed that all gasoline sold in the country would be blended with 22% anhydrous ethanol and that the pump price would remain competitive with gasoline. Past sugarcane crop problems have slightly altered the percentage of ethanol in Brazilian gasoline, however, mandated levels have usually remained at around 20%. Then, on June 1, 2003, the Brazilian government raised the ethanol mix in gasoline from 20% to 25%. http://www.eia.doe.gov/emeu/cabs/brazenv.html

Currently, as mentioned above, about half of Brazil’s sugarcane crop has gone into bio-ethanol production with the rest being refined into sugar. Motorists today can choose to fill up with 100 percent ethanol at half the price of gasoline at over 30 000 filling stations nationwide, or petrol blended with 20-25 percent ethanol. Ethanol accounts for 40 percent of all non-diesel consumption. And, in 2005, for example, Brazil produced 15.9 billion litres of bio-ethanol, more than one-third of the world’s supply and second only to the United States. Brazil’s bio-ethanol is the only large-scale bio-fuel program now able to expand without government subsidies. US’ bio-ethanol from corn, in contrast, is heavily subsidized (Mae-Won Ho, 2006 February 28).

To add to this, Brazil is set to double its bio-ethanol production in the next decade, the futures market rose by 62 percent in 2006, thanks to growing demand in the EU, US, China, Japan, India and elsewhere. It is also poised to vastly expand biodiesel production for export, using soya, palm oil and caster oil. Brazil is emerging as the biggest of The New Biofuel Republics (as cited in Mae-Won Ho, 2006 December 26) in the world, and getting bigger all the time (Mae-Won Ho, 2006 December 26)

Rising global demand for bio-fuels has provided an opportunity, not only to expand its sugarcane ethanol, but also to save its ailing soybean industry, by turning soybean oil into another bio-fuel, biodiesel. New plants are being constructed in Brazil every day, such as the new ethanol-biodiesel plant in Barra do Bugres, Mato Grosso, in the heart of Brazil’s centre-west soybean belt, has been producing ethanol from surrounding sugarcane fields for more than 20 years, but Dedini, a leading provider of sugar-ethanol biodiesel and cogeneration plants in Brazil, constructed the integrated biodiesel plant on the site, after investing 27 million Reals (US$12.5 million). In addition, the Lula government recently passed legislation that will mandate a 2 percent blend of biodiesel from oilseed crops like soybean, sunflower or castor beans in all commercial sales of petroleum diesel by 2008 rising to 5 percent by 2013. A few hundred filling stations already offer blends. Brazil has about 10 biodiesel plants in operation and another 40 under construction (Mae-Won Ho, 2006 December 26)

Finally, in 2006, Brazil integrated bio-ethanol and biodiesel production. For example, in a press release in December 2006, it is reported that President Lula recently inaugurated Barralcool, the first integrated bio-fuels plant that will produce sugarcane-based ethanol and biodiesel from oilseeds (Mae-Won Ho, 2006 December 26).


2. History and policy of bio-diesel in Brazil

Soy, the main raw material for biodiesel in Brazil, due to its massive current production, "has already become one of the principal factors behind deforestation of the Amazon and the Cerrado, a biome of savannahs and scrub forests that covers the extensive central area of Brazil," said the expert (Osava, 2006).

In 2005, as part of its ongoing energy matrix diversification, Brazil has taken a further step in promoting its renewable sources policy. Almost thirty years after creating Proálcool (the National Alcohol Programme), the most important fossil fuel substitution initiative in the global automobile market, Brazil has now authorized the commercial use of a new fuel - biodiesel. This is a biodegradable product originating from sources such as vegetable oils, animal fats, industrial residues, and sewage. Under the PNPB (the National Biodiesel Production and Utilisation Programme), the Brazilian Government has created a production chain, defined credit lines, structured its technological base, and enacted a law regulating this sector. Over the next three years, Brazil will sanction the addition of 2% biodiesel to diesel oil, a mixture that will be compulsory from 2008 and which will increase to 5% in 2013" (Biodiesel in Brazil - Overview 2005).



See full overview at URL: http://www.oti.globalwatchonline.com/online_pdfs/36488X.pdf#search=%22government%20support%20for%20Biodiesel%20in%20Brazil%22

3. The affects on culture and economy of Brazil

Research suggests mixed reviews of the cultural and social implications of producing ethanol in Brazil, including:

• The replacement of food crops by sugarcane has increased food prices
• The sugarcane industry has created a large population of migrant workers causing crime
• Decreased biodiversity
• Decreased dependency on foreign oil
How this affects Brazil’s economy, culture, and how it affects other countries.

There have been substantial affects on Brazils economy, culture and other countries. For example, with ethanol and biodiesel as a springboard, Brazil's President Luiz Inácio Lula da Silva aims to turn his country into an energy superpower -- in contrast to the 1970s when the Brazilian economy was thrashed by its dependence on oil imports and its dramatic price hikes. But environmentalists warn that although bio-fuels reduce emissions of greenhouse gases (which lead to global climate change), they could also trigger a massive expansion of the bio-fuel crops, pushing the agricultural frontier deeper into the forests, destroying habitat and biodiversity. Alone for three decades in widespread use of ethanol, or ethyl alcohol, to replace a portion of gasoline in vehicles, Brazil developed technologies and a sugarcane economy that ensure its absolute competitiveness in exports, still limited by protectionist barriers and an unstable international market (Osava, 2006).

According to the International Food & Agricultural Trade Policy Council (October 2006), in Brazil, “the growth in world demand for ethanol will affect the environmental sustainability of sugar production…. Because Brazil is one of the largest consumers and the largest exporter of ethanol, the expansion of sugarcane acreage will be mostly ethanol related. However, liberalization in the world sugar market will benefit Brazil in terms of its ability to export both sugar and ethanol, thereby also contributing to the increase in land devoted to sugarcane production. The resulting increase in sugarcane monoculture will have a net negative effect on soil quality and water use, perhaps more negative for water than soil, because sugarcane is a "thirsty" crop. Brazil’s score on air quality is difficult to determine, since it will be negative due to associated burning of cane and processing activity, but will be positively affected, since ethanol replaces fuels that contribute more to air quality degradation and carbon emissions” (International Food & Agricultural Trade Policy Council, 2006).

"On the plus side, the effects on biodiversity are anticipated to be minimal and increases in sugarcane planting will lead to some additional seasonal rural employment. However, Brazil’s good environmental legislation, but pronounced lack of enforcement capability, combined with the likelihood that increased sugarcane acreage will be widely dispersed in non-traditional areas, leads to a negative score across most environmental categories. Removal of EU export subsidies will make Brazil’s sugar sector more competitive, and therefore it will be able to export more sugar and derivative products. This will, in turn, adversely affect all environmental factors. The one exception is within the social sphere, where greater market access will create more rural employment. If and when cellulosic conversion technology becomes commercialized, Brazil will be able to also convert bagasse, the residue of sugarcane production, to ethanol and may be able to devote less land to sugarcane production" (International Food & Agricultural Trade Policy Council, 2006).

Brazilian ethanol producers are actively looking to expand exports to the United States, despite a 2.5 percent ad valorem plus a 54-cent-per-gallon tariff that the United States imposes on direct imports of the fuel. In order to skirt the tariff, Brazilian producers have purchased ethanol-processing facilities in El Salvador and Jamaica that have duty-free access to the United States through the Caribbean Basin Initiative. Investors in Guatemala, Panama and the Dominican Republic are also reported to be working with Brazilian partners to plan new ethanol distilleries (Constance, 2006).


According to Szwarc: “The consolidation of bio-ethanol as an important source of energy is linked to the creation of about one million direct jobs and an extensive agribusiness supply chain that has been contributing to rural and industrial development. Also bio-ethanol has helped to improve air quality in urban areas due to its much lower pollution characteristics and it has been regarded as an important alternative to greenhouse effect mitigation. Actually under Brazilian typical production and demand conditions bio-ethanol avoids the emission of 2.6 tons of CO2 equivalent /m3 for the anhydrous grade while for the hydrous grade the value is 1.7 tons of CO2 equivalent /m3. Furthermore the energy balance of the bio-ethanol cycle is highly favorable resulting in a net output of 8.3 units of energy for each unit of energy input. Based on the successful experience of bio-ethanol Brazil is just starting a biodiesel program that aims basically to reduce imports of diesel oil, stimulate social development of poor rural areas, mainly in the Northeastern part of the country, and reduce emissions from diesel-powered vehicles. Starting in 2005 production and use of biodiesel will be encouraged by a comprehensive policy that is being finalized by the Federal government. Initial demand of Biodiesel is expected to reach 800 million liters/year and this volume is likely to be used primarily for diesel blends containing 2%biodiesel. It is worth of note that conversely to what happens elsewhere where vegetable oil is processed with methanol to produce methyl ester in Brazil the preferred route for biodiesel production will use bio-ethanol to produce ethyl ester. The environmental advantage is obvious considering that methanol is mainly produced from fossil feedstocks” (Szwarc, n.d).


The trend in Brazil has far-reaching implications for environmental policy, trade and economic development in poor countries that may have a bright future producing crops that can be easily turned into fuels. Biofuels also could be alternatives for U.S. farmers facing cuts in large federal farm subsidies on traditional crops, according to some agricultural economists. Congress, the Bush administration and U.S. industry are aware of ethanol's potential. During Senate floor debate Thursday on major energy legislation, Sen. Maria Cantwell (D-Wash.) said Brazil's example showed that bio-fuels were one way to break the "addiction" to imported oil. Efforts to gain wide acceptance in the United States have faced political, economic, and technical obstacles not present in Brazil (Morgan, 2005).


From another source:

According to this source: "First, not all Brazilian ethanol sold in the United States is imported “in spite” of the tariff. The Caribbean Basin Initiative allows Caribbean and Central American countries to sell Brazilian ethanol to U.S. importers duty-free. The amount is capped at 7% of U.S. domestic consumption, with provisions allowing additional tariff-free imports for mostly Brazilian ethanol with specified percentages of Caribbean “domestic content.” Second, U.S. refiners might be importing very little Brazilian ethanol if Congress, in the 2005 Energy Policy Act, had not (a) mandated the sale of 7.5 billion gallons of ethanol by 2012, and (b) denied refiners liability protection from lawsuits over MTBE contamination of ground water–a policy that triggered a stampede to ethanol as a fuel additive. Third, the relative success of Brazil’s ethanol industry depends on rather special conditions including an ideal climate for growing sugarcane, abundant cheap labor, and vast tracts of unused land with scant biodiversity (see p. 15 of Dennis Avery’s paper and pp. 7-8 of Marcus Xavier’s paper). Fourth, even in Brazil, it is unclear whether ethanol could compete successfully with gasoline without policy privileges. According to Brazilian economist Edward F. de Almeida, Brazil’s national government taxes ethanol at $0.01 per liter and gasoline at $0.26 per liter. Value added taxes imposed at the state level further skew the market in favor of ethanol. In Sao Paulo, for example, the VAT for ethanol is 12% compared to 25% for gasoline. Overall, Brazilian ethanol enjoys a tax advantage over gasoline of $997 million per year" ( Biofuels can match oil production, Harvard researcher says).

4. How/if they changed over from dependence on oil to
bio-fuels (has it been successful and if so how
successful)

Brazil’s bio-ethanol is often held up as a model of sustainable bio-fuel production, and this appears to have been confirmed by a report released in October 2006 by the International Energy Agency’s Bio-energy Task 40, which analyses the international bio-energy and bio-fuels trade [4, 5]. The report concluded that, in general the production of sugarcane-based ethanol as currently practiced in Brazil, is “environmentally sustainable” (Mae-Won Ho, 2006 December 26).

Thus, it is extremely successful, at least from the economic perspective. Currently, in fact, about half of Brazil’s sugarcane crop has gone into bio-ethanol production with the rest being refined into sugar. Motorists today can choose to fill up with 100 percent ethanol at half the price of gasoline at over 30 000 filling stations nationwide, or petrol blended with 20-25 percent ethanol. Ethanol accounts for 40 percent of all non-diesel consumption. And, in 2005, for example, Brazil produced 15.9 billion litres of bio-ethanol, more than one-third of the world’s supply and second only to the United States. Brazil’s bio-ethanol is the only large-scale bio-fuel program now able to expand without government subsidies. US’ bio-ethanol from corn, in contrast, is heavily subsidized (Mae-Won Ho, 2006 February 28). To add to this, Brazil is set to double its bio-ethanol production in the next decade, the futures market rose by 62 percent in 2005, thanks to growing demand in the EU, US, China, Japan, India and elsewhere. It is also poised to vastly expand biodiesel production for export, using soya, palm oil and caster oil. Brazil is emerging as the biggest of The New Biofuel Republics (as cited in Mae-Won Ho, 2006 December 26) in the world, and getting bigger all the time.

5. Effects to the environment

6. Pro’s of bio-fuels

There are many eco-benefits to replacing oil with bio-fuels like ethanol and biodiesel, including:

• Since such fuels are derived from agricultural crops, they are inherently renewable--and our own farmers typically produce them domestically, reducing our dependence on unstable foreign sources of oil.
• Second, ethanol and biodiesel emit less particulate pollution than traditional petroleum-based gasoline and diesel fuels. They also do not contribute to global warming, since they only emit back to the environment the carbon dioxide (CO2) that their source plants absorbed out of the atmosphere in the first place.
• Third, unlike other forms of renewable energy (like hydrogen, solar or wind), bio-fuels are easy for people and businesses to transition to without special apparatus or a change in vehicle or home heating infrastructure--you can just fill your existing car, truck or home oil tank with it (The Pros and Cons of Bio-fuels).

7. What are the cons of bio-fuels?

Despite the upsides, however, there is a downside to look at as well, which include:

• Those looking to replace gasoline with ethanol in their car, however, must have a “flex-fuel” model that can run on either fuel. Otherwise, most regular diesel engines can handle bio-diesel as readily as regular diesel.

• Second, a wholesale societal shift from gasoline to bio-fuels, given the number of gas-only cars already on the road and the lack of ethanol or bio-diesel pumps at existing filling stations, would take some time.

• Third, another major hurdle for widespread adoption of bio-fuels is the challenge of growing enough crops to meet demand, something skeptics say might well require converting just about all of the world’s remaining forests and open spaces over to agricultural land.

• Fourth is the issue of whether producing them actually requires more energy than they can generate. After factoring in the energy needed to grow crops and then convert them into bio-fuels, Cornell University researcher David Pimental concludes that the numbers just don’t add up. For example, his 2005 study found that producing ethanol from corn required 29 percent more energy than the end product itself is capable of generating. He found similarly troubling numbers in making biodiesel from soybeans. “There is just no energy benefit to using plant biomass for liquid fuel,” says Pimentel (The Pros and Cons of Bio-fuels).


From another source:


Until recently, according to Constance (2006), the immediate reason was the low price of petroleum. When oil sold for less than US$30 per barrel, cane growers in most countries could earn better returns from producing sugar than ethanol. (Even in Brazil, growers have traditionally switched between sugar and ethanol production depending on fluctuations in the price of each commodity). But the bigger reason is that an ethanol program like Brazil’s requires a decades-long commitment by successive governments, elaborate system mandates, subsidies and incentives, and large expenditures in research and development. Constance (2006) also states: "Finally, in countries with limited extensions of arable land, a large-scale expansion of sugarcane cultivation will almost certainly come at the expense of existing food crops or, worse yet, native forests. New sugar cane plantations are thus likely to face opposition from agricultural interests or environmentalists" (Constance, 2006).


From another source:

According to Osava (2006), however, the sugarcane economy is not a good environmental model. In the southeastern state of Sao Paulo, which produces 70 percent of Brazil's alcohol, the companies generally do not obey the Forestry Code, which requires nature preservation of 20 percent of rural properties. Furthermore, the cane fields are burned to facilitate the harvest, which creates serious local air pollution, said Rodrigues in a Tierramérica interview. "It is worrisome that a new economic cycle based on bio-fuels would trigger the expansion of monoculture crops and, consequently, deforestation," says Délcio Rodrigues, an energy expert with Vitae Civilis, a Brazilian non-governmental organisation that is active in fighting climate change (Osava, 2006).

8. How this affects imports and exports of Brazil, including
oil imports?


From country studies, for example: “The growth in world demand for ethanol will affect the environmental sustainability of sugar production in Brazil. Because Brazil is one of the largest consumers and the largest exporter of ethanol, the expansion of sugarcane acreage will be mostly ethanol related. However, liberalization in the world sugar market will benefit Brazil in terms of its ability to export both sugar and ethanol, thereby also contributing to the increase in land devoted to sugarcane production. The resulting increase in sugarcane monoculture will have a net negative effect on soil quality and water use, perhaps more negative for water than soil, because sugarcane is a "thirsty" crop. Brazil’s score on air quality is difficult to determine, since it will be negative due to associated burning of cane and processing activity, but will be positively affected, since ethanol replaces fuels that contribute more to air quality degradation and carbon emissions” (International Food & Agricultural Trade Policy Council).

"On the plus side, the effects on biodiversity are anticipated to be minimal and increases in sugarcane planting will lead to some additional seasonal rural employment. However, Brazil’s good environmental legislation, but pronounced lack of enforcement capability, combined with the likelihood that increased sugarcane acreage will be widely dispersed in non-traditional areas, leads to a negative score across most environmental categories. Removal of EU export subsidies will make Brazil’s sugar sector more competitive, and therefore it will be able to export more sugar and derivative products. This will, in turn, adversely affect all environmental factors. The one exception is within the social sphere, where greater market access will create more rural employment. If and when cellulosic conversion technology becomes commercialized, Brazil will be able to also convert bagasse, the residue of sugarcane production, to ethanol and may be able to devote less land to sugarcane production" (International Food & Agricultural Trade Policy Council).


According to Constance (2006) and others, Brazilian ethanol producers are actively looking to expand exports to the United States, despite a 2.5 percent ad valorem plus a 54-cent-per-gallon tariff that the United States imposes on direct imports of the fuel. In order to skirt the tariff, Brazilian producers have purchased ethanol-processing facilities in El Salvador and Jamaica that have duty-free access to the United States through the Caribbean Basin Initiative. Investors in Guatemala, Panama and the Dominican Republic are also reported to be working with Brazilian partners to plan new ethanol distilleries (Constance, 2006).

In other words, reports Constnace (2006), “before ethanol can be traded as a large-volume commodity on the international market, even Brazil’s mature ethanol industry will need to consolidate and invest heavily in transportation infrastructure and logistics. Both public and private entities in the country appear to be rising to this challenge. Brazil’s ethanol producers association has announced plans to expand production with the goal of doubling exports by 2010, to around 5 billion liters per year. According to Garten Rothkopf, 89 new ethanol distilleries are either planned or under construction in Brazil, and the country’s ethanol production capacity is growing at around 8 percent per year” (Constance, 2006).



9. Cost of oil versus cost of ethanol

Motorists today can choose to fill up with 100 percent ethanol at half the price of gasoline at over 30 000 filling stations nationwide, or petrol blended with 20-25 percent ethanol. Ethanol accounts for 40 percent of all non-diesel consumption (http://www.eia.doe.gov/emeu/cabs/brazenv.html).


10. Sugar ethanol versus corn ethanol

South America's largest economy, Brazil launched an ethanol motor fuel program in 1975 and, against heavy odds, has developed a cost-efficient alternative to gasoline. In fact, Brazil's sugar industry, once viewed as a remnant of the country's colonial past, may now have a prominent place in the world's energy future. About half of the country's 21,000 square miles of sugar cane under cultivation is used to make ethanol that, according to the World Bank, is being produced at a cost of $1 per gallon compared to $1.50 for gasoline. Getting to that point required decades of steady pressure from Brazil's government, in ways that would be hard to duplicate in the United States, according to Deibert, 2006 (Deibert, 2006).

In fact, ethanol is currently the most available bio-fuel, and the U.S. and Brazil combined produce 70% of the world’s ethanol. One difference between the two countries is that ethanol is made primarily from cornstarch in the U.S. and from sugar from sugarcane in Brazil. Both countries are also ramping up to begin producing ethanol from plant biomass, which can come from a variety of sources ranging from corn stover and sugarcane bagasse to wood and grasses (Ritter, 2007).
Motorists today can choose to fill up with 100 percent ethanol at half the price of gasoline at over 30 000 filling stations nationwide, or petrol blended with 20-25 percent ethanol. Ethanol accounts for 40 percent of all non-diesel consumption. And, in 2005, for example, Brazil produced 15.9 billion litres of bio-ethanol, more than one-third of the world’s supply and second only to the United States. Brazil’s bio-ethanol is the only large-scale bio-fuel program now able to expand without government subsidies. US’ bio-ethanol from corn, in contrast, is heavily subsidized (The Pros and Cons of Bio-fuels).



According to the Washington, "Most U.S.-produced ethanol is now made from ground corn in a process that has been faulted as inefficient. Corn yields less sugar per acre than sugar cane, and the refining uses substantial amounts of energy. To keep ethanol competitive with gasoline, major refiners such as Archer Daniels Midland Co. have relied since the 1970s on a tax subsidy, now 51 cents a gallon. U.S. refiners sell a gasoline blend containing 10 percent ethanol in many parts of the Midwest, but they have been in no hurry to use more. Only a few hundred gasoline stations, mostly in the Midwest, offer a near-pure blend known as E85. Adapting cars to pure ethanol can be done relatively inexpensively by adding a fuel sensor and corrosion-resistant hoses, but there are only about 4 million flexible-fuel cars on U.S. roads out of more than 200 million" (Morgan, 2005).


11. Who is investing in Brazil’s bio-diesel and sugar fields?

Biodiesel and ethanol have captured the imaginations of soybean and corn farmers in the U.S. and soybean and sugarcane growers in Brazil—as well as lots of entrepreneurs—as a pathway to handsome financial gains (Ritter, 2007).

“It’s no secret that as fossil fuels are used up”, reports Ritter (2007), “we will have to replace them with something, both to drive our cars and to heat and power our homes and businesses. A lot of people started out thinking big about using hydrogen-powered fuel cells and solar-powered batteries. Solar technologies likely will win out in the distant future once they become more efficient and affordable, but to be practical, bio-fuels will have to serve in the interim” (Ritter, 2007).

Also see http://www.biodiesel.gov.br/docs/cartilha_ingles.pdf#search=%22Brazilian%20National%20Alcohol.

12. The automobile technology and how Brazil changed cars
from oil fuels to ethanol (bio-fuels)

In July 2003, for example, “Volkswagen announced plans to have its entire Brazilian fleet's engine converted from conventional to bi-fuel version by 2006. A bi-fuel engine can run on either gasoline or ethanol (Flexible Fuel Vehicles). Ethanol usually offers consumers a cheaper option to gasoline. In the past, Brazilians became wary of relying on ethanol due supply problems and cheap oil prices. The use of biomass fuel ethanol is an effective strategy to mitigate greenhouse gases, as it replaces oil, a more carbon-intensive fuel. While the manufacture of crop fertilizers and extraction and purification of ethanol can be highly energy intensive, this is not the case in Brazil, because much of the work is done by hand" (http://www.eia.doe.gov/emeu/cabs/brazenv.html).

13. What other countries (Sweden) have followed in Brazils
footsteps?

For its part, Brazil is quietly forging renewable fuels development agreements with a number of countries, most recently Chile, Jamaica, and Indonesia (Ritter, 2007).

The United States and China are working on a pact to promote use of ethanol and other bio-fuels to reduce greenhouse gas emissions and could announce an agreement as early as next month, an American official said Friday. The agreement would call for cooperation in research, producing crops for fuel and other areas, said Alexander Karsner, an assistant U.S. energy secretary. He was in Beijing for talks with Chinese officials on promoting use of renewable energy sources. China already is the third-largest producer of bio-fuels after the United States and Brazil, which account for 80 percent of global production, according to Karsner (McDonald, 2007).

The Swedish oil company Statoil is currently selling E85 ethanol at 170 of their gas stations throughout Sweden, a number, which should increase to 260 by the end of 2007. Last year they sold 5.2 million gallons of E85, an increase of 270 percent compared to 2005. During the same time 36,711 flex-fuel cars were sold in Sweden, a jump of 156 percent from the previous year and 13.5 percent of all new car registrations. In 2005 only 5.2 percent of new car sales were flex-fuel capable. This growth probably hasn't been hurt by Saab's promotion of their BioPower flex-fuel models, and since Sweden doesn't have much if any domestic oil, they are also heavily promoting cellulosic ethanol development, to make them more energy self-sufficient (Abuelsamid, 2007).

Fueled by concerns over high oil prices and global warming, resource-poor Japan is revving up its drive to promote biofuels. Japan recently launched the first test sales of gasoline mixed with bioethanol in Osaka about six months after Japanese oil distributors began to sell another type of biofuel — gasoline blended with ethyl tertiary butyl ether (ETBE) — in the Tokyo metropolitan area on a trial basis. ETBE is a gasoline additive made by combining bioethanol — grain alcohol derived from such plants as sugar cane and corn –- with isobutylene, a petroleum product (Masaki, 2007).


Also see http://ap.google.com/article/ALeqM5j3wJcaZmHP9Pmi8YtNF_S_Mm3SoQD8SUOPIO0 and other resources in attached files.


14. What is the US response to Brazil’s bio-fuels?

The governments of both the U.S. and Brazil view bio-fuels as a means for achieving “energy independence” and as yet another way to apply political leverage. For scientists, bio-fuels represent a new opportunity for international scientific collaborations (Ritter, 2007).

For example, the U.S. and Brazil announced plans to establish an energy partnership to encourage ethanol use throughout North and South America. Brazilian President Luiz Inácio Lula da Silva and U.S. President George W. Bush met twice, once in February in Brazil and again in March in the U.S. The two countries plan to sign agreements on technology sharing within the next year. For the U.S., the cooperation with Brazil is in part a political maneuver to frustrate President Hugo Chávez of oil-rich Venezuela, and by extension President Mahmoud Ahmadinejad of Iran, both of whom the Bush administration perceives as security threats. Chávez in particular has been using oil revenues to build influence in Latin America and the Caribbean (Ritter, 2007).



References

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Biofuels can match oil production, Harvard researcher says (2007). Retrieved December 3, 2007, from http://www.factsaboutethanol.org/?p=294

Biodiesel in Brazil – Overview (2005) . Retrieved December 3, 2007, from http://www.oti.globalwatchonline.com/online_pdfs/36488X.pdf#search=%22government%20support%20for%20Biodiesel%20in%20Brazil%22


Constance, P. (2006). The age of ethanol - Brazil has shown the world that bio-fuels can be used to reduce dependence on petroleum. But will other Latin American nations follow its lead? Latin Business Chronicle. Retrieved December 3, 2007, from
http://www.latinbusinesschronicle.com/app/article.aspx?id=427

Deibert, M. (2006 March 27). Brazil has head start on ethanol production. Por Energia Alternativa. Retrieved December 3, 2007, from http://www.midiaindependente.org/pt/blue/2006/03/349201.shtml

Mae-Won Ho (2006 February 28). Biofuels for Oil Addicts. ISIS Press Release. Retrieved December 3, 2007, from http://www.i-sis.org.uk/BFOA.php

Mae-Won Ho (2006 December 18). Biofuels Republic Brazil (2006 December 18). ISIS Press Release. Retrieved December 3, 2007, from http://www.i-sis.org.uk/BiofuelRepublicBrazil.php

Masaki, H. (2007 November 10) Roadblocks to Japan's biofuel drive. Retrieved December 3, 2007, from http://www.japantoday.com/jp/comment/1189

McDonald, I. (2007 November 16). US, China working on a bio-fuel pact. The Associated Press. Retrieved December 3, 2007, from http://ap.google.com/article/ALeqM5j3wJcaZmHP9Pmi8YtNF_S_Mm3SoQD8SUOPIO0

Morgan, D. (2005). Brazil bio-fuel strategy pays off as gas prices soar: Oil substitutes include sugar cane, corn, soybeans, beets, cornstalks. Washington Post. Retrieved December 3, 2007, from http://www.msnbc.msn.com/id/8262015/.

Osava, M. (2006). ENERGY-LATIN AMERICA: Bio-fuel Boom Sparks Environmental Fears. Retrieved December 3, 2007, from http://ipsnews.net/news.asp?idnews=34845

International Food & Agricultural Trade Policy Council (2006 October). Trade liberalization in sugar and oilseeds: How will it affect the environment? Retrieved December 3, 2007, from
http://www.agritrade.org/Publications/Sugar_exec_summary_web.pdf

Ritter, S. (2007). What the bio-fuel fuss is all about. Retrieved December 3, 2007, from http://cenbrazil.wordpress.com/2007/05/23/what-the-biofuels-fuss-is-all-about/

Szwarc, A. (n.d). Use of bio-fuels in Brazil (Abstract). Brazilian Ministry of Science and Technology. Retrieved December 3, 2007, from
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The Pros and Cons of Biofuels (2007). Retrieved December 3, 2007, from http://news.carjunky.com/environmental/the-pros-and-cons-of-biofuels-c0