Brazil's Fledgling Biodiesel Industry Takes Off

BRASILIA, Brazil, April 29, 2005 (ENS) - Brazil is better prepared than most countries to confront one of today's biggest challenges - producing low-pollution fuels from renewable sources, President Luiz Inácio Lula da Silva said Thursday at the inauguration of the first biodiesel factory in the north of Brazil.

Located in Belém, the factory belongs to the Agropalma group, a large Brazilian palm oil producer. The first Brazilian biodiesel factory opened in March of this year in Cássia, in the state of Minas Gerais.

President Lula emphasized that his administration will fight to establish biofuel as one of the chief components of the Brazilian energy matrix.

President Luiz Inácio Lula da Silva speaks at the opening of northern Brazil's first biodiesel factory. (Photo courtesy Agência Brasil)

Biodiesel is a low-pollution fuel derived from renewable sources. It can be made from animal fats or vegetable oils, such as those from castor beans, dende nuts, sunflower seeds, babassu nuts, peanuts, and soybeans as well as from palm oil.

The vegetable fuel replaces, in whole or in part, petroleum diesel oil in automotive engines or stationary motors used to generate electricity and heat. It can be used in its pure state or mixed with petroleum diesel in various proportions.

Brazilian law allows a mixture containing a maximum of two percent of biodiesel, but in 2013, according to the Minister of Mines and Energy Dilma Rousseff, this percentage should be increased to five percent.

At the biodiesel factory opening, President Lula said that if petroleum prices continue to rise, it should not be long before Brazil raises the percentage of biodiesel that can be added to diesel fuel.

While palm plantations are often blamed for clearcutting of the Amazon rainforest, the Agropalma Group says they plant palms on degraded lands such as overgrazed pastures. The company is certified to ISO 14001 standards for environmental management.

Brazil's investment in biodiesel production is expected to reach US$515 million in 2008, when production of this fuel is expected to amount to around 800 million liters (211 million gallons).

This estimate was given by José Honório Accarini, deputy head of analysis of government policies of the Presidential Civilian Advisory Office, at a biodiesel seminar Tuesday in São Paulo.

Addressing delegates to the seminar, "Biodiesel - Strategies for Production and Use in Brazil," Accarini said the investment figure is projected to grow to US$1.5 billion five years later in 2013, when domestic production is projected to be two billion liters.

The seminar is intended to demonstrate the advantages of biodiesel for the country, the progress of research in the field, the technologies employed to develop the fuel, and the lines of production incentives, among other topics.

The Presidential Civilian Advisory Office plans to encourage Brazilian biodiesel entrepreneurs to express their opinions, and staff will provide successful examples from other countries to speed up the introduction of biodiesel on the market, the official said.

Accarini said that everybody can gain from biodiesel. "The businessman and the family farmer can make money, and poor regions can get jobs and energy in remote communities."

With two tanks in the trunk, this flex-fuel car can run on gasoline, ethanol or any mixture of the two. (Photo courtesy Volkswagen)

To confront the oil crisis of the 1970s, millions of Brazilians switched to cars that ran on alcohol - also called ethanol - derived from sugar cane, until a 1989 shortage of fuel left frustrated motorists unable to fill up.

When gas prices came down in the 1990s, alcohol-only cars fell from favor, and last year only 3.5 percent of new vehicle sales were alcohol-only cars.

Instead, flex-fuel cars that can run on gasoline, alcohol or natural gas were introduced in 2003, and some Brazilians have embraced them. About 200,000 flex-fuel cars were sold to June 2004, the latest period for which figures are available.

Flex-fuel cars, which are manufactured in Brazil by GM, Fiat and Volkswagen, now represent an estimated 20 percent of the new cars sold in Brazil.

Biodiesel cannot be burned in flex-fuel cars but only in diesel engines, but any diesel engine can use a biodiesel fuel mixture without modification.

{Agência Brasil contributed to this report.}