Biofuels Regulation in Peru Biofuels Regulation in Peru W HAT ARE - PDF document

Caterina Miró Quesada Samanez Biofuels Regulation in Peru

Biofuels Regulation in Peru W HAT ARE BI OFUELS? W HAT ARE BI OFUELS? • Biofuels are fuels produced directly or indirectly from organic material called biomass. • A distinction is made between first, s second and third generation biofuels. First-generation biofuels are made e largely from edible sugars and starches. • Second-generation biofuels are made e from nonedible plant materials and are a result from processing biomas ss and including liquid biofuels such as ethanol and biodiesel that can be used in vehicles and industrial processes. • Third-generation biofuels are made fr rom algae and other microbes.

Biofuels Regulation in Peru ETHANOL AND BI ODI ESEL ETHANOL AND BI ODI ESEL • Ethanol is a type of alcohol that can n be produced by using any feedstock containing significant amounts of sugar, such as sugar cane or sugar beet, or starch, such as corn and w heat. • Ethanol can be blended with gasol ine or burned in nearly pure form in slightly modified spark-ignition en ngines. A liter of ethanol contains approximately two thirds of the en nergy provided by a liter of gasoline. However, when mixed with gaso oline, it improves the combustion performance and lowers the emissi ons of carbon monoxide and sulphur oxide. • Biodiesel is the name of a clean bu rning alternative fuel, produced from g , p domestic, renewable resources. Bio odiesel contains no petroleum, but it can be blended at any level with p petroleum diesel to create a biodiesel blend.

Biofuels Regulation in Peru ETHANOL PRODUCTI ON I N P ETHANOL PRODUCTI ON I N P PERU PERU • Eth Ethanol production is a new busine l d ti i b i ess in Peru, starting in August 2009. i P t ti i A t 2009 Similar to Brazil and Colombia, sug gar cane can be cultivated in Peru all year round, especially on the count ry’s northern coast. • Peru’s competitive edge lies in its e efficient use of land to cultivate sugar cane. In fact, Peru is one of the world’s most efficient producers of sugar cane. • Ethanol in Peru is produced using t he diffusion method which is broadly used in Brazil. This method consist ts of shredding the cane very thinly then moving it through thirteen c consecutive showers of warm water (between 70 and 80°C). The wate er that comes out of the last wash then is fermented. Once the alc coholic yeast is finished with the fermentation process, the liquor is d distilled.

Biofuels Regulation in Peru ONGOI NG PROJECTS ONGOI NG PROJECTS • With an investment of $210 million n, Caña Brava is currently the only ethanol producer in Peru. Caña Brav h l d i P C ñ B va has established 6,000 hectares of h bli h d 6 000 h f sugar cane in Piura and built a p processing plant with a capacity of 350,000 liters per day. Caña Brava b began operations in August 2009

Biofuels Regulation in Peru ONGOI NG PROJECTS ONGOI NG PROJECTS • Maple Energy ( USA) is currently in n the advanced stages of developing one of the first and most significa nt ethanol projects in Peru. At an estimated cost of $254 million this agro-industrial project consists of a 7 800 hectare sugar cane plantati 7,800 hectare sugar cane plantati ion in the initial phase which will ion in the initial phase which will provide sugar cane feedstock to the Ethanol Project . • • Maple Maple Energy Energy has made significan has made significan nt nt progress in progress in all all aspects of aspects of the the Ethanol Project, including agri cultural development, industrial development and financing and currently expects to commence commercial operations in the second d half of 2011.

Biofuels Regulation in Peru BI ODI ESEL PRODUCTI ON I N BI ODI ESEL PRODUCTI ON I N N PERU N PERU • Up to date, the main feestock for b Up to date, the main feestock for b biodiesel production in Peru is palm biodiesel production in Peru is palm oil. • Biodiesel is made through a chemic cal process called transesterification whereby the glycerin is separated from the fat or vegetable oil. The process leaves behind two product ts -- methyl esters (the chemical name for biodiesel) and glycerin (a valuable byproduct usually sold to be used in soaps and other products. .

Biofuels Regulation in Peru ONGOI NG PROJECTS ONGOI NG PROJECTS • The Heaven Petroleum ( Peru) pla nt was the first biodiesel plant in Peru. Their product is known as Biodiesel H B100. When they first started operations the production was expected at 12,00 p p , 0 gallons per day. Then the production is g p y p expected to rise to 24,000 gallons per day. • Pure Biofuels Corporation (USA) • Industrias del Espino (Peru) Industrias del Espino (Peru)

Biofuels Regulation in Peru LEGAL FRAMEW ORK LEGAL FRAMEW ORK • Law No. 2 8 0 5 4 : The Law for the Pro Th L f th P motion of the Biofuels Market was enacted ti f th Bi f l M k t t d L N 2 8 0 5 4 in 2004 with the aim of establishing t the general framework to promote the use of biofuels based on free market pol icies and with the objective of increasing employment, diversifying fuel sources employment, diversifying fuel sources s, strengthening agricultural development s, strengthening agricultural development and reduce environmental contaminati on. • It also calls for the creation of a Te echnical Committee to be responsible for determining the blending percentages and schedules, recommending regulations regarding biofuels production and commercialization, c and leading a public awareness campaign regarding the ben nefit of biofuels. • Suprem e Decree No. 0 1 3 -2 0 0 5 -EM M: The Regulation for the Promotion of the Biofuels Market, was enacted with the aim of promoting the investment in crops for the production and commercializati ion of biofuels, spread the economic, social and environmental advantages of its s use and establish the safety technical requirements for its production and dis stribution.

Biofuels Regulation in Peru LEGAL FRAMEW ORK • Suprem e Decree No. 0 2 1 -2 0 0 7 -E p EM: In 2007, the Regulation for the , g Commercialization of Biofuels – was enacted. This norm establishes the requirements for the commercializati on and distribution of biofuels. • Regarding the commercialization re Rega ding the comme ciali ation e equirements, the Regulation states eq i ements the Reg lation states that gasoline must include 7.8% of f Fuel Grade and it will denominate Gasohol 97 Plus, Gasohol 95 Plus, G Gasohol 90 Plus or Gasohol 84 Plus, depending on the octane number. Th he Gasohol will be of mandatory use in the country according to the timet h d h able set therein. bl h • Diesel must include a range between n 2 and 20% of biodiesel depending on the type of diesel (For Diesel B2 on the type of diesel (For Diesel B2 2 (2% ) 2 (2% ), for Diesel B5 (5% ) and for for Diesel B5 (5% ) and for Diesel B20 (20% )) It is important t to mention that the Regulation also states that, since January 1 st , 2009 t the commercialization of Diesel B2 is l No. 2 and that since January 1 st , mandatory in replacement of Diese 2011, the commercialization of Dies 2011 the commercialization of Dies el B5 is mandatory, replacing Diesel el B5 is mandatory replacing Diesel B2.

Biofuels Regulation in Peru ENVI RONMENTAL I MPLI CAT ENVI RONMENTAL I MPLI CAT TI ONS TI ONS • • Food Food im pacts: im pacts: There There has has been been worldwide worldwide criticism criticism of of the the effect effect of of increased ethanol production on foo d prices. Because the cost of feedstock dominates the production cost of bi iofuels, all crops compete for the same inputs: land, fertilizer and irrigation g water. • W ater im pacts: Depletion and con ntamination of water supplies can have profound effects on human and ani mal health. Many biofuel crops require large amounts of water for their cu ultivation, particularly harmful in water areas where water is scarce. • Forest im pacts: The cutting of fore ests in order to create land available for the growing of biofuel crops has s grave impacts on greenhouse gas reduction as well as biodiversity. • Greenhouse Gases: There is incre asing evidence that the total emissions and environmental damage from p producing many “clean” biofuels often outweigh their lower emissions when outweigh their lower emissions when n compared with fossil fuels n compared with fossil fuels.