Brazil ethanol industry goes green for the money

By Reese Ewing




SAO PAULO
Thu Jul 5, 2007 11:34am EDT



SAO PAULO (Reuters) - Brazil's ethanol industry is cutting out the dirty habits that contribute to global warming and environmental degradation. But it's not just a noble effort -- it makes good financial sense, too.



Billionaire George Soros, who is investing hundreds of millions of dollars in Brazilian ethanol production, is in the forefront of the effort.



"If ignored, global warming can destroy civilization," Soros said at an Ethanol Summit in Brazil last month.



Brazilian ethanol mills have taken steps to break with traditional practices that call into doubt the environmental benefits of biofuel production from sugar cane over gasoline or other biofuel production, such as U.S. ethanol from corn.



The burning of cane fields is a prime example.



Roughly 70 percent of Brazil's 6-million-hectare (15-million-acre) sugar cane crop is still manually harvested. This requires fields to be burned to clear the dense, serrated leaves of the plant before cutters can gain efficient access to the stalks.



Sao Paulo Governor Jose Serra estimated cane burning in 2006 in his state, which accounts for 65 percent of Brazil's cane crop, spewed 750,000 tonnes of pollution into the air.



Although the cane industry had pledged to move from manual cutting to mechanized harvesting, the roughly 15 percent annual expansion in the cane crop with the boom in ethanol demand has resulted in an actual increase in burning.



Burning rates are up 20 percent from a year ago at this time in Sao Paulo, according to the latest satellite data from the National Space Studies Institute.



BURNING BANS



For the first time in history, Sao Paulo's environment secretary issued bans on burning for short periods in 2006 due to respiratory health risks.



Mechanized harvester sales soared after the burning bans.



Mills have only so much time to cut in the dry season, before the spring rains, which start around October, make harvesting unprofitable. And there is a lot more cane to cut these days.



Were it not for this additional financial risk for mills posed by the burning bans, the industry likely would not have signed an agreement with Serra in June to quicken the phase-out of burning.



Under the accord, 88 percent of Sao Paulo's cane area will end burning by 2014 and the remaining 12 percent, or 440,000 hectares (1.09 million acres) in slightly hilly areas, will stop by 2017, well before the previously scheduled target of 2031