The interest in Brazil's ethanol industry has increased recently due to many factors. The foremost factors are the country's position as the world's major sugarcane producer and manufacturer of 40 percent of the world's fuel alcohol. Brazil was only recently surpassed by the United States as the world's largest ethanol producer.
 
 Petroleum prices, concerns about climate change and a global engagement surrounding the reduction of greenhouse gas emissions will ensure Brazilian ethanol remains in the international spotlight.
 
 Brazil has put a lot of effort into its ethanol industry in order to reduce the fuel costs to foreign and domestic consumers. The challenge now is creating a global ethanol market that can guarantee long-term supply while competing with petroleum.
 
 Brazilian President Luiz Inacio Lula da Silva has emphasized the importance of working with the United States to promote a global ethanol market and develop international quality standards. In early March, Lula met with U.S. President George W. Bush. The meeting led to a memorandum of understanding between the countries to advance cooperation on biofuels. In part, the agreement said the countries intend to work through the International Biofuels Forum to examine the development of common biofuels standards and codes to facilitate the commoditization of biofuels. The nations also agreed to help third countries, beginning in Central America and the Caribbean, to stimulate private investment for location production and consumption of biofuels.

 
 According to a study conducted by the Alternative Energies Center and the State University of Campinas, domestic Brazilian ethanol demand is expected to reach 205 billion liters (54 billion gallons) by 2025. This equates to a nationwide 10 percent ethanol blend. In order to partially meet this demand, the study proposes the construction of several ethanol distilleries capable of producing 1 million liters (264,000 gallons) of ethanol per day. 
 
 The report also concludes that an estimated US$5 billion is required to build distilleries and enhance infrastructure to create an annual export volume of 104 billion liters (27.5 billion gallons) by 2025.
 
 Today, 50 percent of all sugarcane produced in Brazil is used for ethanol production. By 2012 it's estimated this will increase to 60 percent. Sugarcane can be harvested for five to seven years without replanting. Following that period, a rotation policy is introduced to grow a different crop for any one-crop period.
 
 Brazil has two distinct crop periods. The north-northeast region of the country harvests its crops between November and April, while the mid-southern region's harvest occurs between May and October. Thus, the country not only enjoys an interesting geographical diversity, but greater crop balance.
 
 Brazil's predominant sugarcane producer is the state of Sao Paulo, particularly its Ribeirao Preto region. It distinguishes itself from other regions by having one of the highest concentrations of sugarcane farms in Brazil, and the highest production of sugar and ethanol.
 
 Furthermore, Sao Paulo offers the best sugarcane infrastructure in the country. Most of its sugar mills have the capacity to burn bagasse to produce energy beyond their own needs. Passed in September 1996, Decree No. 2003 allows independent producers to commercially distribute cogenerated electricity.
 
 The heat and electricity necessary for Brazil's industrial processes can be completely renewable in Brazil through the burning of bagasse. One ton of sugarcane produces approximately 140 kilograms (308 pounds) of bagasse, of which 90 percent can be used in energy production. 
 
 Sugarcane mills and distilleries are capable of completely processing biomass from sugarcane to feed an entire supply chain. They produce sugar as a foodstuff, electric energy from bagasse burned in boilers, hydrated alcohol as a vehicle fuel, and anhydrous alcohol to improve gasoline's energy and environmental performance. 
 

 The differences in regional development are reflected in the industry. Poorer regions usually offer lower salaries and more labor-intensive activity. At the same time, an increase in competitiveness enlarges the development and implementation of new and modern technologies.
 
 The dissemination of modern technologies, and increasing interest in Brazilian ethanol, has led to more investment opportunities in the country. The agribusiness fair Agrishow 2007, held this year in Ribeirao Preto, brought 4,000 foreign investors to Brazil and generated U.S.$355 million in deal closings.
 
 While foreign investment and cooperation with the United States begins to shape the Brazilian ethanol industry, steps are being taken to ensure sustainable growth. For example, in the state of Sao Paulo, sugar and ethanol producers have adopted models of social responsibility, sustainable growth, environmental quality and human progress. 
 
 The southeastern region of Brazil has invested in continuous improvement of its agricultural, industrial and administrative processes. It's also invested in professional development projects for its employees, and social and environment actions, which promotes the improvement of the quality of life.
 
 The sustained growth of Brazil and the planet depends on the preservation of the environment. Brazil has abundant farmland available to plant sugarcane to satisfy world demand for biofuels without damaging the environment.
 
 The Brazilian Constitution devotes an entire chapter to environment matters, explicitly requiring that the government:
 › Preserves and recovers species and ecosystems,
 › Promotes environmental education and awareness,
 › Defines conservation areas, and
 › Requires an environmental impact assessment, among other requirements.
 
 For example, it's no longer possible to consider new investment in Brazil without taking into account the limitations imposed by environmental factors. Projects must not present risks or negatively affect the environment. Environment-friendly practices such as waste reduction, energy efficiency and pollution prevention are commonplace. Even Brazilian legislation, although characterized as complex, enables total legal security in its relations and has contributed to national sustainable growth.

 
 Brazil has offered mechanisms to increase resource and energy efficiency, economic prosperity, community revitalization, and environmental protection and restoration.
 
 The country's ethanol development has been led by Brazilian companies that welcome outsiders. New and considerable investments may be attracted to the Brazilian ethanol industry in order to promote the expansion in supply through new production units. 
 
 All forms of investments are welcome in Brazil as long as they are not contrary to the country's policy for foreign investment and national security. Registration of foreign investments with the Central Bank of Brazil is a condition for repatriation of capital and remittance of dividends and profits.
 
 The Constitution establishes that foreign investments should be in the national interest and shall contribute to economic development such as agriculture. 
 
 Aires Vigo and Andrea Rodella Andrade are attorneys with Aires Vigo Advogados. Reach Vigo at <a href="mailto:aires@airesvigo.com.br">aires@airesvigo.com.br</a>. Reach Andrade at <a href="mailto:andrea.andrade@airesvigo.com.br">andrea.andrade@airesvigo.com.br</a>. For more information, visit <a href="http://www.airesvigo.com.br" target="_blank">www.airesvigo.com.br</a>. 
 

 The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

Foreign Investment to Spur Growth of Brazil's Ethanol Industry

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Foreign Investment to Spur Growth of Brazil's Ethanol Industry