Raising Cane

Europe has an appetite for sustainable ethanol. Brazil is hungry to supply the demand.
By Ryan C. Christiansen | November 03, 2008
With the goal of reducing greenhouse gas emissions, the European Union continues to direct its member states to adopt measures that will increase the percentage of ethanol used in transportation fuel in those countries. The EU has also said the ethanol must be produced with little impact to the environment or people's well-being. Purchasing ethanol from Brazilian producers appears to be the least expensive way to increase ethanol consumption in Europe. However, there is skepticism about whether Brazilian-made sugarcane ethanol is being produced in a way that is sustainable.

European Targets
More than six years ago, the EU and its member states ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which means the EU commits its member states to reducing their collective greenhouse gas (GHG) emissions at least 8 percent by 2012.

During a plenary session to be held in December the 785-member European Parliament is expected to approve a co-decision with the EU's Council of Ministers to move forward with a directive from the European Commission (the executive branch of the EU) that by 2020, at least 10 percent of the energy used in road transportation in the member states should come from renewable fuels and that at least 40 percent of the renewable fuels should be from more sustainable sources, such as second-generation biofuels made from waste or algae, for example. The directive is expected to set an interim target of 5 percent by 2015 and to stipulate that the 10 percent by 2020 target be reviewed again in 2014.

Under the directive, member states would be required to adopt national action plans and targets to help the EU meet its objectives. The directive might also include language that says the European Commission will impose direct penalties on member states that fall short of targets.

Sustainability Requirements
The EU directive will also tighten the sustainability criteria for ethanol. If the fuel is to count toward the target, it must save at least 45 percent of GHG emissions compared with petroleum gasoline. After 2015, GHG savings must be at least 60 percent.

GHG savings are not the only criteria for making ethanol sustainable. According to the European Biofuels Technology Platform, which is funded in part by the European Commission, ethanol production must not negatively affect the land where the feedstock is grown, including animal life and water resources for the land, as well as the land's ability to sequester carbon dioxide. Ethanol must not be produced in a way that negatively affects the price and availability of food. The quality of life of those who live on or work the land must also not be impaired. GHG use and savings must be accounted for along the entire supply chain from the field to the fuel pump.

The EU's sustainability goals are subjective ones. How does the EU plan to move beyond subjectivity toward objective sustainability goals?

To objectively confirm that a specific quantity of ethanol has been produced in a way that meets sustainability criteria, the ethanol must be certified by an arbiter. The EU and its member states will need to adopt a certification system.

According to Norbert Schmitz, a managing director for the Meo Consulting Team in Kln, Germany, there currently are no certification systems that can handle sustainability criteria and GHG calculations for the various feedstocks that are used to produce ethanol and the regions where it is produced. However, Schmitz and his consultancyunder the direction of the German federal governmentare leading the way in helping the EU to establish a framework for certifying the sustainability of ethanol.

Ethanol Production (MMgy) - 2006


The consultancy's International Sustainability & Carbon Certification project is based on a model that was developed by Meo in 2006-'07 with organizations from Europe, the Americas and Southeast Asia and with support from the Agency for Renewable Resources in the German Federal Ministry of Food, Agriculture and Consumer Protection. The two-year pilot project, which started in February, is developing a global certification process that might become the model for the entire EU. "The overall intention is to set up a global system with participation from many countries outside Germany and Europe," Schmitz says. "We concluded that, instead of preparing further studies, a real field test would be required to move things forward."

Meo has enlisted more than 80 organizations, including Brazilian, European, and U.S. ethanol suppliers and major oil companies to test various chain-of-custody models. Schmitz says he was not at liberty to name the participants involved.

One of the chain-of-custody models the ISCC project is testing is a "book-and-claim" system that certifies the sustainability of a quantity of ethanol for a producer. The producer can then use the certificate to sell an equivalent amount of ethanol. The buyer then receives the certificate and the ethanol and can claim sustainability. However, the certificates and the actual product are not coupled, Schmitz says. The system only guarantees that a specific amount of sustainable ethanol is produced and paid for. Schmitz says the book-and-claim system is well-suited for certifying ethanol because it is a bulk commodity and the traceability of specific quantities of the product is almost impossible.

GHG emissions for the ISCC project are determined based on calculations provided by the European Commission.

Brazil: Europe's Ethanol Supplier
According to the European Bioethanol Fuel Association (eBIO), the EU produced 468 MMgy of ethanol in 2007, mostly from wheat and raw alcohol, but consumed an estimated 687 MMgy. The EU's top ethanol consumers are Germany, Sweden, France, Spain, Poland and the U.K. The demand in 2007 was satisfied with imports; 98 percent of the imported ethanol came from Brazil.

According to the Renewable Fuels Agency, an executive nondepartmental public body funded by the Department for Transport in the U.K., 79 percent of ethanol used in the U.K. from mid-April to mid-May was imported sugarcane ethanol from Brazil.

EU member states imported 32 percent of the ethanol they consumed in 2007, despite having an installed production capacity sufficient to handle demand. Capacity in the EU is currently 1 billion gallons per year, mostly in France, Germany, and Spain, with 1 billion gallons under construction, according to eBIO. According to ethanol producer Verbio Vereinigte BioEnergie AG in Leipzig, Germany, even though grain prices were lower in September than the previous year, the company still could not compete with the price of imported ethanol. Therefore, the company temporarily shut down its ethanol plant in Zrbig, Germany.

Brazil plans to be the world's price-competitive ethanol provider. A United Nations Environment Program report entitled "Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World" published Sept. 24 said Brazil currently accounts for about half of all global ethanol exports and the country is planning to increase sugarcane production by 55 percent over the next six years. According to a report published in September by Brazil's state-owned Energy Research Co. (Empresa de Pesquisa Energtica), demand for ethanol in Brazil, where more than 75 percent of vehicles are flexible fuel will grow by 150 percent over the next 10 years from 6.7 billion gallons per year to 16.9 billion gallons. Meanwhile, the country expects exports will double in the next 10 years from 1.1 billion gallons per year to 2.2 billion gallons. To meet the total demand, Brazil will need to have 246 ethanol plants in production, 114 of which are already producing or under construction, and 23 of which are being planned and financed; this means that 109 more plants will be needed.

Brazilian Ethanol and Sustainability
Because much of the agricultural land where sugarcane is grown in Brazil is converted grasslands or forests, concerns have been raised that much of the sugarcane ethanol that Brazil currently produces could not be certified for use in the EU. The Brazilian Sugarcane Industry Association dismisses such concerns, however, and says that most sugarcane that is grown for producing ethanol is harvested in south-central Brazil, more than 1,500 miles from the Amazon and primarily in degraded pastureland.

However, the EU also says that an ethanol producer's supply chain must not impinge upon the human rights of the workers involved. At a minimum, the standards set by the U.N.'s International Labor Organization must be followed in the production of ethanol in order for the ethanol to be certified sustainable, Schmitz says.

According to the U.N., many Brazilian sugarcane plantation workers receive poor paya little more than $1 per ton for sugarcane cuttersand find themselves in debt to their employers due to exorbitant charges for transportation, accommodation and food. Work conditions are also deplorable and sometimes dangerous, the U.N. says. Workers experience crowding, poor hygiene, and poor nutrition and company security guards are sometimes violent with workers.

Meanwhile, Brazil's Ministry of Labor and Employment (MTE) works to combat abuses through labor inspections and the labor courts. More than half of the 5,800 slaves rescued by Brazilian authorities in 2007 were found on sugarcane plantations, according to the U.S. Department of State's 2008 Trafficking in Persons Report. For example, in July 2007 MTE inspectors freed 1,108 forced laborers from a sugarcane farm producing cane for ethanol in Ulianopolis, Para, Brazil, according to the State Department's 2007 Country Report on Human Rights Practices for Brazil.

Investments from multinational agribusinesses have helped to consolidate Brazilian sugar and ethanol production. For example, Cargill owns the country's biggest ethanol refinery, along with an associated 36,000 hectares (89,000 acres) of plantation, according to the U.N. In 2006, Cargill acquired a 63 percent stake in Central Energtica Vale do Sapuca Ltda., an ethanol mill located in Patrocnio Paulista, in the state of So Paulo, according to information on Cargill's Web site.

It is not known if Cargill is communicating with plantation owners about labor practices. A request for a statement from Cargill was not returned. However, Sekab, one of Europe's leading ethanol suppliers based in rnskldsvik, Sweden, has worked with its Brazilian ethanol producers to develop sustainability criteria. In late summer, Sekab began receiving what it says is "verified sustainable ethanol" confirmed by an independent auditor. The company's criteria have zero tolerance for child labor or forced labor and also the conversion of rainforest land into agricultural land. The company aims for its producers to have a fully mechanized harvest by 2014, which the company admits will replace 80 to 90 jobs for each harvesting machine, but plans to address the issue through job training and the expansion of production. The company said it has sustainability agreements with Brazilian ethanol producers LDC Bioenergia, Cosan, Guarani, Novoamerica and Alcoeste. Sekab is also planning and preparing for large-scale production of ethanol in Tanzania and Mozambique and is working with those governments on sustainability criteria.

Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.