Skip navigation
Newswire

Brazil gov't bank backs doubling of ethanol output

RIO DE JANEIRO, Brazil, Aug 25 (Reuters) - Brazil's BNDES national development bank signed an agreement on Monday with government crop research arm Embrapa and state-owned oil giant Petrobras to double production of cane-based ethanol in the world's largest sugar cane grower.

"This (agreement) addresses a protocol for joining forces to build economic and technical bases to transform the country into a large center for bioenergy," said BNDES president Carlos Lessa during a seminar on fuel ethanol.

Without giving numbers, Lessa said the BNDES had earmarked funds for "good projects", which he said he hoped would double Brazil's ethanol output in three to four years, making the ethanol sector as big as the country's soy industry.

The BNDES began studying plans to expand ethanol output from Brazilian sugar mills after officials from Japan and Europe expressed interest in using the renewable fuel as an energy source, said Lessa.

Currently, anhydrous ethanol makes up 25 percent of all gasoline sold at Brazilian pumps and a significant portion of the national automobile fleet is powered by specially modified engines that run on 100 percent ethanol fuel.

"We have the available logistics to respond to this. It's just a matter of rolling up our sleeves," said Lessa, who did not reveal the details of the agreement between Embrapa and Petrobras .

An official from Petrobras said Brazil could raise its annual ethanol output by 11 billion liters (2.9 billion U.S. gallons) with the implementation of a new distilling technology that uses cane pulp and bagasse to squeeze more ethanol out of the production process.

The current 2003/04 sugar cane crop is forecast to produce 13.6 billion liters (3.6 billion U.S. gallons) of ethanol, up 8 percent on last season.