Brazilian biotechnology startup GranBio Investimentos will export the fuel it hopes to make from cellulose in sugar cane stalks starting next year rather than trying to supply Brazil’s cars, its chief executive said.
Brazil, the global pioneer of sugar-cane based ethanol , has not developed policies promoting so-called second-generation biofuels that convert non-edible material into fuel, GranBio’s CEO Bernardo Gradin said on Wednesday.
“There are new rules for ethanol in the United States and Europe has launched a guaranteed demand for cellulosic ethanol. Brazil has no such program … it makes more sense commercially for us to export,” he told Reuters on the sidelines of Brazil’s biennial Ethanol Summit.
The U.S. Environmental Protection Agency’s Renewable Fuel Standard 2 calls for 21 billion gallons (79 billion liters) of advanced biofuels to be delivered by 2022, a target many have called unrealistically high for an industry that is barely producing on a commercial scale.
Brazil’s agriculture ministry estimates national production of 100 million liters a year of cellulosic biofuel by 2015.
Though markets for second-generation biofuel are relatively unknown, analysts have been expecting an uptick in Brazil’s cane-based ethanol exports to the United States since Washington’s decision last year to end a steep tariff on foreign biofuels.
Gradin said GranBio is holding its estimated start date for its first cellulose ethanol mill, an 82-million-liter facility in northeast Brazil, for the first four months of 2014. The company then has plans to open a new mill each year for the next four years, a $2 billion investment.
Other firms investing in the high-risk venture of second-generation biofuel in Brazil include UK-based TMO Renewables, which said in April it plans to open a 10 million liter bioethanol plant next year to supply the local market.
Though Gradin said he wished the Brazilian government would do more to support cellulosic ethanol now, he said it would only be a matter of years before Brazil turns to non-edible biofuel.
Brazil imports most of its gasoline and sells it at a loss, and a recent weakening of Brazil’s currency, the real, has accentuated the difference in imported fuel prices, possibly giving the government another incentive to promote biofuels.
“The demand for fuel is going to double in 10 years and I don’t believe first generation ethanol can meet it,” he said.