Brazil can help accelerate India's ethanol blending programme: Raizen CEO

Raizen, one of Brazil's biggest ethanol producers is looking for partnerships with Indian firms, the company's CEO tells Business Standard in an interview

In the last few months, India and Brazil have signed agreements in the field of clean and bio-energy during the visit of President Bolsanaro.

In an interview with Business Standard, Luis Henrique Gulmaraes, President and CEO of Raizen, one of the biggest ethanol producer in Brazil said that the company is looking at partnerships with Indian firms for second-generation ethanol, produced from bagasse and sugarcane leaves. He said, Brazil could also export ethanol to India in the interim to quicken its 10 per cent ethanol-blend programme. Raízen, is a 50-50 joint venture between Brazil’s Cosan and Royal Dutch Shell. Edited excerpts

How is Raizen as a company looking at the Indian ethanol-blending programme?
 

From the company’s perspective, I just want to understand better what is going here in India and to motivate the local producers and others to look at ethanol as a way to grow this business here as viable source of energy. We (Raizen) being one of the largest ethanol producer in the world think we can add a lot of value to the Indian ethanol industry. Although, I will like to clarify that there is no intention at this stage of any direct investment or participation in the sugar industry in India. But, we do believe that in future there could be opportunity for us in second generation ethanol. This a technology that we have developed and I think we can help.

So, are u looking at investments in second generation ethanol?
 

Investments or partnerships because I feel we have already over the last five years developed a technology which I think will benefit India from the point of view of speeding up its ethanol-blending programme.

Which are the feedstock that you use in making second-generation ethanol?
 

We use bagasse and also sugarcane leaves as feedstock for our second-generation ethanol programme. No corn, no paddy, because we are fully integrated as a bio-refinery. So we take the bagasse from the pack after getting out of the sugar mills. We have the utilities there and distlillation from the first generation ethanol, so we have a lot of advantages for being in the same facility. And, the same is also applied for converting sugarcane leaves into ethanol. We feel we can work with the producers in India that are looking for implementation of second generation ethanol to speed up the blending curve and we could monetize and benefit from it.

Are you looking at some sort of investments in ethanol-storage facilities as well because as I understand, storing ethanol is big issue here?
 

I think also, between India and Brazil, given that both are large sugar producers, we could have a kind of backup agreement, whereby if you (India) have a shortage of ethanol in India; Brazil should be prepared to reduce its production of sugar and produce more ethanol just for meeting India’s needs. So I think there're ways in which we can cooperate between the two countries.

So how does that work? Do you mean exporting ethanol from Brazil?

Yes, If India has shortage of ethanol in the intercrop period and finds it difficult to meet the 10 per cent blending target; Brazil can export ethanol in the interim to quicken the blending programme. Suppose, India needs needs 3.54 billion litres of ethanol for 10 per cent blend and let’s say India today is able to produce just 1 billion of that; in such a situation Brazil can contribute the remaining. So, that India gets quicker to the three and a half billion required for its 10 per cent blending programme.

This way the blending programme in India could be accelerated?

Yes, I think that is the way to accelerate the ethanol-blending programme in India. I think Brazil could reduce sugar production a bit and shift that capacity to ethanol so that India’s demand could be met and we can return to producing sugar once India’s own ethanol-production capacities are fully developed. This in my view should form part of the India-Brazil agreement on alternative energy sources signed between Brazil’s President Bolsanaro and Prime Minister Narendra Modi few months back.

You talked about developing newer markets for ethanol, which could be potential players apart from India, Brazil and US?

I think, Thailand which has a fairly large sugar industry could come up as big ethanol producer in the years to come, as could Pakistan. Africa in the future is an emerging market. You start with countries which both produce and consume ethanol and then at a later stage, export market could be developed.

How do you see corn and paddy as an alternative feedstock to sugarcane based ethanol?

I think it's complimentary. US is a big producer of corn-based ethanol while Brazil is also starting on the journey of producing corn-based ethanol (in 2019-20 out of the 35.8 billion litres of ethanol produced in Brazil, just around 1.46 billion came from corn), Argentina already produces lot of corn-based ethanol. So I don’t think there is any competition between the two.

This brings to the environment-question as to whether too much reliance on sugarcane-based ethanol is environmentally sustainable?

From our experience in Brazil, I can say that ethanol is a very efficient way to transform solar energy into fuel. Because, if you take the energy of the sugarcane plant, one-third is bagasse, one-third is sucrose and one-third is in the leaves. In the Indian case, it is not using 100 per cent of sugarcane plant’s potential energy. Compared to other crops, sugarcane offers a very efficient way to transform solar energy into clean fuel.