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Brazil’s ailing sugar cane growers get boost from anti-coal push

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Bloomberg

Global efforts to curb the use of coal-fired power plants may provide a lifeline to Brazil’s embattled sugar cane industry.
That’s the bet of companies including Cosan SA Industria e Comercio, co-owner of the world’s largest sugar cane processor, which formed a $130 million joint venture for making sugar cane-based biomass pellets that can be burned to produce electricity.
Power generators are already expanding their use of biomass pellets made from wood to displace coal in thermal power plants. Cosan expects global demand for pellets to swell 60 percent over the next five years, creating a huge market for Brazilian pellets made from bagasse, the fibrous by-product of sugar-cane processing that usually ends up as waste.
“There’s a constant trend of replacing coal and other sources of pollution with renewable ones for power generation,” said Mark Lyra, president of Cosan Biomassa, the joint venture formed by Cosan and Sumitomo Corp. “There’s no going back because policies to fight climate change are being reinforced around the globe. By using sugar-cane residue, Brazil is positioned to become the Saudi Arabia of renewable energy.”
Biomass pellets made of wood dominate the industry, and almost all of them come from forests in Europe, the U.S. and Canada. Cosan and Sumitomo expect the global market to jump to 40 million metric tons in five years, from 25 million tons now.
Brazil, the world’s biggest cane grower, may be able to produce as much as 80 million tons a year from bagasse, enough to supply the entire industry, according to Cosan.
“Pelletized sugar cane biomass is a new commodity being created to serve the low-carbon economy,” said Lyra.
The growing demand for biomass pellets comes as nations seek to curb their reliance on coal, which produces about one-third of the world’s electricity, according to the World Resources Institute in Washington, D.C.
Japan’s wood pellet imports more than doubled last year to a record 232,425 tons, according to the nation’s finance ministry. The trade ministry has approved more than 2,000 megawatts of new woody biomass projects since the July 2012 introduction of incentives known as feed-in tariffs, which would require about 40 million cubic meters of wood material a year, almost double Japan’s annual domestic wood production, according to estimates by the Biomass Industrial Society Network.
That will help Japan meet its target of cutting greenhouse gas emissions by 26 percent by 2030, part of its commitments under the global climate agreement completed in Paris in December.
The pellet plant in Sao Paulo state recently began production and will initially produce about 175,000 tons annually. Output may reach 2 million tons a year by 2025 and the joint venture will first target Japan, South Korea and Europe. Sumitomo’s Summit Energy unit is building Japan’s largest biomass power plant in Handa, which will have 75 megawatts of capacity and is expected to go into operation next year.
“As climate change becomes a global concern, the demand of biomass fuel must increase drastically,” Kusano said in an e-mail. Sumitomo will continue to use wood-based pellets, and will increase its use of those made from sugar cane, and Brazil is “one of the best countries to produce bagasse pellets.”

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