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Brazil and Indonesia in Ethanol Pact
15 March 2007
Brazil will provide Indonesia with technical help to produce sugarcane ethanol under a pact just signed by the two nations.
Indonesia, with the fourth-largest population in the world (behind China, India, and the United States), wants to revitalize its agriculture sector and reduce its dependence on oil. A member of OPEC (Organization of the Petroleum Exporting Countries), Indonesia became a net importer of oil in 2004.
The Indonesian government has marked US$1.42 billion for agricultural subsidies and recently signed agreements that will bring in another US$12.4 billion for biofuels development. (Earlier post.)
Indonesia currently produces mainly biodiesel, but wants to expand ethanol production from sugarcane and cassava. It is dedicating 2.25 million hectares of land to grow those crops for fuel.
The pact between Indonesia and Brazil comes among a number of recent developments—both domestic and international—for the Brazilian biofuels industry.
The US and Brazil agreed to promote ethanol as an alterative fuel, and to push for increased production in the Latin America and the Caribbean. (Earlier post.)
Brazil may begin commercial production of the cellulosic ethanol from sugarcane bagasse by 2012, according to an executive at Dedini SA said. Dedini is the world’s largest builder of sugarcane mills, and is already making small amounts of cellulosic ethanol at the same cost as from sugarcane juice.
A new Brazil-focused ethanol company—Brazilian Renewable Energy Company Ltd., (Brenco)—raised $200 million in a private placement this week. The company is backed by Vinod Khosla, Ron Burkle and Steve Case. The new company will be headed by Philippe Reichstul, the ex-president of Petrobras and plans to become one of the largest ethanol producers in the world. The goal is to reach an annual output of 1 billion gallons over the next 10 years.
Imports of Brazilian ethanol to Europe are likely to rise, according to the European Bioethanol Fuel Association Thursday.
Brazil may boost the required ethanol blend in gasoline to 25% from the current level of 23% by May. (Earlier post.)
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