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Will ethanol be definitely inserted into the Brazilian energy matrix?

The Brazilian sugar and ethanol sector, since the Proálcool in the 1970’s, has been questioned in terms of its economic, environmental and social impacts, as well as the viability of public policies to boost its growth. Therefore, up until now, there has not been a firm position regarding the role of ethanol in the Brazilian energy matrix, which has jeopardized the creation of clear rules that ensure low risks in this important segment of the Brazilian agribusiness.


The expansion of activities in the sugarcane chain since 1970 has caused major concerns, such as the issue of sugarcane versus food production. This concerns land use for biofuel production to the detriment of food production. Another issue is the workforce, which involves some major worries. First, the termination of labor force in the sugarcane activity. Since demand is higher during the harvesting period, mills needed to hire workers from other Brazilian regions, which could lead to an increase of the crime rate in the regions that received these workers. Secondly, inadequate and unsafe working conditions for cane cutters. Another argument against the expansion of sugarcane activities is the burning of sugarcane crops to facilitate manual harvesting, which was a source of pollution in the urban areas near the crops.


Arguments related to the issue “sugarcane versus food” do not proceed when we analyze that the soil use for ethanol production is small compared to the total cultivated area in Brazil and even smaller when taking into account only areas allocated to planted forests. In 2015, the sugarcane planted area allocated to ethanol production accounted for roughly 7% of the Brazilian agricultural land and a negligible percentage when compared to agricultural, cattle raising and forestry areas as a whole.


Concerning food security, the argument that the soil allocation for biofuel production may limit food supply does not sustain due to the increases of yields obtained for agriculture and cattle raising in Brazil. According to the Ministry of Agriculture, Livestock and Supply, 17% of the Brazilian area is allocated to cattle raising, and half of area can be allocated to agricultural production without requiring a decrease of the cattle herd.


Complaints of the Brazilian population about food shortage is more related, as indicated by several studies on the issue, to not-enough income to purchase food and the effects that this reduction has on prices than to food supply retraction itself. Brazil stands out as a major exporter in the world of agricultural products, namely sugar, coffee, orange juice, beef, broiler and soybean and byproducts.


Several studies have shown a positive relation between the growth of sugar and ethanol activity and the increase of income and job creation. There is also the overflow effect, which brings benefits to the regions where the expansion of the sugarcane activity happens. Therefore, the issue of land use for biofuel production in Brazil may not threaten food supply and food security. On the contrary, the income increase caused by expansion of activities in the sugar and ethanol sector leads to the improvement of economic and food conditions of families.


Regarding employment, about the growth of sugar and ethanol sector and issues related to temporary work during harvesting, it is argued that, in the Central-Southern region, the major sugarcane producing region in Brazil, sugarcane harvesting is almost fully mechanized, anticipating pre-stablished schedules in agreements between growers and the government. The adoption of mechanized harvesting ensured a significant increase of linearity in the use of labor force. Unhealthy and unsafe working conditions for sugarcane cutters and air pollution in cities that were affected by the burning in sugarcane fields have no longer been observed.


Arguments against the expansion of the sugarcane activity over the last 40 years, which are summarized in this text, are rejected. The current concern that the expansion of the sugar and ethanol sector in Brazil may lead to the use of biomes that must be preserved does not proceed either. However, the recently-established agroecological zoning, meeting strict preservation criteria, defined areas for the expansion of the sugarcane activity without affecting the environment.


Moreover, the sugarcane activity is a reference in the Brazilian agribusiness in terms of job creation. Besides being an intensive workforce compared to other activities in the field, even after the mechanization of harvesting, the sugarcane activity has the highest levels of regularization – 86.8% of workers are officially on the payrolls –, while the average for agricultural and forest activities is 45.1%, according to PNAD (National Home Sample Research).


The sugarcane activity is also a reference regarding the partnership between the links of the chain, that is, the grower and the industry, in terms of trading products. The system developed by Consecana (Council of Sugarcane, Sugar and Ethanol Producers in São Paulo State), which coordinates this partnership and defines minimum prices for the raw material supplied by independent producers and for the payment of leased areas, is well-structured and aims to adequate the program to changes in production techniques and market conditions.


Therefore, by analyzing the cost/benefits of the sugarcane activity expansion for ethanol production, the benefits prevail. Among benefits, we can highlight the increase of income and employment rates, a clean energy matrix, positive effects on the payment balance, reducing the need to import fossil fuel and byproducts, among other aspects.


The urge to define trading rules that bring lower risk to the biofuel sector, leading to production increase, has been stagnated in Brazil for a long time. This segment of Brazilian agribusiness has faced unfavorable market conditions due to short-sighted measures, either related to distorted prices of substitute products or to tax issues.


There is a proposal for the production expansion of renewable fuels in Brazil: Renova Bio 2030. Suggested in 2016 and with public hearings scheduled to begin in 2017, the program aims to discuss biofuel sustainability, involving conventional and new biofuels, such as second-generation ethanol, sugarcane diesel, biogas/biomethane, biokerosene and hydrotreated vegetable oil (HVO). The program also aims to stablish new trading rules and define policies to encourage the investment in renewable fuels. Public hearings will discuss details of the program and actions to be implemented.


In COP21 (21st Conference of the Parties – United Nations), Brazil, as well as other countries, committed itself to dealing with environmental problems, which was confirmed by the Brazilian Congress and the Presidency. In this scenario, because its production already adopts a well-developed technology, ethanol will certainly have a very important role in the accomplishment of stablished goals, with a significant increase estimated for its production in Brazil.


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