Brazil throws troubled ethanol industry tax breaks, credit

April 24, 2013

Alonso Soto, Reese Ewing – Reuters, 04/23/2013

Brazil’s government threw its sugar-ethanol industry a lifeline on Tuesday, by cutting taxes and sweetening credit for the struggling sector it hopes will resume investments in new biofuel plants to bolster output.

Finance Minister Guido Mantega, who announced the measures, said he expected a recovery in the ethanol industry could also help curb stubborn consumer inflation by bringing down fuel prices and reducing Brazil’s dependence on gasoline imports.

The reduction of the so-called PIS/Cofins – payroll and social security taxes – and interest rates on loans is expected to help ethanol groups such as Louis Dreyfus, Bunge , Cosan and others offset production costs that have risen steadily in the last decade.

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Rousseff deepens Brazil power costs cuts as inflation accelerates

January 24, 2013

Raymond Collitt – Bloomberg, 01/23/2013

Brazil will lower energy costs this year more than the government previously announced and made the cuts effective today as part of an effort to slow inflation that has remained above the central bank’s target since August 2010.

“Beyond anticipating the enforcement of the new rates, the cut is bigger than previously announced,” President Dilma Rousseff said in a nationally-televised address yesterday.

The president said the cuts that go into effect today rather than early next month will pare consumers’ power costs 18 percent and those for industry by 32 percent compared to the reductions of 16.2 percent and 28 percent she had announced in September.

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End all trade barriers

January 18, 2013

Bob Dinneen – Ethanol Producer Magazine, 01/16/2013

As America’s ethanol industry continues to fight to expand the domestic market for ethanol through the increased use of E15, more flex-fuel vehicles (FFVs) on the road, and more consumer fuel choice at the pump, the global market for ethanol has been critical to maintaining the health and profitability of our nation’s ethanol industry.  Despite the arrival of the E10 “blend wall” for ethanol in the U.S, the ever-increasing demand for ethanol globally has helped the U.S. industry continue to grow and thrive at the same time it fights to combat an artificially constrained U.S fuel market.

While the U.S. ethanol industry historically only exported a small amount of its product every year, that all changed in 2009 when improving industry economics led to the U.S. ethanol industry becoming the lowest-cost producer on the planet. This ultimately led to a dramatic and sustained surge in U.S. ethanol exports around the globe. Amazingly, annual ethanol exports from the U.S. expanded from a meager 113 million gallons in 2009 to 397 million gallons in 2010 to a record 1.2 billion gallons in 2011. Although exports of U.S. ethanol in 2012 are not expected to be much higher than around 750 million gallons, this amount still represents the second-largest export total in U.S. history.

It is widely accepted that the reduction in U.S. ethanol exports in 2012 is in large part due to the sustained drought conditions suffered in the Midwest that have, in turn, significantly increased ethanol feedstock costs, and thereby hurt global price competitiveness. There is strong evidence, however, to suggest that the reduction of exports in 2012 is not solely the result of recent shifts in industry economics, but has been exacerbated by a recent effort by Brazil to erect new barriers to U.S. ethanol imports. While exports of ethanol to Brazil made up more than one-third of all U.S. ethanol exports in 2011, exports to Brazil have fallen significantly in 2012 due to new protectionist measures put in place over the past 18 months.

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Ghosts of 2001: Brazil worries about another energy crisis

January 10, 2013

Anthony Boadle – Reuters, 01/09/2013

Brazil looks less vulnerable today to an energy crisis similar to one in 2001 that cut output at factories, lopped about a percentage point off economic growth, and led millions of people to spend their nights by candlelight.

Still, the risk of a major disruption remains – in part because the South American economic powerhouse has grown so much since then and electricity output has not kept up with soaring demand.

Twelve years ago, Brazil experienced a severe drought that reduced water levels at hydroelectric dams just as is happening today. The solution then was to ration energy supplies for eight months, in large part because the nation relied on such dams for 88 percent of generating capacity.

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Brazil says no to power rationing

January 10, 2013

The Miami Herald/AP, 01/08/2012

Brazil says it will not resort to energy rationing despite low water levels in the country’s hydroelectric power plants.

The executive secretary of the Mines and Energy Ministry is Marcio Zimmermann and he tells reporters on Tuesday that Brazil will activate generators fueled by natural gas if needed.

A hotter than usual summer and lack of rain have caused water levels at hydroelectric dams in most of the country to drop to a third of their capacity. The levels are similar to those registered in 2001, when rationing was imposed and blackouts occurred.

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Brazil energy crisis could wreck Rousseff economic agenda

January 9, 2013

Anthony Boadle – Reuters, 01/08/2013

President Dilma Rousseff cut short her vacation on Tuesday to deal with a budding energy crisis that could wreck her efforts to restore vitality to Brazil’s economy this year.

Rousseff denies there is any risk of electricity shortages or rationing stemming from a historic drought that has left hydroelectric dams short of water. But some independent analysts disagree, saying it depends on whether summer rains finally arrive in coming weeks.

Even if the worst is avoided, the crisis has already pushed up electricity prices on the spot markets and could torpedo Rousseff’s delicately balanced economic agenda. She is trying to revive an economy that likely grew less than 1 percent last year, while also keeping a lid on inflation now running above 5.7 percent.

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Anaylsis: Brazil’s once-envied energy matrix a victim of “hubris”

January 8, 2013

Jeb Blount – Reuters, 01/07/2013

Just five years ago, Brazil‘s mostly “green” energy landscape was the envy of nations dependent on dirtier sources of power and the pride of a government that believed it was leading the country to economic superpower status.

Three-quarters of electricity came from renewable hydro power and the main automobile fuel was home-grown sugarcane ethanol. Plus, Brazil had just found massive oil fields off its coast, putting it on a path to become the world’s No. 3 oil producer after Russia and Saudi Arabia by 2020.

Today, the outlook is much darker. Oil output is falling, ethanol production has plunged, and fears have recently returned of electricity rationing that could further depress a stagnant economy and embarrass President Dilma Rousseff.

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Brazil doubles down on biofuels

January 2, 2013

Vinod Sreeharsha – IEE Spectrum, 01/02/2013

Later this year, northeastern Brazil will host one of the most ambitious biofuel experiments ever. There, in the small town of São Miguel dos ­Campos, surrounded by sprawling sugarcane fields, a commercial-­scale ethanol plant is expected to start operating in December. Unlike the nearby ethanol plants, which use sugarcane as feedstock, this new facility will consume the leftovers of those plants—bagasse and straw—to produce a holy grail of biofuel: ­cellulosic ethanol.

Ethanol produced from corn has gotten a bad reputation in recent years. Turning food crops into fuel might help drivers fill up their tanks, but it also raises food prices. What’s more, studies have shown that production of corn-based ethanol actually increases carbon emissions rather than reducing them. Because cellulosic ethanol is made from agricultural waste and nonfood crops, it has none of those drawbacks.

The prospect of transforming cheap raw materials like sugarcane bagasse, switchgrass, wood chips, wheat straw, and corn ­stover into fuel has led to a worldwide race for technologies that can make ­cellulosic ethanol commercially practical. But success has eluded big companies and start-ups alike. It costs more to make ethanol from cellulose than from corn or sugarcane because of the extra equipment, chemicals, and steps involved.

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Brazil expands mines to drive future, but cost is a treasured link to its past

December 17, 2012

Simon Romero – The New York Times, 12/15/2012

Archaeologists must climb tiers of orchid-encrusted rain forest, where jaguars roam and anacondas slither, to arrive at one of the Amazon’s most stunning sights: a series of caves and rock shelters guarding the secrets of human beings who lived here more than 8,000 years ago.

Almost anywhere else, these caves would be preserved as an invaluable source of knowledge into prehistoric human history. But not in this remote corner of the Amazon, where Vale, the Brazilian mining giant, is pushing forward with the expansion of one of the world’s largest iron-ore mining complexes, a project that will destroy dozens of the caves treasured by scholars.

The caves, and the spectacular mineral wealth in their midst, have presented Brazil with a dilemma. The iron ore from Carajás, exported largely to China where it is used to make steel, is a linchpin of Brazil’s ambitions of reviving a sluggish economy, yet archaeologists and other researchers contend that the emphasis on short-term financial gains imperils an unrivaled window into a nebulous past.

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Brazil utilities baulk at government plan for cheaper electricity

November 9, 2012

Leonardo Goy – Reuters, 11/09/2012

Refusal by large Brazilian power utilities to renew their concessions on the government’s terms has put in doubt the viability of President Dilma Rousseff’s plan to lower electricity costs to spur economic growth.

Minas Gerais state electricity company Cemig decided not to renew concessions for three of its hydroelectric dams that produce 2,500 megawatts (MW).

The Sao Paulo state utility Cesp and power transmission company Cteep are also expected to reject the extension of their concessions in exchange for its commitment to provide cheaper electricity.

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