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Shell and Cosan launch their multi-billion dollar sugarcane ethanol JV Raízen

Shell and Cosan launched Raízen, their multi-billion dollar joint venture to produce ethanol made from sugar cane. (Earlier post.) The major retail and commercial fuels company will operate in Brazil. Raízen will produce and sell more than 2 billion liters (528 million gallons US) of sugarcane ethanol per year.

Raízen will distribute biofuels and more than 20 billion litres of other industrial and transport fuels annually through a combined network of nearly 4,500 Shell-branded service stations. In Brazil it becomes the third largest fuels company. Plans would extend the company’s reach in future years to export more ethanol to other key markets.

Shell is already one of the largest distributors of sustainable biofuels: now it is moving for the first time into production. The deal with Cosan is a major development in Shell’s strategy of investing for selective growth in its fuels business.

The joint venture combines Shell’s expertise and technology partnerships in advanced biofuels with Cosan’s experience in the commercial production of low-carbon biofuels. This has the potential to accelerate the commercial production of biofuels from crop waste and inedible plants, the partners said.

Raízen’s 24 mills can process up to 62 million tonnes of cane into sugar or ethanol each year, with the flexibility to adapt to market demand.

We are building a leading position in the most efficient ethanol-producing country in the world. Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix.

—Peter Voser, Shell CEO

Biofuels make up around 4% of transport fuel in Europe, and 3% in the USA. Globally biofuels currently meet around 3% of road-transport fuel demand. Shell expects this to rise to about 9% by 2030.

Brazil leads the world in the use of biofuels for transport. They are likely to make up more than 40% of the country’s transport fuel mix by 2030, double today’s proportion. Raízen's current annual production capacity will be enough to meet nearly 9% of Brazil’s current ethanol demand.

Carbon intensity (CI) of Brazilian sugarcane ethanol—the California view
Shell says that ethanol made from Brazilian sugar cane produces around 70% less CO2 than gasoline, when the cultivation and production processes are taken into account.
According to the California Air Resources Board (ARB) carbon intensity lookup tables for gasoline and fuels that substitute for gasoline, ethanol derived from Brazilian sugarcane with average production process, mechanized harvesting and electricity co-product credit has a direct emissions carbon intensity value of 12.40 gCO2e/MJ, compared to 95.86 CO2e/MJ for CARBOB gasoline (based on the average crude oil delivered to California refineries and average California refinery efficiencies)—an 87% reduction.
ARB’s CI is a full lifecycle measure of the greenhouse gas emissions associated with the production, transport (to California), storage, and use of a fuel.
Factoring in land use or other indirect effects adds 46 gCO2e/MJ, raising the total to 58.40 gCO2e/MJ—a 39% reduction.
Brazilian sugarcane using average production processes (no mechanized harvesting, no electricity credit) raises the direct emissions to 27.40 gCO2e/MJ, and the total to 73.40 gCO2e/MJ. These equate to a 71% and a 23% reduction, respectively, compared to CARBOB gasoline.

At the pump Brazilian motorists are offered the choice of pure ethanol or a blend of gasoline and ethanol. Around 90% of the country’s new cars can run on either fuel type.

Brazilian sugar cane yields 7,000 liters of ethanol per hectare of cane compared to, for example, 3,800 liters for a hectare of corn in the USA and 2,500 liters for a hectare of wheat in Europe, according to Unica, the Brazilian sugar-cane industry association.

By-products from turning sugar cane into ethanol are recycled as organic fertilizer. Plant waste, called bagasse, is burned to produce power for the processing mills and surplus energy is supplied to the national grid.

To further improve productivity, Raízen will use its own advanced geographical information system to monitor its land. This allows its scientists to make accurate predictions about crop yields and adjust fertilizer or pest control, for example, to help boost production.

Brazilian sugar-cane ethanol is one of the most sustainable and lowest-CO2 biofuels available. We expect the development of advanced biofuels to benefit from Cosan’s feedstock and its expertise in large-scale biofuels production. This has the potential to accelerate the future commercial viability of cellulosic ethanol.

— Mark Gainsborough, Shell Executive Vice-President Alternative Energies

The deal includes part of Shell’s interest in the firm Iogen, which uses enzymes to break down plant waste into ethanol, as well as Shell’s interest in Codexis, developers of super-enzymes for the faster conversion of plant waste into transport fuels.

Sustainable production. Raízen will work to improve the sustainability of its operations. Sugar cane for ethanol requires little water to be added because Brazil’s tropical rainfall provides natural irrigation. In the industrial process Raízen has been introducing a system that recycles up to 90% of water used.

Raízen supports the development of varieties of sugar cane to suit regional climate and resist disease. To protect cane from pests, it breeds and releases natural predators, further reducing the use of chemical pesticides.

As a member of Bonsucro, formerly the Better Sugarcane Initiative, Raízen has joined with other producers, non-governmental organizations and other experts to establish an EU-approved certificate for sustainable sugar-cane production. This covers areas such as human rights and the impact of activities on biodiversity.

Raízen is working towards achieving certification for all ethanol produced by its own operations over the coming years. It also plans to have certified all ethanol produced from suppliers’ cane.

Current sugar-cane production in Brazil takes up 8.1 million hectares, around 0.9% of the country’s land. Government legislation forbids industries from entering sensitive areas such as rainforests or land needed for other food crops, and from displacing food crops into other sensitive areas. National laws also recognize the rights of indigenous communities and their claims to land ownership. The main sugar-growing areas are hundreds of kilometers from the Amazon rainforest.

Raízen is well advanced in phasing in mechanized harvesting, ahead of requirements due to come into force in the main Brazilian sugar-cane growing state of São Paulo in 2014. It already uses machines on around 64% of its suitable land (with a slope of less than 12%). CO2 emissions can be reduced because it avoids the need to burn the hard straw, a necessary step in manual cutting.

Comments

SJC

California Air Resources Board (ARB)

These guys had 2000 Ford Taurus running perfectly on M85 made from natural gas in the 90s. They just let that fade away.

HarveyD

No matter what they claim, sugar cane ethanol is putting pressure on world sugar price (+43% in the last year) and this huge facility will do even more to raise the price again.

The world should not try to feed our gas guzzler with edible food. It is the wrong thing to do. We are starving millions and making billions poorer.

Many people go to jail for a lot less.

SJC

Make sugar from the cane and fuel from the stalks.

HarveyD

That's a much better idea.

SJC

The U.S. can produce E10 from stalks without using one kernel of corn grain. We went down the wrong path and now need to get on the right path for sustainability.

Engineer-Poet

How much does that E10-from-stalks cost, though?

HarveyD

And, as usual, corn stalks and other feed stocks price will multiply as soon as they are used to produce fuel. That's what already happened to corn and sugar?

It may be cheaper to continue to use tar sands oil from Canada.

SJC

If you want to know costs, I suggest you look it up yourself. The Poet Corporation is making fuel from cobs right now, I assume that they think it is a good business move.

HarveyD

The one dozens or so small plants in operations all claim that they will lower their production cost from $4/gallon to $5/gallon to something between $2/gallon to $3/gallon by 2012. They all received huge subsidies from multiple sources. It is not clear if their forecast production cost include or exclude the subsidies.

Without subsidies and tax credits etc, their total production cost would reach $5+ /gallon. If you add delivery cost, all normal equivalent taxes and retail profit margin, the total real price could be as high as $7+/gallon. Since this is for lower energy ethanol, the gasoline equivalent real price could be as high as $8.50+/gallon.

SJC

If you have $1 for feed stock and $1 for plant cost with each gallon, I can make gasoline at $2 per gallon and sell it for $3 per gallon, it does not take an MBA to figure out that I will make money.

Reel$$

Gents, you should probably discuss this with the Brazilians. It's their country and they have chosen to quit fossil fuel in favor of domestic fuel. If sugar costs more due to that - it's a cost of living increase.

HarveyD

International sugar price went from $0.25/Kg to $0.65/Kg (260%) in the last 24 months and from $0.11/Kg to $0.65/Kg in the last 10 years (590%) in the last 10 years.

Of course it had NOTHING to do with Brazilian Ethanol plants.

At the current rate, it may go up another 300% in the next 2 to 3 years.

A lot of other food will go the same way as sugar price.

ToppaTom

Ethanol from stalks has been "just around the corner" for some time now.

Obviously still too expensive.

Reel$$

Follow the Chicago Board and see sugar fluctuate along with other commodities. It's more due to financial speculation than Brazilian ethanol plants.

Engineer-Poet
If you want to know costs, I suggest you look it up yourself.
Reversing the burden of proof, eh?

That's not my job, it's yours. You asserted that cellulosic ethanol is "the right path". It's up to you to support that with evidence, including but not limited to the cost involved.

SJC

I never said it was cheap, I said it could be done. You are the one that asked what it would cost.

SJC

If you claim to be seeking truth, bring some to the site rather than picking fights and arguing.

HarveyD

It is very difficult to forecast the international price for cellulosic ethanol 5 or 10 years down the road. It is doubtful if we can find enough low cost feed stocks to produce 40+ million barrels/day (worldwide), i.e. about 40% to 45% of the world demand.

Feed stock prices could double every year or so or until cellulosic ethanol becomes non-competitive.

In the long term, clean wind and solar energies could most probably be harnessed at a competitive or lower cost. It is much easier to forecast.

All electric homes and BEVs (or PHEVs for the next 2 decades) with sun/solar energy is cleaner and more sustainable than any liquid fuel avenues. It may even become totally cheaper and certainly better for our well being.

Fossil and biomass fuels could and should be reserved for chemicals and essential usages such as large commercial and military airplanes etc.

SJC

We see Iogen with enzyme cellulose ethanol from wheat straw and Syntec with gasification fuels from trees. It is not huge, but it is quantifiable. If the farmers, timber companies, paper plants and others saw how much money they would make from making fuels as well as everything else they do, then we could make progress.

But after the collapse, there is NO money available. That is why corporations are hording cash and not hiring. Capitalism can work if capital is available, when you play reckless games and break the machine, you get what you deserve. Except the people suffering the most did not cause the problem. The people that caused the problem are richer than ever.

Engineer-Poet
I never said it was cheap, I said it could be done. You are the one that asked what it would cost.If you claim to be seeking truth, bring some to the site rather than picking fights and arguing.
My, snippy today aren't we?

I asked what it costs because cost is a very good proxy for required resources (not including externalized costs, such as carbon emissions and soil erosion). One of the reasons we know corn ethanol is not "the right path for sustainability", without having to look at those other details, is because the cost skyrocketed. It not only "can be done", it IS being done, but it is obviously backed up against resource constraints and cannot be the fix it's long been touted to be.

If cellulosic ethanol is the fix, it's got to avoid resource constraints. One of the ways constraints will manifest is high costs; thus, the question. Getting snippy about it won't make the biophysical limitations go away.

SJC

Not anything, other than tired of your BS.

Engineer-Poet

Asking what something costs is "BS". Gotcha.

HarveyD

The only sustainable energy sources are those with FREE unlimited feed stocks. Fossil fuels, bio-fuels, corn/sugar ethanol, cellulosic ethanol/butanol and the like do not qualify.

Two of the qualified sources (Wind and Solar) are being exploited in relative small but meaningful quantities in many countries. Multiplied by 100+, the world could stop worrying about clean energy availability. It is very possible to do within a few decades.

What about cost, of course, clean energy will, specially during the first decades, cost more than dirty energy sources. However, if one adds all the secondary cost of using dirty energies, the real NET cost difference may not be as much as we think.

Wind energy can already compete with many dirty energy sources. Solar energy will probably do so by 2020/2030. Distributed solar energy with 50+% higher efficiency solar panels may be much more competitive by 2020 and could extend the life of current grids by taking loads off and reducing peak demands. Many people may not have to be connected to the grid, specially if you are rather far from a power line.

Energy production is changing fast. The switch to cleaner energies may follow the same curve as the switch from ICE to electrified vehicles. Many are looking at Germany to see how it can be done while remaining competitive on the world market.

SJC

If you imply it is not cost effective, then show evidence.

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