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Fuel Ethanol in JapanFuel Ethanol in Japan
XII JAPAN-BRAZIL Joint Economic Committee MeetingCNI - Nippon Keidanren
March 6, 2006 - Sao Paulo
Takao OmaeMitsui & Co., Ltd.
22
World Ethanol Production, Share by ApplicationWorld Ethanol Production, Share by Application
9.6
12.6
3.2
12.1
14.7
3.4
14.3
14.7
3.7
16.2
16.1
3.8
19.2
16.7
3.9
0
20
40
60
80
100
120
2002 2004 2006 2015
USA Brazil China India France Russia Others
Bevarage15%
Industiral8%
Fuel77%
(Unit: million kl)
34.139.2 41.3
45.050.1
Production/EstimationProduction/Estimation Share by ApplicationShare by Application
SourceSource::Estimation / Estimation / F.O.LichtF.O.Licht
34.76.8 3.6
Beverage Industrial15%
Fuel85%
20052005 : : 45.045.0 million million klkl
20152015 Estimation:Estimation: about about 110404million million klkl
8915
105
54 million kl
of additional Fuel demand
33
Japan-ETBE0.84 million kl in 2010(0.36million kl Ethanol equivalent)
Japan-ETBE0.84 million kl in 2010(0.36million kl Ethanol equivalent)
E3: 3% Ethanol Blended Gasoline
E10: 10%Ethanol Blended Gasoline
ETBE: Ethyl Tertiary Butyl Ether
Europe (sugar beet, wheat, barley)-E5,E10 implemented: Sweden, Poland-ETBE implemented: Germany, France, Spain-Production: 4.7 million kl (2006)-Biofuel 5.75% in 2010 (22 million kl)
10% and over in2030 (38 million)
Europe (sugar beet, wheat, barley)-E5,E10 implemented: Sweden, Poland-ETBE implemented: Germany, France, Spain-Production: 4.7 million kl (2006)-Biofuel 5.75% in 2010 (22 million kl)
10% and over in2030 (38 million)
Philippine (sugarcane, Molasses)-E5 Obligation from 2009
Thailand (cassava, molasses)-E10 Obligation by 2007
Philippine (sugarcane, Molasses)-E5 Obligation from 2009
Thailand (cassava, molasses)-E10 Obligation by 2007
Brazil (sugarcane)-E20-25、E100 (FFV) Implemented-Production:16.7million kl (2007)-Export : 3.0 million kl (2006)
Brazil (sugarcane)-E20-25、E100 (FFV) Implemented-Production:16.7million kl (2007)-Export : 3.0 million kl (2006)
Use of Fuel Ethanol in the WorldUse of Fuel Ethanol in the World
USA (domestic corn + import)-E10 implemented in many states-Production:19.2million kl(2006)-Import:2.5million kl(2006)-Renewable, Alternative Fuel
35 billion gal (133 million kl) in 2017
USA (domestic corn + import)-E10 implemented in many states-Production:19.2million kl(2006)-Import:2.5million kl(2006)-Renewable, Alternative Fuel
35 billion gal (133 million kl) in 2017
China (domestic corn, rice etc)-E10 tests in 9 Provinces-Production: 3.9millionkl (2006)
China (domestic corn, rice etc)-E10 tests in 9 Provinces-Production: 3.9millionkl (2006)
Canada (grain)E5 obligation by 2010
Canada (grain)E5 obligation by 2010
India (sugarcane)-E5 implemented in 9 states
India (sugarcane)-E5 implemented in 9 states
44
Ethanol Ethanol Production & Consumption in BrazilProduction & Consumption in Brazil
2.74
15
02468
10121416
Now 2013
(million Vehicles)Flex Fuel Vehicles in Brazil
17.4
14.3
35.7 28.7
0
10
20
30
40
mill
ion
KL
Now 2013
Ethanol Production & Consuption
Ethanol Production Ethanol ConsumptionSource: ANFAVEA
3.7
21.6
50.2
78.1 82
0
20
40
60
80
100%
2003 2004 2005 2006 Jan2007
Flex Fuel Vehicle Sales
55
Advantage of Sugarcane of BrazilAdvantage of Sugarcane of Brazil【Brazil】
Dominant competitiveness of the production cost
Adequate climate condition for sugarcane cultivation
Unused area 50 times more than the current sugarcane plantation area where it is easy to expand the production
Huge unused area which is 9 times more than Japan with no destruction of Tropical Amazon Forest.
Over 100 years of know-how in the use of Fuel Ethanol for Automobiles
【Sugarcane】Possible to be cultivated widely in Tropical, Sub Tropical Areas
Strong resistance
Possible to increase production by breed improvement
Advantage of productivity per hectare, which is 3 times more than corn
Less competition against food application compared with other raw materials
Energy generation by bagasse is possible by using residue of sugarcane Possible to stably obtain Carbon Credit
Land area of Brazil851million hectare
Natural Area463million hectare
Possible Agriculture Development Area
388 million hectare
Current Cultivation62 million hectare
Sugarcane Planted Area6.3 million hectare
Land area of Brazil851million hectare
Natural Area463million hectare
Possible Agriculture Development Area
388 million hectare
Current Cultivation62 million hectare
Sugarcane Planted Area6.3 million hectare
Ethanol Production Cost (premise Brazil=100)
262
424
150 137161
100
219
107
0
100
200
300
400
500
Brazil
USA
Eurpoe
Colombia
Latin America
IndiaPakistan
Thailand
(Source: Agra CEAS)
Future expected development Savanna area
“Cerrado”
66
Recent Foreign Investment in BrazilRecent Foreign Investment in Brazil
Cargill / USA origin Major Grain Company
In June 2006 announced acquisition of Sugar & Ethanol Mill in Sao Paulo called CEVASA
Bunge /Holland origin Major Grain CompanyIn January 2007, made proposal for acquisition of the 3rd largest Sugar & Ethanol Mill, Vale do Rosario
Louis Dreyfus / French origin Major Grain Company
In February 2007, Agreed with the Tavares de Melo Group on acquisition of Sugar & Ethanol Business in Brazil, which made Louis Dreyfus become substantially 2nd largest Sugar & Ethanol producer Brazil.
Mr. George Soros / USA
In February 2006, made investment to Mote Alegre, Sugar & Ethanol mill in Minas Gerais State
77
Situation of JapanSituation of Japan
August 2003• Revision of fuel regulation allowing 3% Ethanol blending to gasoline • Potential demand 1.8 million KL
August 2003• Revision of fuel regulation allowing 3% Ethanol blending to gasoline • Potential demand 1.8 million KL
April 2005• Government Approval of Biofuels for Transportation in the Kyoto Protocol
Target Achievement Plan• 0.5 million KL crude oil equivalent Biofuels (equivalent to 0.85 million KL
of Ethanol) by 2010
April 2005• Government Approval of Biofuels for Transportation in the Kyoto Protocol
Target Achievement Plan• 0.5 million KL crude oil equivalent Biofuels (equivalent to 0.85 million KL
of Ethanol) by 2010
February 2007• Discussion in Biomass Nippon Comprehensive Strategy Promotion
Committee• Discussion on 6 million KL of Bio Fuel Use
February 2007• Discussion in Biomass Nippon Comprehensive Strategy Promotion
Committee• Discussion on 6 million KL of Bio Fuel Use
January 2006• Petroleum Association of Japan• ETBE use of 0.84 million KL (0.36 million KL ethanol equivalent) by 2010
January 2006• Petroleum Association of Japan• ETBE use of 0.84 million KL (0.36 million KL ethanol equivalent) by 2010
88
Activities of Japanese Private Sector in BrazilActivities of Japanese Private Sector in Brazil
1. MitsuiMOU with Brazilian Partners to secure stable supply and economical efficiency
• March 2005:MOU with Petrobras, CVRD to search best logistics solution
• April 2006MOU with Petrobras to study on production & marketing of Ethanol (Business & Price Model, Project Selection)Mitsui has intention to invite reliable Japanese partners to the project
• February 2007MOU with Petrobras, Camargo Correa to study on Ethanol Pipeline
1.1. MitsuiMitsuiMOU with Brazilian Partners to secure stable supply and economical efficiency
• March 2005:MOU with Petrobras, CVRD to search best logistics solution
• April 2006MOU with Petrobras to study on production & marketing of Ethanol (Business & Price Model, Project Selection)Mitsui has intention to invite reliable Japanese partners to the project
• February 2007MOU with Petrobras, Camargo Correa to study on Ethanol Pipeline
2. Itochu• Technical Cooperation Agreement with CODEVASF, CAMPO• Feasibility Study on Ethanol and Bio Diesel
2. Itochu• Technical Cooperation Agreement with CODEVASF, CAMPO• Feasibility Study on Ethanol and Bio Diesel
3. Marubeni• Establish JV with Agrenco• Plan to invest in production of Bio Diesel
3. Marubeni• Establish JV with Agrenco• Plan to invest in production of Bio Diesel