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9.2.3 Key Issues in Biofuel Production in Brazil
9.2.3.1 Economic Issues
Unstable Demand Because the number of flex-fuel vehicles on the road is increasing rapidly in Brazil, the demand for bioethanol has been expanding with certainty.
On the other hand, the large fluctuation of crude oil price in the last few years has
been transcended to the unstable demand for bioethanols at the global scale. Higher
the stability of public policy in the European Union, the United States, and Japan is,
higher the certainty of demand for bioethanol production in Brazil.
Investment Environment Regulations on, as well as uncertainties in, foreign investments to Brazil limit the expansion of biofuel production. Brazil’s economic policy
has been relatively stable in the last few years, compared to previous administrations, and thus the uncertainty regarding the foreign investment is lower than before.
However, the legacy of unreliable management of national economy in the past is
affecting the decision of foreign investors.
Grid Connection Electricity generation by burning bagasse is rapidly increasing.
The electricity is supplied not only to the distillery machineries but also to the grid.
The supply to the grid would increase by 2,745 MW from 2007 to 2012. If the feedin- tariff and similar regulation that promote power generation by plantations, the
expected return from investing in plantation development would increase.
Infrastructure Development Pipeline is crucial in expanding the sugarcane production from the state of Sao Paolo toward its north. Transport of ethanols in the special
lorries on the highway is costly and would harm the profitability of such expansion.
The pipeline development toward the Port of Santos is a crucial element in predicting the future of biofuel development in Brazil.
9.2.3.2 Societal Issues
Employment Harvesting sugarcane is traditionally labor intensive, and the seasonal
migrant laborers from the northern part of Brazil have undertaken the role. On the
other hand, mechanization at plantations has progressed. It means that the expansion of new plantations does not necessarily transcend to the increased demand for
manual labor force. Following the mechanization, skilled laborers who can operate
agricultural instruments are likely to benefit from new employment opportunities.
Meanwhile, those unskilled manual laborers need to be supported by providing
vocational education and other job opportunities.
Labor Safety The ban on open burning has problems with labor safety. Scorpions
and snakes cannot be removed from the field before harvesting. The sharp edge of
the sugarcane leaf is another kind of risk to the laborers. On the other hand, there is
a political pressure to ban open burning from the perspective of environmental
M. Matsuura and H. Shiroyama
9.2.3 Key Issues in Biofuel Production in Brazil
9.2.3.1 Economic Issues
Unstable Demand Because the number of flex-fuel vehicles on the road is increasing rapidly in Brazil, the demand for bioethanol has been expanding with certainty.
On the other hand, the large fluctuation of crude oil price in the last few years has
been transcended to the unstable demand for bioethanols at the global scale. Higher
the stability of public policy in the European Union, the United States, and Japan is,
higher the certainty of demand for bioethanol production in Brazil.
Investment Environment Regulations on, as well as uncertainties in, foreign investments to Brazil limit the expansion of biofuel production. Brazil’s economic policy
has been relatively stable in the last few years, compared to previous administrations, and thus the uncertainty regarding the foreign investment is lower than before.
However, the legacy of unreliable management of national economy in the past is
affecting the decision of foreign investors.
Grid Connection Electricity generation by burning bagasse is rapidly increasing.
The electricity is supplied not only to the distillery machineries but also to the grid.
The supply to the grid would increase by 2,745 MW from 2007 to 2012. If the feedin- tariff and similar regulation that promote power generation by plantations, the
expected return from investing in plantation development would increase.
Infrastructure Development Pipeline is crucial in expanding the sugarcane production from the state of Sao Paolo toward its north. Transport of ethanols in the special
lorries on the highway is costly and would harm the profitability of such expansion.
The pipeline development toward the Port of Santos is a crucial element in predicting the future of biofuel development in Brazil.
9.2.3.2 Societal Issues
Employment Harvesting sugarcane is traditionally labor intensive, and the seasonal
migrant laborers from the northern part of Brazil have undertaken the role. On the
other hand, mechanization at plantations has progressed. It means that the expansion of new plantations does not necessarily transcend to the increased demand for
manual labor force. Following the mechanization, skilled laborers who can operate
agricultural instruments are likely to benefit from new employment opportunities.
Meanwhile, those unskilled manual laborers need to be supported by providing
vocational education and other job opportunities.
Labor Safety The ban on open burning has problems with labor safety. Scorpions
and snakes cannot be removed from the field before harvesting. The sharp edge of
the sugarcane leaf is another kind of risk to the laborers. On the other hand, there is
a political pressure to ban open burning from the perspective of environmental
M. Matsuura and H. Shiroyama