Brazil Pumps More Funds Into Ethanol Research

Brazil, the world leader in sugar cane ethanol production and consumption, has announced that its national Development Bank (BNDES) and the Brazilian Innovation Agency (FINEP) have signed a Technical Cooperation Agreement, pledging R$1 billion between 2011 and 2014 for a Joint Plan to Support Industrial Technological Innovation in the sugar-based Energy and Chemical Sectors (PAISS).

According to a statement released earlier this week, the objective of the deal is to stimulate the development, production and commercialization of new technologies to process sugarcane biomass. The hope is to bring this type of biofuel, also known as second generation or cellulosic ethanol, to the same level as Brazil's established technologies for the production of conventional biofuels.

Another aspect of the deal is to obtain sugarcane biomass products, such as energy-rich fuels including diesel, gasoline and aviation kerosene, or chemical intermediates, with application in several different industries.

The approval of the PAISS more than doubles the number of currently available resources in the sector and brings Brazil near the investment levels of the U.S. and the EU, officials said. Currently, the joint innovation portfolios of BNDES and FINEP in ethanol and derivates production totals R$ 413.5 million.

Funding process

The PAISS will focus on three key areas: Second Generation Bioethanol, New Sugarcane Products (including development from sugarcane biomass through biotechnological processes) and Gasification (with an emphasis on technology, equipment and processes).With the support of the PAISS and Brazil's massive supply of low-priced biomass, the country hopes to become a pioneer in the production of cellulose-ethanol and other advanced biofuels in order to keep its leadership in the sector.

As new technology projects arise from the initiative, they will also be supported by BNDES and FINEP, based on existing lines of financing, programs and funds. Investors will have the opportunity to obtain financing from BNDES and FINEP according to project features and equity interest through the equity arm of the national development bank, BNDESPar.

The joint innovation portfolios of BNDES and FINEP in ethanol and derivates production totals R$413.5 million. BNDES is responsible for R$169.1 million through financing and FINEP for R$244.4 million. The approval of the PAISS more than doubles the number of currently available resources in the sector and brings Brazil near the investment levels of the U.S. and the EU.

In order to qualify for the PAISS, companies need to specialize in the research, development and innovation of the sugar-based energy and chemical market. Their proposals should tie in with company's overall business strategy, with an introduction of their respective products in the market and technological outlook. More detailed information about the business plan selection process and PAISS will be made available on the BNDES and FINEP websites soon.

Image credit: Sweeter Alternative