Shell and Cosan invest $1 billion to boost Brazilian biofuels

Royal Dutch Shell and Cosan Ltd. invest $1 billion to boost Brazilian biofuels | 30/12/14
by John Brian Shannon John Brian Shannon

Everyone knows that Royal Dutch Shell is a giant in the global petroleum industry, but did you know that Raízen (Shell and Cosan’s joint biofuel venture) is Brazil’s 3rd-largest energy company?

Raízen, the joint venture between Royal Dutch Shell and Cosan Ltd, is the third-largest energy company in Brazil in terms of revenue. Image courtesy of Raízen.
Raízen, the joint biofuel venture between Royal Dutch Shell and Cosan Ltd. is the 3rd-largest energy company in Brazil. Image courtesy of Raízen.

Now Shell the petroleum giant and Cosan the sugar giant have teamed up to invest $1 billion dollars over the next 10 years in 2nd generation biofuels sourced from sugarcane. The sweet part of this deal (apart from the sugarcane) is that both companies have committed to bring 1st generation biofuel production practices to an end, replacing those practices with 2nd generation technology, making Brazilian biofuel orders-of-magnitude cleaner.

Growing sugarcane for biofuel in Brazil usually means harvesting the cane of the sugarcane plant, leaving the rest of the plant behind. All of the ‘bagasse’ or ‘stover’ as it’s sometimes called, goes up in smoke as the fields are burned by the farmers twice per year. (Due to Brazil’s climate and nutrient-dense soil, sugarcane growth is explosive and Brazilian farmers can harvest 2 crops of sugarcane per year)

So much smoke and CO2 is generated from this 1st generation practice that NASA says it is able to detect changes in the Earth’s airmass for many weeks after millions of acres of sugarcane fields are burned in Brazil.

Happily, that’s going away now as Raízen will harvest the bagasse immediately after the main sugarcane harvest and process it with enzymes in cellulosic bioreactors, converting it into very pure ethanol.

All the benefits of ethanol biofuel — but without the (1st generation) drawbacks

Nothing will change with regards to the same fast, reliable, and simple process presently employed to produce biofuel from the sugarcane itself.

But harvesting the bagasse, changes everything as millions of acres of fields no longer need to be burned twice per year in order to remove the millions of tonnes of leftover plant material.

Due to advances in cellulosic biofuel technology, the leaves, roots and other parts of the sugarcane plant can be used in new cellulosic biofuel reactors (basically, a 500,000 gallon soup pot) to produce very high quality ethanol (or biodiesel, depending on the enzymes chosen and the process employed) at a moderate cost.

Raízen will increase their annual biofuel output by 50% to 1 billion litres — which is roughly equivalent to 106 million US gallons.

No doubt that most of this newfound ethanol will be used to power cars within Brazil as all gasoline in the country must have a minimum 25% ethanol component — known as the E25 blend. If you choose the ‘other pump’ at the gas station, you can fuel your car with 100% ethanol, assuming your car is E100 compatible.

There are no longer any light vehicles in Brazil running on pure gasoline.

Since 1976 the government made it mandatory to blend anhydrous ethanol with gasoline, fluctuating between 10% to 22%, and requiring just a minor adjustment on regular gasoline engines.

In 1993 the mandatory blend was fixed by law at 22% anhydrous ethanol (E22) by volume in the entire country, but with leeway to the Executive to set different percentages of ethanol within pre-established boundaries.

In 2003 these limits were set at a minimum of 20% and a maximum of 25%. Since July 1, 2007 the mandatory blend is 25% of anhydrous ethanol and 75% gasoline or E25 blend.

The Brazilian car manufacturing industry developed flexible-fuel vehicles that can run on any proportion of gasoline (E20-E25 blend) and hydrous ethanol (E100).

Introduced in the market in 2003, flex vehicles became a commercial success, reaching a record 92.3% share of all new cars and light vehicle sales for 2009.

By December 2009 they represented 39% of Brazil’s registered Otto cycle light motor vehicle fleet, and the cumulative production of flex-fuel cars and light commercial vehicles reached the milestone of 10 million vehicles in March 2010, and 15.3 million units by March 2012.

By mid-2010 there were 70 flex models available in the market manufactured from 11 major carmakers.

The success of “flex” vehicles, together with the mandatory E25 blend throughout the country, allowed ethanol fuel consumption in the country to achieve a 50% market share of the gasoline-powered fleet in February 2008.

In terms of energy equivalent, sugarcane ethanol represented 17.6% of the country’s total energy consumption by the transport sector in 2008. — José Goldemberg, the father of the Brazilian biofuel industry, as quoted by

If all ethanol producers in Brazil follow Raízen’s lead, the country could soon be exporting millions of litres of very pure (clean burning) and very clean (sustainable agriculture practices) ethanol biofuel.

As far as the cost is concerned, producing second generation cellulosic oil is more costly than that of ethanol, produced from other sources. Raizen’s Agro-Industrial Director, Joao Alberto Abreu, expects costs to decrease over time as enzymes needed for production become more easily available.

Brazil is the biggest ethanol producer in the world and one of the biggest exporters of biofuel.

Many ethanol producers have been struggling over the past few years but there are encouraging signs as domestic demand for ethanol is on the rise, while the opportunity to export cellulosic ethanol might grow in the near future.

It looks like 2nd generation biofuel production practices have won in Brazil. Competitors will be forced to emulate Raízen’s lead, rather than continue to send billions of dollars worth of product up in smoke at each harvest.

All in all, a very sweet deal. Congrats to Shell and Cosan on their Raízen joint venture!

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