"Brazil is the world's leading sugar producer and exporter.  It is also the world's #2 ethanol producer after the U.S., but #1 ethanol exporter. In a first for Brazil, local company Raudi, in partnership with a Sao Paulo state institute, is planning to build a pilot plant capable of producing "green" methanol from excess sugarcane biomass within the next three years.  

The reason is twofold, said Adriano Fiaschi, Raudi Industria e Comercio's project coordinator, in a phone interview with Dow Jones Newswires. First, while Brazil is a net oil exporter, the country remains an importer of methanol, which is traditionally derived from fossil fuels.  At the same time, the country's booming sugarcane sector discards much of its biomass in the form of cane leaves as waste.  To take advantage of both factors, the Sao Paulo-based company plans to install a pilot gasifier capable of converting sugarcane leaves and bagasse in the municipality of Sao Carlos do Avai in southern Parana state by September or October next year.  The company already has a partnership with a local Parana sugarcane cooperative, Coopcana, to use its excess biomass.

After the gasifier is up and running, the company will define the parameters for building a methanol synthesis power plant, said Fiaschi.  "Our commercial target is 20 to 25 tons of methanol per hour," he added, noting that the pilot plant in its initial stages is expected to produce 20%-25% of this amount.  The initial costs of installing the plant are expected to total more than 10 million Brazilian reals.  As long as the price of methanol hovers around $250 per cubic meter or higher, "I'm pretty confident that our results will be positive," said Fiaschi.  "Our methanol is quite competitive, even without factoring in the carbon credit market," he added.  

Higher Eco-Efficiency
There are several reasons why using biomass to make methanol is environmentally friendly as well as ecologically efficient, said Ademar Ushima, a researcher at the state-funded Sao Paulo State Institute of Technological Research, or IPT, which has been working in tandem with Raudi for the past eight years to create the new technology.

First, an average ton of sugarcane yields roughly 145 kilograms of sucrose, 145 kilograms of dry bagasse, and 145 kilograms of cane leaves.  Today, about 90% of the bagasse is used by local cane mills to co-generate electricity, while 10% is sold to other industries. However, few millers seek to use the excess biomass from cane leaves, in part because Brazil's market for co-generating electricity has suffered from lack of market demand in recent years, said Ushima.

Worse, about 60% of Brazil's sugarcane in the country's No. 1 sugarcane state of Sao Paulo is still harvested by hand, which involves the burning of sugarcane leaves to faciliate the cutting of the cane.  However, such a practice increases air-pollution levels in regional cities, and can also lead to a higher probability of pulmonary diseases, said Ushima.  "(Brazil's) sugar and ethanol sector is growing a lot, and will grow even more in coming years," he added. "The quantity of cane leaves and bagasse will be really enormous. Brazil has to invest in this development, or it will lose out in efficiency.

Growing Biodiesel Market
Brazil's growing biodiesel market is also likely to consume more methanol as a key input in coming years.  By 2008, the country has mandated an obligatory 2% biodiesel mix in all diesel, or about 800 million liters.  If all of that volume was produced using methanol, rather than ethanol, as an input, Brazil could require some 80 million liters of methanol, according to very rough estimates by the Sao Paulo-based National Biofuels Center.

However, using an input derived from fossil fuels to make a biofuel is somewhat illogical, say local analysts.  And, while local producers could also use ethanol instead of methanol, methanol remains a far more efficient and faster feedstock, said Catarina Pezzo, the project coordinator at the National Biofuels Center.  In 2005, Brazil imported more than 251,000 tons of methanol, according to data from the Trade Ministry.  Despite the potential, there are still technical conditions that could cause local producers to hesitate before adopting the new technology.  

First, the company's current gasifier is more efficient using compacted bagasse rather than cane leaves, said Fiaschi. And, while Brazil's sugar and ethanol mills could be easily adapted to burn cane leaves instead of bagasse to co-generate electricity, their equipment will require a few technical modifications, he added.

Second, a sugarcane mill that crushes an average of 1.3 million tons of cane per harvest should be able to produce 7 metric tons of methanol per hour, or roughly 55,440 tons per year, according to preliminary data from the IPT.  A mill double that size could produce double the amount of methanol per hour.  "These are preliminary numbers, but in seven years' time, a mill will definitely recover all of its costs," said Ushima.  Raudi - which also operates a sodium bicarbonate factory in the north of Parana - accounts for roughly 20% of Brazil's bicarbonate market. ”

By Grace Fan; Dow Jones Newswires; brazil@dowjones.com  11-17-06  (c) 2006 Dow Jones & Co, Inc. Centre for Energy