Ethanol production in Brazil 'to be further regulated'
Date added: 13th June, 2011 at 13:26
(view all articles from June, 2011)
Categories: Natural Resources
People considering making an investment in Brazil may be aware of the importance of the ethanol production industry in the country and the sector is soon to be subject to new regulations designed to prevent shortages in the fuel.
The territory's National Petroleum Agency ANP published the rules on Friday (June 10th) after having recently been charged by the government with the responsibility of minimising seasonal dips in output of the resource.
Director of the body Haroldo Lima said the aim is for the legislation to be approved in the next six months, but for now the new regulations are open to public consultation and the comments of interested parties will be discussed on July 1st.
Statistics from the Renewable Energy Association, a trade organisation for US ethanol producers, show that Latin America's largest economy was the source of 6.9 billion gallons of the commodity last year.
This makes Brazil the second largest producer of the fuel in the world - with the US taking the top spot - and the figures reveal that its annual output is on the rise, increasing by almost two billion gallons over the last four years.
Ethanol production across the world is on the up, with demand in the US alone reaching just over nine million barrels per day in February this year compared with 2.8 million barrels per day at the same point in 2006.
Furthermore, the commodity is widely used as a fuel in cars across Brazil, but shortages of the resource occur between March and April every year following the harvest of the commodity.
These dips in production, which push the price of the energy source higher, are what the ANP is attempting to prevent.
Keeping the cost of buying ethanol to a minimum may help maintain the competitiveness of the biofuel in Brazil, where Sao Paulo-based sugar and ethanol consultancy Datagro expects demand to fall this year due to the rising expense of choosing it over gasoline.
Indeed, industry representatives at last week's Brazil Ethanol Summit revealed that their major concern was with lowering the amount of money needed to produce the commodity so that the price for customers is kept to a minimum, according to Reuters.
One of the ways the ethanol industry hopes to cut costs is by creating a new pipeline to distribute the fuel more cheaply than by road or rail.
The R$6 billion (£2.3 billion) structure is to be built by Logum - a logistics company created by several mills that partnered to fund the development, including Petrobras, Cosan and Odebrecht Transport Particpacoes, the news provider reported.
Chief executive of Louis Dreyfus Commodities Bruno Melcher told Reuters that the project should "help to cut costs".
"The pipeline will revolutionise the transport of the fuel from remote production areas to the main domestic and export market," he explained.
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