There is a possibility to replace fossil fuels for renewable ones in Brazil, preventing the emission of methane, study shows
Biomethane production in Brazil — Foto: Barbosa Neto
Brazil could avoid spending $137 billion in diesel imports in a decade if all heavy-duty vehicles running on the fossil fuel used locally-produced biomethane instead.
The calculation was made by the Brazilian Center of Infrastructure (CBIE) at Valor’s request and shows that there is a possibility to replace fossil fuels for renewable ones in Brazil, preventing the emission of methane, which is short-lived but the more harmful gas, and still resulting in benefits to the trade balance.
The consulting company put together three scenarios for the evolution of diesel consumption in Brazil by 2031, based on projections of different economic growth rates. In a more optimistic scenario of GDP growth, demand for diesel exceeds the country’s expected refining capacity, so Brazil would require imports of 35 billion liters in 2031 alone, or 45% of the consumption expected for that year.
In order to completely replace these imports, Brazil would need to expand the production capacity of its biomethane industry to 40 billion liters per year by 2031, or 112.89 million cubic meters of biogas per day. This volume would avoid spending $137 billion on imports from 2021 to 2031.
In the base-case scenario, in which economic growth would be less accelerated, Brazil would have to import 30 billion liters of diesel in 2031. With this, the replacement of fossil fuel by biogas would be $124 billion
This demand is within what the organizations that represent biogas investors project for Brazil’s capacity to produce the renewable fuel. According to calculations by the Brazilian Biogas Association (Abiogás), a complete utilization of the residues from farming and urban sanitation existing today in Brazil would allow the production of up to 120.8 million cubic meters of biogas per day. This is more, therefore, than the demand needed to replace the imports of fossil diesel projected by CBIE for the next decade in the most optimistic scenario for consumption.
The total use of residues, however, is still far from reality. The most likely scenario is that in 2030 Brazil will have the industrial capacity to produce 30 million cubic meters of biomethane per day, according to Abiogás, considering investments already announced for the coming years, those in the pipeline, and the expected ones.
Even considering this more conservative perspective for biomethane production, the volume would already be able to stop the increase in diesel imports by the end of the next decade. According to CBIE, in a scenario of average growth in the next decade, the country would have problems to meet diesel demand starting in 2028, considering that there will not be new investments in refining until then or increases in the import capacity of fossil fuel.
In this hypothesis, there would be a demand for 15.2 million to 29.8 million cubic meters of biomethane per day until 2031. A volume, therefore, that the expected capacity until the end of the decade would be able to meet, considering Abiogás’s projection. In this case, the consumption of biomethane would avoid imports of $7.8 billion of diesel.
The projections took into consideration that diesel today is a blend that includes 10% of biodiesel and should remain that way until 2023 and a progressive increase until 2026.
The potential estimated by CBIE is still distant when compared to the industries that are active in Brazil today. According to Abiogás, the country has today less than 10 units with capacity to deliver 400,000 cubic meters per day. Most are recent investments, such as Adecoagro and Cocal, which use residues from ethanol production to generate biogas.
Besides sugar cane, there is also potential within agribusiness for production in farms, feedlots, and agricultural crops that supply residues for biodigesters, besides urban landfills, where there is greater potential of growth. But new investments have yet to materialize.
Bruno Pascon, a partner at CBIE, believes that new legal frameworks recently approved can favor this leap. This year alone, the solid waste law was regulated, which can unlock investments in landfills, and the decree for the biomethane incentive was published, which granted tax benefits for investments. In his view, the federal fertilizer plan and the Eletrobras Law, which forced the contracting of natural gas thermoelectric plants, can also contribute to promote biomethane (which is chemically equal to natural gas).
“Due to the power of agribusiness, Brazil has everything to also be a world reference in biogas,” he said. According to Mr. Pascon, the fact that Brazil is a “leader” in the production and export of food makes the country a potential leader also in biomethane.
Currently, Germany has the largest installed capacity of biogas in the world, followed by the United States, United Kingdom, Italy and China. From this group, Mr. Pascon said, the ones with more potential to continue growing are the Americans and the Chinese, precisely because of their agricultural production, which leaves residues. “Brazil has just started,” he said.
By Camila Souza Ramos — São Paulo
Source: Valor International