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The future of oil and bioethanol in Brazil

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  • Moreira, Jose R.
  • Pacca, Sergio A.
  • Parente, Virginia

Abstract

This work compares the return on investments (ROI) of oil versus biofuels in Brazil. Although several renewable energy sources might displace oil, the country's forte is sugarcane biofuels. In our analysis we carry out simplified benefit–cost analyses of producing oil fields, pre-salt oil fields (without and with enhanced oil recovery), a business as the usual ethanol scenario, and a high ethanol scenario. Excluding the ROI from existing oil fields, which is the highest, when the discount rate is 4% or more, the ROI of the high ethanol scenario is greater than that of the ROI of pre-salt oil. Considering a US$40/t CO2 tax, the high ethanol scenario's ROI is greater than the pre-salt oil's ROI if a discount rate of 2% or more is adopted. Moreover, the high ethanol scenario throughput up to 2070 compares to 97% of the pre-salt oil reserve without EOR, and demands 78% of its investment. Pre-salt oil production declines beyond 2042 when the country might become a net oil importer. In contrast, ethanol production reaches 2.1millionboe per day, and another 0.9millionboe of fossil demand is displaced through bioelectricity, yielding a total of 3millionboe (62% of the country's oil demand).

Suggested Citation

  • Moreira, Jose R. & Pacca, Sergio A. & Parente, Virginia, 2014. "The future of oil and bioethanol in Brazil," Energy Policy, Elsevier, vol. 65(C), pages 7-15.
    • Handle: RePEc:eee:enepol:v:65:y:2014:i:c:p:7-15
    DOI: 10.1016/j.enpol.2013.09.055
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    References listed on IDEAS

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    1. Mendes, Pietro A.S. & Hall, Jeremy & Matos, Stelvia & Silvestre, Bruno, 2014. "Reforming Brazil׳s offshore oil and gas safety regulatory framework: Lessons from Norway, the United Kingdom and the United States," Energy Policy, Elsevier, vol. 74(C), pages 443-453.
    2. A. Khoodaruth, 2016. "Contribution of the sugar cane industry to reduce carbon dioxide emissions in the energy sector: the case of Mauritius," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(6), pages 1719-1731, December.
    3. Fátima Lima & Joana Portugal‐Pereira & André F.P. Lucena & Pedro Rochedo & Jorge Cunha & Manuel Lopes Nunes & Alexandre Salem Szklo, 2015. "Analysis of energy security and sustainability in future low carbon scenarios for Brazil," Natural Resources Forum, Blackwell Publishing, vol. 39(3-4), pages 175-190, August.
    4. Hakan Eggert & Mads Greaker, 2014. "Promoting Second Generation Biofuels: Does the First Generation Pave the Road?," Energies, MDPI, vol. 7(7), pages 1-16, July.
    5. Corrêa da Silva, Rodrigo & de Marchi Neto, Ismael & Silva Seifert, Stephan, 2016. "Electricity supply security and the future role of renewable energy sources in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 328-341.
    6. Postic, Sebastien & Selosse, Sandrine & Maïzi, Nadia, 2017. "Energy contribution to Latin American INDCs: Analyzing sub-regional trends with a TIMES model," Energy Policy, Elsevier, vol. 101(C), pages 170-184.

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