A HUB OF SKILLS IN THE BIODIESEL

PRODUCTION CHAIN IN BRAZIL

 goal

To set up a pool of highly professional

organizations in the private and public sector to
organize the bio-diesel production chain , making
available to the market turn-key projects
(from soil to oil)

9 promoting sustained development and poverty

alleviation, creating opportunities and a new model for
the intensive and extensive use of the energy biomass
potential of Brazil.
 vision

“Take joint actions and improve efforts to work together

at all levels to improve access to reliable and affordable
energy services for sustainable development sufficient to
facilitate the achievement of the MDGs, including the
Goal of halving the proportion of people in poverty by
2015, and as a means to generate other important services
that mitigate poverty, bearing in mind that access to
energy facilitates the eradication of poverty”

( Summit on Sustainable Development in the

Johannesburg Plan of Implementation )
 our challange
In modern economies, large scale poverty imposes an enormous
economic loss, wasting the talents and energies of hundreds of
millions of people , diverted from socially productive activities that
could create wealth for society to the struggle for mere survival.

The partnerships
should be at the
global level, at the
country level with
national
stakeholders and
external partners
acting together,
the private sector
and civil-society But the fundamental partnership, and
institutions
collaborating to ultimately the only one that counts, is with the
create conditions poor themselves. They have the talents, the
that emancipate skills and the knowledge of their own
poor groups. environment.
 Innovation of BioVale Hub for industries

9 Cold mechanical expelling

OIL EXPELL 9 Phosphorous low content

9 by-products with high nutricional content

9 Ethanol technology
TRANSESTERIFICATION 9 Low operational cost
9 Meeting International requirements

9 Plenty local feed-stock

ANIDRUS ALCOHOL 9 High calorific power
DESTILLATION
9 Low production cost

9 re-usage of water and contaminated

BIOLOGICAL glycerin
TREATMENT 9Cogeneration of electric and thermal
energy
9Production of biological fertilizer
 Linking the various stakeholders

The main objective of the Hub is to bring capabilities of the various

stakeholders involved in the bio-diesel production chain, both in Brazil and
abroad providing resources and diffusing knowledge to the linked firms.

The benefits provided through such linkages are of great significance because
of the complimentary capabilities among the stakeholders.

Linkages with foreign organizations can be a great driver of dynamism and

competitiveness to develop effectively and rapidly the Brazilian bio-diesel
program. The foreign firms benefit from linkages are reduced costs, local
market and product intelligence and enhanced assets (UNCTAD 2001).

MINASINVEST´s interventions, as a leading IPA (Investment promotion agency)

are important to the extent that investors believe that an enterprising IPA can
assist them in identifying and introducing reliable local firms and
organizations with whom the investors can partner.

The linkage envisages upgrading domestic enterprises; facilitating the

transfer of technology, knowledge and skills; improving business and
management practices; and facilitating access to finance and markets.
Market scenario and prospects

the price of
crude oil tripled
between early
2002 and mid-
2005 while
natural gas
reaches a level
six times greater
than ten years
earlier.
Source: GTZ/WorldWatch Institute
 The growing gap
9 energy companies have not invested in building
enough refinery capacity to meet the growing level of 9companies have
world demand. World oil production has gone up by 40% not been able to
in the past 20 years while refinery capacity has only find enough new
gone up 15%. oil and gas fields
9 to replace the
exhausting ones.

9Oil is being
pumped out of
the ground three
times faster than
it is being
replaced by new
oil finds.

9the oil reserves discovered between 1950 and 1980 are being run down.
Source: GTZ/WorldWatch Institute
 Will oil prices rise further?

"There are not enough large-scale projects in the development

pipeline right now to offset declining production in mature oil fields
and to meet global demand growth beyond 2007". (Chris Skrebowski,
the editor of the Petroleum Review )

The total amount of

energy that the world
gets from oil and gas
will begin to decline
after 2010.

Source: GTZ/WorldWatch Institute

 What alternative sources to fill the gap?

9The global demand for oil is increasing by just over 2%

every year at present.
9This increase in demand added to the gap being created
by the declining supply, implies new energy sources each
year equivalent to 4-5 per cent of the world's current oil
production:
around 1,800 million barrels of oil a year.

9In 2015, when world gas output ceases to increase to

meet the its growing demand , the new energy sources
would have to increase the annual rate at which they grew

by another 900 million barrels.

Source: GTZ/WorldWatch Institute
 What alternative sources to fill the gap?

9 The only truly sustainable energy sources are those based

on the flow of energy from the sun: solar, hydro, wind,
wave, biomass.

9These flows are very large in comparison with humankind's

use of energy.

9Renewable sources can therefore meet all the world's

energy needs, both now and in the future.

9The amount of energy supplied by renewable sources

could be 120 times its present level .
The problem is to develop these sources
quickly enough to fill the gap as it opens up.
Source: GTZ/WorldWatch Institute
 Biofuels: a Booming Industry

The world is on the verge of

unprecedented growth in the
production and use of biofuels , by
virtue of:

9 Rising oil prices, national security

concerns, the desire to increase farm
incomes, and a host of new and
improved technologies .

9The two most prevalent biofuels are

ethanol and biodiesel.

World production of ethanol more

than doubled between 2000 and 2005,
while production of biodiesel
quadrupled.
 New Technologies, New Gains

Biofuel production
has become
substantially more
efficient over the last
25 years as Brazil and
the United States
have scaled up their
industries.
Such incremental
gains are likely to
continue for years to
come.

However, the greatest potential for biofuels lies in the

development of new technologies that will significantly
expand the range of biomass feedstock, increase
conversion efficiencies, and lower production costs.
 Biofuels: A New Future for Rural Communities

One of the main benefits of biofuels is their potential to increase

farm incomes and strengthen rural economies. The World Bank
reports that biofuel industries require about 100 times more workers
per unit of energy produced than the fossil fuel industry.

In 2004, the Brazilian sugarcane sector was responsible for 1 million

jobs (direct)/4 million (indirect) corresponding to the production of
350 million tonnes of cane (UNICA, 2003 and Goldemberg, 2003).

The dispersed nature of agriculture makes it unlikely that biofuel

production will become as centralized as the oil industry.

In the focused region of the project (Jequitinhonha & Mucuri Valleys)

the access to modern forms of energy is limited or absent. An
orchastrated pool of competences involved in the biodiesel
production chain can help provide income and clean, accessible
energy that is vital for rural development and poverty alleviation.
 Further benefits

9In general, biofuels have a solidly positive GHG balance. Energy crops
have the potential to reduce GHG emissions by more than 100 percent
(relative to petroleum fuels) because such crops can also sequester carbon
in the soil as they grow.

9Large deforested areas could be recovered by crops producing

vegetable oils in order to produce biofuels.

9Even with subsidies, the economic savings with biofuels from avoided oil
imports are considerable: between 1975 and 1987, ethanol saved Brazil
$10.4 billion in foreign exchange while costing the government $9 billion
in subsidies. This investment paid off even more in subsequent years:
studies show that from 1976–2004, Brazil’s ethanol production substituted
for oil imports worth $60.7 billion—or as much as $121.3 billion including
the avoided interest that would have been paid on foreign.
 RET OPPORTUNITIES
¾ Renewable energy will have to supply a greater share of the world's
energy requirements.

¾ It is estimated that the market for clean energy technologies could

be worth $1.9 trillion by 2020. The financial sector has a key role to
play in developing and promoting this market.

¾ In the next 25 years, the world will consume all that has been
produced in fossil oils so far.

¾The world´s dramatic increment for fuels should be supplied by bio-

fuels.

¾ In the future, In the short run, ETHANOL and BIO-DIESEL are the
main bio-fuels.

Renewable energy is both a solution and a business

opportunity; BUSINESS AS AN AGENT OF WORLD BENEFIT
 Biodiesel - a Mutual Profitable Partnership

¾As oil prices and environmental concerns have risen in the past few
years, investment in new biofuel facilities has mushroomed in Brazil.

¾The Brazilian National Program for use and production was

incorporated in the Brazilian energy matrix by Law nr 11.097/2005 .

¾ Large trans-national corporations, as ADM, have already started

investing in biodiesel projects in Brazil

¾The crop area required to produce the blend of initial mandatory

2% of biodiesel will be 1.5 million hectares, equivalent to only 1% of
the total acreage under crops or available for agriculture throughout
Brazil (150 million hectares).

BIOVALE ENERGY: YOUR PARTNER IN BRAZIL – FROM INCEPTION TO CONCEPTION

 Brazilian ethanol´s use and production

¾ PRODUCTION CAPACITY: 18 billion liters/year

¾ PRODUCTION: 15 billion liters/year (seed/2004/2005)
¾ EXPORTATION: 2.4 billion liters in 2004
¾SUGAR CANE PLANTED AREA: 5.6 million hectares
¾POTENTIAL FOR AGRICULTURAL EXPANSION IN BRAZIL:
¾90 million hectares of arable lands – Without any forest removal
¾INTEGRATED PRODUCTION OF SUGAR AND ETHANOL:
¾Provide production flexibility
¾UTILIZATION OF ETHANOL IN VEHICLES IN BRAZIL:
¾Automobiles, light commercials, motor-cycles and aircrafts
¾Flexible Fuel light vehicles: reached 37% of internal market sales in
2005
 Brazil: a global benchmark in RET

Brazil has ideal conditions for becoming a major world producer of

biodiesel. It has a vast amount of arable land, part of which is not
suitable for food crops but has the right soil and climate for
growing a range of oilseeds.

Biodiesel will make Brazil a global benchmark in the use of

renewable fuels.It first won this position in the 1970s with the
introduction of ethanol made from sugarcane to power automotive
vehicles.

The National Alcohol Program, Proálcool, was the largest fossil

fuel substitution program in the world automotive market. It is
still considered a global example of excellence, and Brazil remains
the largest producer and consumer of fuel alcohol in the world.

The experience Brazil has accumulated through the Proálcool

serves as a strong foundation for implementing the biodiesel
program and maximizing the nation’s competitiveness in a
relatively short period.
 Brazilian domestic market projection

¾ Law 11 097/2005: it sets forth a mandatory use of biodiesel

mixture to diesel, which reflects in the following prospects

2020
2020

20%
12,4
12,4
billions
billions
liters/year
liters/year

Source: MME
 Brazil’s export potential

With the launch of commercial production, Brazil

becomes a potential exporter of biodiesel.

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.
Features of envisaged agricultural area:

Total semi-arid area: 1.219.021,50

Km2, equivalent to about 1/5 of Brazil
– comprising ten States Maranhão,
Piauí, Ceará, Rio Grande do Norte,
Paraíba, Pernambuco, Alagoas, Sergipe
e Bahia and Minas Gerais. Population:
1/3 of Brazil (55 million)
 Possible partners

Countries : Companies :
⊲ Bearing high agricultural ⊲ Having to meet social and
production costs environment responsibilities

⊲ Bearing internal/external ⊲ Bearing environment liabilities

obligations of emission reduction
(Kyoto Protocol and other ⊲ Willing to attract SRI
compromises) and valuing their stock prices

⊲ Bearing scarcity of cultivation ⊲ Bearing intensive need of fuel

lands sources

⊲ Willing strategic alternatives ⊲ Investors in prospective high

for diesel supply return SRI

BIOFUELS: FUTURE´S MOST PROSPECTIVE INVESTMENT

 Prospects of biodiesel cooperation/partnership

Possible areas of interest:

¾Utilization of Partners technology for biodiesel plants in

building, logistics, utilization of glycerin and other by-
products, specification, engine tests, etc.

¾Sale of carbon credits (MDL) obtained through the

utilization of biodiesel in Brazil.

¾Export of vegetal oil and biodiesel to Partner´s country.

¾Exploitation of the potential domestic market

 MINAS GERAIS STATE:
The ideal place for investments in Brazil

9 Strategically located in the Southeast region of

Brazil: concentrating 78% of Brazilian consuming
market .
9 18 million people.
9 Territory greater than many European countries.
9 Third largest South American economy.
9 Excellent infra-structure
9 Abundant energy and modern communication.
9 Modern law on on Public-private partnerships,
respecting obligations with investors and partners.
9 Expedient and practical action from Public
Administration
9 Strong competitiveness for new enterprises
9 Highly qualified labor

MINAS GERAIS State stands at a vibrant moment in its development,

introducing entrepreneurial changes, innovation, paradigm shifts, and
openness for new alternatives and investments.
 The State program for bio-fuels

The program, set forth in Law no. 15.976/2006 has the following goals:

Research and technology development;

Technology transfer to the private sector;
Job posts creating and improvement of income distribution;
Reduction of fossil diesel imports;
Reduction of gas pollution emission;
Development of Feed-stock production

Targets up to 2007/2008 :

250.000 hectares crop plantation for production of B2 (blend 2% ),

reaching 625.000 he for production of B5 in 2013;

Direct income generation to 100.000 families, corresponding to about

500.000 job posts up to 2007.
 Jatropha curcas: the feedstock

Perennial crops of Jatropha Curcas will be used to protect lands that are
vulnerable to erosion and to restore lands degraded by grazing.

The yields of currently used biofuel feedstock vary widely. Jatropha

seeds have proven advantageous in several spheres.
 Jatropha curcas: the feedstock

Jatropha is identified under the physical-chemical platform of

biomass energy conversion route. It is a drought-resistant
perennial, living up to 50 years and growing on marginal soils
(HENNING, 1996).

The remote rural communities of the Brazilian semi-arid in drought

regions will be able to address their energy needs using the
Jatropha resource.

The Jatropha Curcas was especially selected because the plant is

not an invasive species (GÜBITZ ET AL., 1999) and permits the
growth of other plants in its vicinity, so it does not negatively
affect the ecosystem.

The results of the researches developed by EPAMIG, the State

Agriculture R&D entity, in the 80´and the preliminary current
( 2004/2006) results attest the potentiality of the jatropha curcas
cultivation in the semi-arid region
 Development model

The development model is based on the working

relationship between the community benefiting
from the BIO-VALE project, a local technical NGO,
an enterprising development agency , a foreign
development agency, Government stakeholders
and a corporation.

Each entity has its respective and important roles

that complement, harmonize and support one
another leading to the ultimate success and
sustainability of the project.
“The private sector can play an important role
towards furthering development, for development
cannot occur without conditions that are amenable to
the conduct of business.” (United Nations)
 Development model: Investment agency

MINASINVEST, a not-for profit investment agency, will be primarily in

charge of the social-economic factors coordinating the efforts among
the various stakeholders, which includes:

enhancing logistics, building market information systems.

Identifying and coordinating the best partners;

Developing policies and strategies to improve competitiveness;

Strengthening the producers´ negotiating position ;

Providing well-researched analyses;

Government and institutional relationships involved in the project.

 Development model:The Community

The local community possesses direct responsibility towards the day-

today running of the biofuel project . Particular emphasis is given on
the socio-economic empowerment of women, thus women groups will
be specially utilized to manage the project.

The role of the community should therefore be:

● Provision of land for Jatropha plantation and site for the

establishment of the oil extraction unit.
● Responsibility for the day-to-day management of plantation,
including: cultivation and harvesting.
● Commitment of human resources for project development such as
unskilled labor (to handle farmlands), access to skilled labor.

In order to help the community in their quest towards sustainable

development, it is very important that they should be the main
recipient of all benefits accrued from the project.
 BIOVALE ENERGY & PARTNERS

GENERAL CORPORATE ACTIVITIES

General coordination among the various stakeholders
Resources (financial and management)
Industrialization: oil extraction and trans-esterification
Logistics (sales, distribution, export process, shipping)

GENERAL CONSULTING ACTIVITIES

turn-key/Global solution in BioDiesel projects
Research & Development
Institutional and Government support
Project development, Project Financing an Funding
International product commercialization
Logistics (sales, distribution, export process, shipping)
 professional management

Implementation goals

Internal External
capabilities capabilities

Professional
POOL
monitoring
Roles of strategies
stakeholders

Resources Action plan

management

BioVale Energy: your partner in Brazil.