Despite the slower production of ethanol, Brazil will reignite its sugar cane ethanol production by working closely with the private sector, taking advantage of new financing support and further incentives.
The financing will in large come from the state-run development bank BNDES, which will contribute US$19-22 billion towards the expansion in the sugar cane sector throughout 2014. During an investor conference, Haroldo Lima, the head of Brazil’s ANP energy regulatory agency, said, “The best way for the government to prevent regular shortages in the sugar cane-based biofuel was to provide the conditions so that investment could increase, not in the medium term, but in the short term.”
Energy Minister Edison Lobao commented on the changes the ethanol industry has experienced and said, “The sector is going through a new phase of challenges and these challenges need to be overcome together by government and business.”
Lobao said a regular 10-year investment plan is currently being developed by the government in collaboration with private-sector representatives. He believes the demand for ethanol will roughly double in tandem with Brazil’s booming economy.
The financing support is badly needed to boost Brazil’s somewhat stagnant $30 billion a year sugar cane industry that has lacked investment despite high prices for biofuel and a massive expansion in the domestic fleet of cars that use it. Ethanol producers have recently been criticised by officials from President Dilma Rousseff’s government for what they describe as a failure to invest and plan.
The investor conference hit a record of over 2,000 attendees. Luciano Coutinho, the head of the BNDES, said he was very optimistic about the future of the sector, an important endorsement from the institution that is by far the country’s biggest long-term lender.