UNICA Comments to CARB on Sugarcane Ethanol

8/14/2019 UNICA Comments to CARB on Sugarcane Ethanol

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B ra z i l i an Sug a rc ane I ndu s tr y A s so c i a ti on (UN ICA ) 1 711 N St ree t NW Wash in g t on , DC 20036

Phone +1 (202 ) 506 5299 Fax +1 (202 ) 747 5836 wash ing ton@un ica . com.br www.un ica . com.br/EN

April16,2009

VIAELECTRONICMAILMaryD.NicholsChair,AirResourcesBoardHeadquartersBuilding1001IStreetSacramento,CA95814Reference: ProposedLowCarbonFuelStandardDearMs.Nichols:TheBrazilianSugarcaneIndustryAssociation(UNICA)welcomestheopportunitytoprovidespecificcommentsonCaliforniasproposedLowCarbonFuelStandard(LCFS).Thisletterexpandsonourpreviouscorrespondence1regardinglifecyclecalculationsofsugarcaneethanolandincludesanumberofspecificrecommendationsconcerningthecalculationsofindirectlandusechange.WeaskthatthisletterandallofitsreferencesbefullyconsideredbytheCaliforniaAirResourcesBoard(CARB)andstaffpriortoapprovaloftheregulation.Theletterisstructuredasfollows:(I)IntroductionofUNICAashavingadirectandsignificantinterestinthisrulemaking;

(II)Commentsandrecommendedchangestolifecycleassessmentinputsandassumptions;(III)Commentsandrecommendedchangestolandusechangecalculations;and,(IV)Conclusions.I. INTRODUCTION

TheBrazilianSugarcaneIndustryAssociation(UNICA)istheleadingtradeassociationforthesugarcaneindustryinBrazil,representingnearlytwothirdsofallsugarcaneproductionandprocessinginthecountry.Our125membercompaniesarethetopproducersofsugar,ethanol,renewableelectricityandothersugarcanecoproductsinBrazilsSouthCentralregion,theheartofthesugarcaneindustry.Brazilistheworldslargestsugarcaneproducingcountrywith

overhalfabillionmetrictonsofcaneharvestedyearly.

1SeeourletterdatedFebruary10,2009,availableonlineathttp://www.arb.ca.gov/lists/lcfslifecyclews/65unica_comments_on_greetca_for_sugarcane.pdf.WealsonotethatUNICArepresentativeshavemetwithCARBstaffonvariousoccasions,mostrecentlyonApril2,2009,wherewediscussedmanyofthesepointsaddressedinthisletter.


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UNICA Comments on CaliforniasLowCarbonFuelStandard Page 2

Lastyear,Brazilproducedover31milliontonsofsugarandabout26billionliters(6.8billiongallons)ofethanol.Inaddition,themillsgeneratetheirownpowerfromthesugarcanebiomass.Officialgovernmentdataindicatesthatsugarcanemillsproducedapproximately16,000GWhofelectricity(correspondstoabout3%ofthecountrysannualelectricitydemand)lastyear.

Thankstoourinnovativeuseofethanolintransportationandbiomassforcogeneration,sugarcaneisnowthenumberonesourceofrenewableenergyinBrazil,representing16%ofthecountrystotalenergyneedsaccordingtoofficialgovernmentdata.Ourindustryisexpandingexistingproductionofrenewableplasticsand,withthehelpofinnovativecompaniesinCalifornia2willsoonbeofferingbiobasedhydrocarbonsthatcanreplacecarbonintensivefossilfuels.II. LIFECYCLEANALYSIS

OurinitialassessmentoftheresultsoftheGreenhouseGases(GHG),RegulatedEmissions,andEnergyUseinTransportationmodel,asmodifiedbyCARB,(GREETCA)suggeststhatitwascarefullydone,capturingmanyofthecomplexitiesofouragriculturalandindustrialoperations.ThisisnotsurprisinggiventhatGREETsdesignershaveworkedwithBrazilianlifecycleassessmentscholars(namelyDrs.JoaquimSeabraandIsaiasMacedo)toincorporateandharmonizesomeoftheuniquecharacteristicsofsugarcaneproductionsystemsandprocessingintheoriginalGREETmodel.However,industrypracticescontinuetoevolve,andwebelieveitiscriticalthatCARBsanalysisreflectthecurrentstateoftheBraziliansugarcaneindustryandavoidpenalizingthoseplayerswhohavemadeinvestmentsinmoreefficientandsustainablemethodsofproductionsinceoriginalGREETvalueswereestablished.Insomeinstances,GREETCAsdefaultvaluesarefarfromthenormforcurrentBrazilianagriculturalpractices.Lifecycleanalysis,bydefinition,involvesaconsiderablenumberofvariableswithcomplexrelationships,andtheadditionofindirectlandusechanges(discussedinSectionIII)onlyexacerbatesthesecomplexities.Ithasbeentherecommendationofvariousstakeholdergroups(e.g.GlobalBioenergyPartnership,RoundtableonSustainableBiofuels,etc.)tosimplifytheanalysesbyeliminatingsomeaspectsthatareclearlyofsmallerimpactonthemodelsoutput.3Forexample,mostBrazilianandinternationalexpertsdonotconsiderthevolatileorganiccompoundsandotherpollutantsintheGHGcalculations,butdoincludetheinputsofenergyofequipmentsandconstruction.ItappearstousthatGREETCAdoestheveryopposite.Reachingaconsensusontheseapproacheswouldfacilitateanalysesandcomparisonsgoingforward.For

simplicity,wehavehighlightedonlythediscrepanciesthatleadtofundamentalshiftsinmodelmechanismsofthosethathaveasignificantimpactonthevalueofmodeloutputs.

2Forexample,EmeryvillebasedAmyrisannouncedlastyearapartnershipwithoneofUNICAsmembercompaniestoproducefuelssuchasdieselandjetfuelforcommercialuses.Seehttp://www.amyris.comformoredetails.WeareawareofsimilareffortsbetweenanumberofotherCaliforniabasedcompaniesandsugarcanemillsinBrazil.3SeeSustainablebiofuels:ProspectsandChallenges,TheRoyalSociety,January2008,PolicyDocument01/08.Availableathttp://royalsociety.org/document.asp?id=7366


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Inthissection,ourcommentsaddress:(A)thechangesthatshouldbeappliedacrossanysugarcaneethanolpathwaybasedonstandard,averagepracticestoday;(B)ongoingindustrypracticesimprovementsthatfurtherreducesugarcaneethanolscarbonintensity;(C)thetrendsforfurtherimprovementsbasedonexistingregulationsandchanges;and,(D)technicalandpolicyrecommendationstoCARBssugarcanefuelpathways.

A. ChangesforanyBrazilianSugarcanePathway

ThefollowingthreechangesbasedoncurrentindustrypracticesarerequestedforanyBraziliansugarcanepathwaythatCARBconsidersintheLCFS.1. SugarcaneFarming.ThestrawyieldfiguresareabovethenormforBrazilssugarcane

industry.Insteadof0.19drytonstrawpertonofcane,youshoulduse0.14drytonstrawpertonofcane.4Basedonourexperience,itappearsthatthedefaultvaluesforstrawyieldarepossiblybasedonHawaiian,notBrazilian,sugarcaneaverages.

2. ChemicalInputs.Theenergyvaluesandassociatedemissionsintheproductionoflime

(CaCO3)aresaidtobe0.6gCO2/MJ.However,limeproducedinBrazilhassignificantlylowercarbonintensity.5AscorrectlynotedintheStaffReport,Brazilsbaseloadelectricity(averagemix)iscurrentlyapproximately83%hydroelectric,thoughthemarginalexpansionmixhasbeenmostlynaturalgas.6Withthisinmind,accurateinputvaluesfortheproductionoflimeinBrazilare7kWhelectricity(withgridaveragemix)pertonoflime(notthemixofproductsfoundinsomeproductionplantsoutsideBrazil,includingcalciumoxide)and2.6litersofdieselpertonoflime.Consequently,theGREETCAvaluesshouldbeatmost0.11gCO2/MJintheproduction.WeanticipatethatthisamountwilllikelybeshowntobelowerinthecomingmonthsasmoreindepthresearchinBrazilisunderway.7

3. SugarcaneTransportation.Itappearsthattheenergyrequiredfortransportation,and

consequentlytheemissionsassignedinGREETCA,arehigherthanthoseobtainedbyourowngroundtruthingmeasurementsinBrazil.Webelievethatthediscrepancymaywellresultfromobsoleteassumptionsrelatedtoloadperformanceofthevehiclesduringfeedstocktransportation.GREETCAconsidersonly17tontrucks,whileamajorityofmills

4SeeBiomassPowerGeneration:SugarCaneBagasseandTrasheditedbySuleimanHassuanietal;publishedbyUnitedNationsDevelopmentProgram(UNDP)andSugarcaneTechnologyCenter(CTC)inBrazil,2005.Availableonlineathttp://www.ctcanavieira.com.br/images/stories/Downloads/BRA96G31.PDF5SeeHassuaniopcit.,pg157.Also,seeMacedo,Seabra&SilvainGreenhousegasesemissionsintheproductionanduseofethanolfromsugarcaneinBrazilinBiomassandBioenergy(2008).6Evenwhenconsideringadditionalhydroelectricpowerexpansion,emissionscalculationsshouldincludetransmissionimpacts,directandindirectlandusechanges.NewhydroelectricpowerisonlyavailableinremoteandenvironmentallysensitiveareasofBrazil(e.g.Amazonriverbasin),whichrequiresverylongtransmissionlines(over1,000miles)throughhighcarbon,highbiodiversityforests.Forarecentaccountofthis,seeDoubt,AngerOverBrazilDams;AsWorkBeginsAlongAmazonTributary,ManyQuestionHuman,EnvironmentalCostsinTheWashingtonPostonOctober14,2008.Also,forgeneralbackgroundonBrazilselectricitygridseeU.S.DepartmentofEnergysCountryAnalysisBrief,availableathttp://www.eia.doe.gov/emeu/cabs/Brazil/Full.html7PersonalcorrespondencewithDr.JoaquimSeabra,NationalRenewableEnergyLaboratory,inApril2009.


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alreadyoperatewithtruckswithtwoorthreetimesgreaterloads.8Thespecificenergyconsumptionvaluesfortransportationfromthefieldtomillvaryaccordingtothetypeoftruckusedanddistancetravelled.Themeandistancetravelledforfieldtomillisabout12miles,asGREETCAcorrectlyassumes.Basedonproportionofeachtypeoftruckusedinfieldtomilltransportfromlatestavailabledata(i.e.,2004),weknowthat8%oftruckswere

15tonsinglewagon,25%were28tondoublewagon,and67%were45tontriplewagons.Therefore,basedonthis2004data,wecalculatethattheenergyconsumptionofsugarcanetransportfromfieldtothemilltobeapproximately20.4ml/t.km,orabouttwothirdsoftheconsumptionofasinglewagontruck(i.e.,30.3ml/t.km).Inshort,ourrecommendationwouldbetouse19,122BTU/mmBTUinsteadof25,722BTU/mmBTUinTable3.02.9oftheStaffReport.

B. ImprovedLowCarbonIndustryPractices

Inthelastfewyears,therehavebeensignificantoperationalimprovementsintheBraziliansugarcaneindustry.10Thereareatleastthreeinterrelatedchangesthatsignificantlyimpact

carbonintensitycalculations,namely:

Reductionofpreharvestfieldburning Mechanizationofharvest Increasedcogenerationefficiency

Theimpactofthesepracticesontheindustryscarbonintensityandcurrentincreasingadoptionratesarediscussedbelow.GREETCApresumesallsugarcaneinBrazilisburnedinthefieldpriortobeingmanuallyharvested.11Moreover,themodelassumesallenergyfromsugarcanebiomassisemployedforethanolproduction,withnosurplus/credit(eitherintheformofbagasseusedasfuel,orexcesselectricityproducedinthecogenerationprocess).Theseareincorrectassumptionsthatdonotreflectcurrentindustrypractices.AgrowingshareofBrazilssugarcaneharvest(approximately35%)isnotburnedandismechanicallyharvested.12

8SeeCTCreportentitled,AnnualAgriculturalReportingforHarvests98/99,99/00,00/01,01/02,02/03[authorstranslation]fordetailedbackgroundongroundtruthingintransportpractices.Forabroaderdiscussionoftheseandotherevolvingpractices,seeSugarCanesEnergy,editedbyIsaiasMacedo(2005)aswellasSugarcaneEthanol:ContributionstoClimateChangeMitigationandtheEnvironmenteditedbyPeterZuurbierandJosvandeVooren(2008).9Forfurtherdetail,includingformulasused,seepage23,SectionA3,TransportofSugarcanefromFieldtoMill[authorstranslation],of2004SoPauloStateGovernmentreportentitledNetGreenhouseGasEmissionsintheproductionanduseofethanolinBrazil[authorstranslation].Availableonlineathttp://www.unica.com.br/download.asp?mmdCode=76A95628B5394637BEB3C9C48FB2908410SeeWorldWildlifeFundsAnalysisoftheExpansionofSugarcanesAgroindustrialComplexinBrazil[authorstranslation],availableonlineathttp://www.wwf.org.br/index.cfm?uNewsID=13760.AnEnglishversionofthereportisavailableuponrequest.11See1.3GHGEmissionsfromStrawBurninginFieldonpage22ofGREETCA.12Thoughthetrendisforallsugarcaneistobemechanicallyharvestedandnotallburnedcane,therearemillsthatstillburnthesugarcaneinthefieldbutharvestitmanually.


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Webelieveageneric,singlesugarcanepathwaymaynotaccuratelyincorporatetheseimportantchangesinthewaythesugarcaneindustryhasandcontinuestoevolveinBrazil.Wenotethatmerelycreatingseparatepathwaysoneforusingbagasseforelectricityproductionasacoproductandoneforusingmechanizedproductionofsugarcane,assuggestedinTableES6oftheStaffReportwillmissthemarkasitpresumesthattheseprocessesare

mutuallyexclusive.TherealityonthegroundtodayisthatmechanizationandbagasseforelectricityareoccurringinsignificantlevelsandwillonlyincreaseduetoestablishedregulationsinBrazil.13Themechanicalharvesting(withnosugarcanefieldburning)yieldsahighamountofadditionalbiomass(commonlyreferredtoastrashandincludesleavesandtopsofcanestalksamongotherpartsofthesugarcaneplant).Someofthisadditionalbiomassisbeingrecoveredandtransportedtothemillforprocessingandmuchmoreisexpectedintheverynearfuture.14Thisbiomassrecoveryprocessincreaseselectricityproductionthroughcogeneration(or,inthefuture,additionalethanolproductiononcecellulosicpathwaysarecommerciallyviable).Aschangesinfieldoperationscontinue,energyefficiencyimprovementsatmillsalreadyareaddingtothesurpluselectricityprovidedtothenationalgrid.15In2007,millsprovidedabout11,095GWh,whichcorrespondstoabout22.5kWhpertonofrawsugarcanecrushed.16In2008,theMinistryofEnergyindicatedthatpowergenerationincreasedto15.768GWh.17Thisincreasedisaresultofnotonlyincreasesugarcaneproductionbut,moreimportantly,newmillsupgradingtohighpressuresteamcyclegeneratorsthatproduceatleast70kWhpertonofcanewithbagassealone.18Moreover,moreefficientmillsareenteringintolongtermsupplycontractswithpowerdistributioncompanies.19Forinstance,theamountsalreadycontractedfor2012reach45,180GWh,whichbringspowergenerationto65kWhpertonofcane.20Therewillbeadditionalelectricityincorporatedintothegridby2012,eitherthroughthescheduled

governmentauctionsorviaopenmarketsales,butthosecontractshavenotyetbeensigned.Finally,lookingahead,whentheadditionalsugarcanebiomass(i.e.,trash)isusedforpower

13Onapersonalnote,whentheCARBChairvisitedBrazilinAugust2008,shesawthesechangessugarcanemechanizations,cogeneration,andmuchmorefirsthand.ItissurprisingthenthattheStaffReportfailedtoaccountforthat.14SeeHassuaniopcit.15Seepage10inAngeloGurgel,JohnM.Reilly,andSergeyPaltsev.PotentialLandUseImplicationsofaGlobalBiofuelsIndustryJournalofAgricultural&FoodIndustrialOrganization5.2(2007).Availableat:http://works.bepress.com/angelo_gurgel/116Sugarcaneharvestwas493milliontonsofsugarcaneaccordingtoactualproductiondatacompiledbyUNICAandavailableathttp://www.unica.com.br/dadosCotacao/estatistica/.DataforcurrentpowersalesisprovidedbytheBraziliangovernmentsMinistryofMines&EnergyandNationalElectricityAgency,theautonomousregulator,andcompiledbytheSoPauloCogenerationAssociation(COGENSP).WhileallthedataisinPortuguese,itiseasilyaccessibleonlineathttp://www.aneel.gov.brandhttp://www.cogensp.com.br.17PersonalcorrespondencebetweenUNICAsZilmardeSouzaandMinistryofMines&Energyofficials.18SeeMitigationofGHGemissionsusingsugarcanebioethanolbyIsaiasC.MacedoandJoaquimE.A.SeabrainSugarcaneEthanol:ContributionstoClimateChangeMitigationandtheEnvironmenteditedbyPeterZuurbierandJosvandeVooren(2008).19SeeBraziltoinvest$21.2billionincogenerationinTheEconomistIntelligenceUnit(1December2008).20SeeCOGENSPforadditionaldataandinformation,http://www.cogensp.com.br/cogensp/workshop/2008/Bioeletricidade_ENASE_01102008.pdf


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production,thepowergenerationvalueswillincreasetoabove100kWhpertonofcanewithinthedecade(includingbagasseand40%ofthestrawpreviouslyburnedinthefield).21

C. TrendsinIndustryAdoptionofLowCarbonPractices

Mechanizationandcogenerationarecommonindustrypracticestodaythatweexpecttoberapidlyadoptedacrossallplantsinthecomingyears.22Thesetrendsarebeingdrivenbythefollowingpolicyandmarketpressures:1. PhaseOutofFieldBurning.Undercurrentregulationsandagreementsbetweenthe

environmentalauthoritiesandthesugarcaneindustry,nearlyallthesugarcaneintheStateofSoPaulowillbemechanicallyharvestedby2014.SoPauloaccountsfor60%ofallnationalproductionandalmost100%ofsugarcaneexportstotheUnitedStates.SoPaulostatelawrequiresthatsugarcanefieldburningbephasedoutby2021fromareaswheremechanicalharvestingispossiblewithexistingtechnology(over85%ofexistingsugarcanefields)andby2031inareaswherethismaynotbepossible(e.g.,steepslopes,irregular

topography,etc).23However,UNICAmembercompanieshaveenteredintoanagreement24withtheSoPauloEnvironmentalAgencytomoveupthedeadlinesforsugarcanepreharvestburningto2014and2017,respectively.Theagreementalsodefinesotherimportantactionssuchasconservationprogramsandrestorationprojectsforripariancorridorsassetasidelandpolicies.25

2. IncreasingRestrictionsonBurning.ExistingplantationsthatstillusemanualharvestinginthestateofSoPaulomustobtainstateissuedgovernmentpermitsforthepreharvestsugarcanefieldburning.Environmentalauthoritieshavesetstrictcontingenciesuponwhichthesepermitscanbesuddenlyrevoked(e.g.,ifairhumiditydropsbelow30%,caneburning

restrictionsareappliedandifairhumiditydropsbelow20%,allcaneburningissuspended).26Thisuncertaintyhaspushedmanyproducerstomechanicalharvestingtoeliminateassociatedoperationalrisk.

3. ExpansiononlywithMechanization.Since1986allnewsugarcaneplantationsandmillsare

requiredtosubmitenvironmentalimpactstudiespriortoconstructionandoperationin

21Forfurtherdetails,pleasereviewTechnicalEconomicEvaluationfortheFullUseSugarcaneBiomassinBrazil,[authorstranslationfromPortuguese],JoaquimSeabra,UniversidadeEstadualdeCampinas,July2008.22SeeHassuaniopcit.AlsoseeRabobanksreportPowerStruggle:TheFutureContributionoftheCaneSectortoBrazilsElectricitySupplybyAndyDuffandRodolfHirsch(November2007).23SeeSoPauloStateLaw11.241enactedon19Septemberof2002,whichrequirestheeliminationofsugarcanefieldburning,isavailableathttp://sigam.ambiente.sp.gov.br/Sigam2/Repositorio/24/Documentos/Lei%20Estadual_11241_2002.pdf24SeeProtocoloAgroAmbientaldoSetorSucroalccoleiroPaulista,availableinPortugueseathttp://www.ambiente.sp.gov.br/cana/protocolo.pdf25SeeEnvironmentalSustainabilityofSugarcaneEthanolinBrazilbyWeberAmaraletal.inSugarcaneEthanol:ContributionstoClimateChangeMitigationandtheEnvironmenteditedbyPeterZuurbierandJosvandeVooren(2008).26SeeSoPauloStateEnvironmentalAgencysResolutionSMA38/08ofMay16,2008,availableonlineathttp://sigam.ambiente.sp.gov.br/sigam2/default.aspx?idPagina=123.


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ordertoobtainrequiredpermits.27Morerecently,inordertoreceiveapermittoestablishgreenfieldsugarcanemills,theSoPaulostateenvironmentalauthoritiesrequire100%mechanicalharvesting.Otherstatesareinactivediscussionstofollowtheirlead.Moreover,additionalregulationsimposedbythestategovernmentofSoPauloestablishesenvironmentalzoningforthesugarcaneindustryandprogressivelystricterrequirementsfor

licensingandrenewalofexistingplantationsandmills.28

Nottobeoutdone,thefederalgovernmenthasannouncedthatasimilarrequirementformechanizationwillbeestablishednationwidelaterthisyear.29

4. OneThirdHarvestMechanizationNationwide.Theuncertaintiescausedbytheimpactof

harvestpermits,coupledwiththeaforementionedlegislativeandregulatorychanges,haveledtoaquickerthanexpectedtransitiontoallmechanized,unburnedsugarcaneharvest.AccordingtoBrazilsSugarcaneResearchCenter,30whichworkswithnearlyallsugarcaneproducers,about35%ofallsugarcaneinBrazilisalreadymechanicallyharvested,andnearlyallofthisisnotburnedinthefield.In2008,abouthalfofthesugarcanefieldsinthestateofSaoPauloweremechanicallyharvested.AndotherstatessuchasGois,MatoGrossodoSul,andParanarealsoimplementingmechanicalharvest.Infact,therobustpaceofmechanizationwasrecentlyhighlightedinaJohnDeereearningsreleasethatstates,salesarebeinghelpedby[]risingdemandforsugarcaneharvestingequipment.31

AnyrealisticevaluationofcarbonemissionsfromsugarcanefarminginBrazilmustreflectthestrictpoliciesbeingimplementedandactionalreadytakenthatphaseoutofsugarcaneburning,increaseinmechanicalharvestandcogenerationoutput.Withoutreasonableallocationofthesevariousaspects,GREETCAcannotproviderealisticcarbonintensityvalues.Infact,thedevelopersoftheGREETmodelrecognizedthiswhentheywrote,eliminationofopenfieldburninginsugarcaneplantationswillresultinadditionalGHGemissionreductionsby

sugarcaneethanol.32

27SeeCONAMA(BrazilianNationalCouncilonEnvironment)firstresolutioninJanuary1986,availableathttp://www.antt.gov.br/legislacao/Regulacao/suerg/Res00186.pdf.FormoreinfoonCONAMAsactionregardingsugarcane,seehttp://www.mma.gov.br/port/conama/index.cfm28SeeSoPauloStateEnvironmentalAgencysresolutionSMA088of19December2008aswellasresolutionSMASAA004,of18September2008,availableathttp://www.ambiente.sp.gov.br/contAmbientalLegislacaoAmbiental.ph[2009andhttp://sigam.ambiente.sp.gov.br/sigam2/default.aspx?idPagina=12329SeestatementsbyEnvironmentMinisterCarlosMinconthisaswellastheenvironmentalandeconomiczoningbeingpreparedbyaninterministerialgroupoftheBraziliangovernmentandexpectedtobepubliclyannouncedshortly.Availableonlineathttp://www.mma.gov.br30SeeCentrodeTecnologiaCanavieira(CTC),accessibleonlineathttp://www.ctcanavieira.com.br.31SeeDeere&Companyssecondandthirdquarterof2008earningsreports,availableonlineathttp://www.deere.com/en_US/ir/financialdata/2008/thirdqtr08.html32SeeLifeCycleEnergyUseandGreenhouseGasEmissionImplicationsofBrazilianSugarcaneEthanolSimulatedwiththeGREETModel,byMichaelWangetal.inInternationalSugarJournal(2008),availableonlineathttp://www.transportation.anl.gov/pdfs/AF/529.pdf


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D. Technical&PolicyRecommendations

ThetablebelowsummarizesthetechnicalimplicationsofactualindustryperformancetodayanddetailshoweachfuelpathwaycomponentwillbeaffectedinGREETCAbythesechanges.Alltheproposedchangesarebasedoncurrentproductionprocesses,notprojectionoroptimisticbestcasescenarios.Recognizingtheevolvingnatureofthetechnological

improvements,abroaderstructureforhowtointegratetheseandfutureimprovementsintosugarcanelifecycleanalysisfuelpathwaysisdiscussedattheendofthissection. CARBCOMPONENTS

FORSUGARCANEETHANOL

VALUE

(gCO2/MJ)

PROPOSEDCHANGESTOEXISTING

AND/ORADDITIONALPATHWAYS

A SugarcaneFarming 9.9

(1)StrawYieldshouldbechangedto0.14drytonpertoncane;(2)Caneburningemissionsareatmost2.9gCO2/MJundercurrentconditionsandaredecreasingrapidly;(3)Newpathwaysshouldbecreatedtocreditmechanizedandunburnedharvestbenefits

B AgriculturalChemicals 8.7 Energyvaluesinproductionoflime(CaCO3)shouldbechangedto0.11gCO2/MJbasedonaveragegridmix

C SugarcaneTransportation 2.0Totalenergyintransportfromfieldtoplantshouldbereducedto19,122BTU/mmBTUgiventruckscarryloadslargerthan17tons

D EthanolProduction 1.9Emissionsfromethanolproductionshouldbelowered1.1gCO2/MJsincenotallbagassegoesintoethanolproduction

E EthanolDistribution 4.1 Nomajorchangesrecommendedatthispoint

F CogenerationCredit 0

(1)Creditsofatleast1.8to3.6gCO2/MJ,basedonlowendofemissionsscenarios,shouldbeincluded;(2)Trendsandliteratureconfirmthatcreditswill

increasetooffsetothercomponentemissions;(3)Newsugarcaneethanolpathwayswouldallowforaccuratecreditstobegiven,particularlyforincentivizinglesscarbonintenseprocesses

A. SugarcaneFarming.DependingonvariouspathwaysandassumptionsCARBdecidesto

pursue,thevaluesforsugarcanefarmingwillvary.Consideringthecurrentlevelsofmechanicalharvest(i.e.,35%ofallcane)andarevisedstrawyieldfigure(14%ofthecane),and90%ofactualburningintheburnedarea,totalemissionsfromburningcanetodayshoulddropfrom8.2gCO2/MJtoapproximately2.9gCO2/MJ.Thatshouldbethebaseline

forGREETCApathways.However,asnotedelsewhere,werecommendthatGREETCAeitherconsideranevenlowerfiguretorecognizethatthesugarcaneethanolboundforCaliforniacomesfromareasthatarealreadymechanized,ordevelopseparatepathwaystocapturethiscarbonbenefit.


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B. AgriculturalChemicals.TheproductionofLime(CaCO3)inBrazilisconsiderablylesscarbonintensivethanGREETCAsuggests.Asyounoted,recognizinggridaveragemixandotherfactors,GREETCAvaluesforLimeproductionshouldbe0.11gCO2/MJ.

C. SugarcaneTransportation.Energyrequiredforcroptransportationfromfieldtomillis

exaggeratedinGREETCA,likelybecauseofhigherloadperformanceofthevehiclesusedinBrazil.GREETCAshouldconsidertruckswithtwoorthreetimesgreaterloads,leadingtoarevisedvalueof25,722BTU/mmBTUfieldtoenergyconsumption.

D. EthanolProduction.Asdetailedatlengthabove,GREETCAinaccuratelyassumesthatthe

electricitygeneratedfrombagassecombustionisinsufficienttocreatedasurplus.33Basedonacorrectunderstandingoftheuseofbagasse,thetotalGHGemissionsforethanolproductionshouldbereducedfrom1.9gCO2/MJto1.1gCO2/MJonaveragewithlowerfigureslikelyintheverynearfuture.

E. TransportationandDistribution.WeseenosignificantdiscrepancybetweenGREETCAand

ourownanalysiswithregardstotransportanddistribution.F. MissingCogenerationCredit.Therearenocreditsforexcesscogenerationelectricityfrom

sugarcanebiomass.ThereisaninherentfallacyinanyanalysisofsugarcanethatdoesnottakeintoconsiderationtheincreasingsurplusofcogenerationelectricityproducedatsugarcanemillsinBrazil.ThoughGREETCArecognizesthatsugarcanebagasseisusedtoproducesteamandelectricitytopowertheprocessing,itdoesnotconsiderthatthemillisgeneratinganincreasingsurplusofelectricity,whichissoldintothenationalgriddisplacingcarbonintensesourcesofelectricity.Inotherpathways(e.g.,FarmedTreeCellulosic),suchcreditsaregivenandweseenoreasonablebasistodenyitwithintheGREETCAfor

sugarcane.34Failuretoincorporatetheanticipatedgrowthinelectricitycogenerationnotonlyunderminesoneofthegreatestenvironmentalbenefitsofthesugarcanepathway,butalsocreatesfurtherdiscrepanciesintheyearsaheadthatcoulddiscouragecarbonmitigationbehavior.Basedonthelowendoftherangeofanticipatedelectricitysalestothegrid(i.e.45,180GWhalreadycontractedfor2012),aGHGemissionreductioncreditof1.8to3.6gCO2/MJshouldbegrantedunderGREETCA.

35Lookingahead,sugarcanemillsoperatingwith70kWh/twillachieveemissioncreditsinthe1020gCO2/MJrange,likelycompletelyoffsettinganyemissionsduringproduction,processing,andtransportation.In

33Torecap,mechanicalharvestyieldsasignificantincreaseintheamountofbiomass(commonlyreferredtoasstrawortrash)thatcomestothemill,insteadofbeingburnedinfield.Thisadditionalbiomassisnowaddedtotheexistingbagasse(canebiomassremainingafterjuiceextraction)togeneratesteamandelectricityforthemillsprocessesaswellassaleofsurpluselectricitytothenationalgrid.Finally,millshavebeenreplacingolder,lowpressureboilerswithhigherpressureboilers,thereforeobtaininggreaterefficienciesinpowergeneration.Alladditionalelectricitygenerationisleadingtoagrowingroleofcogeneration.34Anydenialtoacceptthesurplusenergycogeneratedwouldrequireattheveryleastareallocationoftheemissionstopowertheethanolproduction,furtherreducingsugarcanesethanoloverallemission.35TherangedependsonthebaselineemissionsscenariosforBrazilianelectricity.ItmustbenotedthatundertherecentlyapprovedEuropeanCommissionDirective,cogeneratedelectricityfromsugarcanewasgivensimilarcarboncreditsforethanol.Seehttp://ec.europa.eu/energy/strategies/2008/2008_01_climate_change_en.htm.


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fact,astheOrganizationforEconomicCooperationandDevelopment(OECD)recentlypointedoutinalengthycomparativeanalysisofbiofuels,sugarcaneethanolmaysoonhavenegativeemissionsonalifecyclebasis.36

Now,turningtoourpolicyrecommendations,UNICArecommendsthatCARBconsidereitherof

thefollowingadjustmentstotheGREETCAfuelpathwaysforsugarcaneinordertoreflectthevariationsinagriculturalandindustrialoperationsinBrazilssugarcaneindustry,aswellastoaccuratelycreditcarbonreducingbehavior:

OptionOne.GREETCAcouldassumeatleast70%ofthesugarcaneusedforethanoltobemechanicallyharvestedandnotburnedinthefield.37Asexplainedabove,themainsugarcaneproducingareaofBrazilreached50%mechanizationinthelastharvestandisrequiredtohaveachievedatleast70%mechanizationby2010.WhenconsideringthewholeofBrazil,about35%ofallsugarcaneisharvestedmechanically.Thehigherfigure(from35%to70%proposedinthisoption)moreaccuratelyrepresentstheactualsourceofthesugarcaneethanolthatmakesittotheUnitedStates;or,

OptionTwo.Alternativepathways38couldbedevelopedformechanicallyharvested,nonburnedsugarcaneethanolandtheadoptionofmoreefficientcogenerationtechnologiesdescribedabove.Whilemorecomplex,suchamethodwouldhavethebenefitofnotonlyaccuratelyportrayingcurrentspecificpracticesbutalsoproactivelyencouraginglowercarbonintensitysugarcanebiofuelsproduction,whichistheunderlyingpublicpolicygoaloftheLCFS.Inseparatepathways,creditwouldbegiventomillsfornonburningofsugarcaneinthefield(i.e.,avoidedemissions),aswellasthecogenerationsurpluspowerdisplacingcarbonintensefuelssuchasnaturalgasorheavyfueloilusedinmarginalpowergenerationinBrazil.

Regardlessofthefinalapproachonadditionalpathways,westronglyurgethatCARBadoptverifiablemechanismthatensuresbestcarbonmitigatingpracticesarerewardedonatimelymannersoastoensurequickeradoption.MerelyupdatingtheGREETCAmodelinhindsight(threeyearsashasbeensuggestedinpublichearings)willnotbeenoughtoreachtheobjectivesofCaliforniasforwardlookingclimatechangepolicy.

36Ethanolfromsugarcaneisthepathwaywherethemostconsistentresultswerefound.Allstudiesagreeonthefactthatethanolfromsugarcanecanallowgreenhousegasemissionreductionofover70%comparedtoconventionalgasoline.Thelargemajorityofreviewedstudiesconvergeonanaverageimprovementaround85%.Highervalues(alsobeyond100%)arepossibleduetocreditsforcoproducts(includingelectricity)inthesugarcaneindustry.ThisreflectstherecenttrendinBrazilianindustrytowardsmoreintegratedconceptscombiningtheproductionofethanolwithothernonenergyproductsandsellingsurpluselectricitytothegrid.Seepage44ofEconomicAssessmentofBiofuelSupportPoliciesbyOrganizationforEconomicCooperationandDevelopment(2008),availableonlineathttp://www.oecd.org/.37AnotherwaytoimplementOptionOnewouldbetosetthepercentageasavariablenumbersinceitcanbeeasilyobtainedonanannualbasisfrompublicandofficialsourcesinBrazil.UNICAwouldbepleasetoworkwithCARBtoestablishthismechanism.38Asnotedabove,webelievethatthetwopathwaysproposedinTableES6oftheStaffReportfailtocapturetherealityofsugarcaneethanolfarmingproduction.Mechanizedharvestwithorwithoutburningandcogenerationcannotbeseparated,astheyareoftenpartofthesamepathway.WewouldbepleasedtoreviewsugarcanefarmingandethanolproductionprocesseswiththeCARBstaff.


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III. INDIRECTLANDUSECHANGE39

Inthissection,UNICApresentsourassessmentoftheStaffReportcalculationsonsugarcaneslandusechangeimpact,whichreliedontheGlobalTradeAnalysisProject(GTAP)fromPurdueUniversity.

Weechothevariouscommentsfromstakeholdersparticularlytheletterby111Ph.D.Scientistsstatingthatthescienceusedindeterminingthesemarketmediated,indirectimpactsisquitelimitedandhighlyuncertain.Inaddition,theselectiveenforcementofindirectlanduseimpactsforbiofuelsoverotherfuelsincludedintheLCFSviolatesthemostbasicprinciplesofregulatoryfairness.Afewlinesmadeintheaforementionedletterbearrepeating:

Weareonlyintheveryearlystagesofassessingandunderstandingtheindirect,marketmediatedeffectsofdifferentfuels.Indirecteffectshaveneverbeenenforcedagainstanyproductintheworld.Californiashouldnotbesettingawidereachingcarbonregulationbasedononesetofassumptionswithclearomissionsrelevanttotherealworld.[...]This

proposalcreatesanasymmetryorbiasinaregulationdesignedtocreatealevelplayingfield.Itviolatesthefundamentalpresumptionthatallfuelsinaperformancebasedstandardshouldbejudgedthesameway(i.e.identicalLCAboundaries).Enforcingdifferentcompliancemetricsagainstdifferentfuelsistheequivalentofpickingwinnersandlosers,whichisindirectconflictwiththeambitionoftheLCFS.40

Moreover,giventhetighttimelineforCARBimplementationoftheLCFS,aswellasthecomplexityanduncertaintyassociatedwithsuchmodelingexercises,41wewouldliketoexpressourconcernabouttheaccuracyofmodeldataassumptions,methodology,andotherkeyfactorsunderlyingtheGTAPrunsmadebyCARB.Weweregiven45daystoreviewandcommentonworkthatCARBtookmonthstodevelop.BytheCARBstaffsownadmissiontheyhaverushedtheprocessandcalculations.Ourexperiencewithothersimilarmodels(e.g.,FoodandAgriculturalPolicyResearchInstitute(FAPRI)model)suggestscarefulanalysisandadeliberativeprocessthatconsidersallfactors(i.e.,landusedynamicsinBrazilinourcase)isfundamentaltominimizeinaccuraciesinmodeloutputs.

39UNICAwishestoacknowledgetheinvaluableinputofvariousscholarsinthepreparationofthissection.AmongthemareProf.AngeloCostaGurgel(UniversityofSoPaulosCollegeofEconomics,BusinessAdministration,andAccountingFEARP/USP),AndrMeloniNassar(PresidentoftheBrazilianInstituteforInternationalTradeNegotiationsICONE),MarceloMoreira(ICONE),LauraBarcellosAntoniazzi(ICONE),LeilaHarfuch(ICONE),LucianeChiodi(ICONE),andProf.WeberdoAmaral(USP).Withtheirassistance,andthatofmanyotherscholars,ourcommentswouldnothavebeenpossible.40Seehttp://www.arb.ca.gov/lists/lcfslifecyclews/74phd_lcfs_final_feb_2009.pdf41ArecentworkshoporganizedbyEnvironmentalDefenseFund(EDF)andtheEnergyBiosciencesInstitute(EBI)withover120expertsnotedthecomplexuncertaintiesassociatedwithmodelinglifecyclegreenhousegases.Thereportssummarystates,TherapidlyevolvingscienceandpolicyofGHGreductionsinvolvesadizzyingarrayofsectorsandtechnologiesthatneedtobemanaged.FuelslifecyclemodelingisadynamicandrapidlyevolvingfieldthatisstrugglingtonarrowthemanyuncertaintiesregardingthedirectandindirectGHGimpactsofarapidlygrowingvarietyofbiomassfeedstocks,productionmethods,andconversionprocesses.Indeed,littleisknownabouttheGHGimpactofawiderangeofcroppingsystemsforbiomassthatmightbeemployedtoproducelowcarbonfuels.Seepagethreeofreportsummary,MeasuringandModelingtheLifecycleGreenhouseGasImpactsofTransportationFuels,EDF&EBIsUniversityofCaliforniaBerkeley(July2008),availableonlineathttp://www.edf.org/fuels_modeling_workshop.


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RecognizingthatCARBappearsdeterminedtopushthisregulationdespitewidespreadconcernsabouttheaccuracyofitsILUCcalculations,weareseekingtoaddresswhatweseeasthemostsignificantmiscalculationsofCARBsILUCanalysis.Thissectionisdividedintothreeparts:(A)indirectlandusechange,(B)carbonintensity

calculations,and(C)proposedscenarios.First,weprovidecommentstoimprovetheGTAPanalysis,especiallywithrespecttoachievingmoreaaccuraterepresentationofBrazilianagricultureinthemodel.Then,wepresentalternativemethodologiestocalculatecarbonemissionsaswellasemissionsfactorsfromBrazilthatwebelieveshouldbeadoptedbyARB.Finally,webringtogethertheresultsintermsoflandusechangeandcarbonintensityaccordingtothealternativespresentedinthissection.

A. IndirectLandUseChanges

Webelievethatanyattempttoincludetheimpactofmarketmediated,indirectlandusechange(ILUC)inemissionscalculationsmusttakeintoaccounttheinterplayofeconomic,

institutional,technological,culturalanddemographicvariablesinherentwithlandusechange.42

1. SystematicSensitivityAnalysisTheILUCeffectsmeasuredbyCARBintermsofcarbonintensity(gCO2e/MJ)wereestimatedusingaComputableGeneralEquilibrium(CGE)model,theGTAPmodel,wellknownandrecognizedasastateoftheartmodelinthisfield.CGEmodelsareusuallydesignedtocomparealternativescenariosanditseconomicresults,mostlyintermsofwelfarechanges.Inthisway,theyaresuitabletoaddresseconomicimpactsfromexogenouschangesinsomesimplifiedartificialeconomy,builtasalabforsimulations.CGEmodelsgivethedirection(sign)ofchangesfromthesimulatedscenarios,identifythebestandworstcasesandrankingoftheresults,giveanideaaboutthemagnitudeorrelativescaleoftheimpacts,andallowtotrack(orexplain)theeconomicreasonsleadingtotheresults.Therefore,modelersavoidputtingtoomuchweightorcredenceontheprecisenumbersproduced.Thechoiceofanintervalofresultsisawidelyrecognizedmethodtousethemodelresults,andcentralnumbersareusedmerelytosimplifytheexplanationaboutresultsandconclusionsfromthemodelingexercise.Giventheuncertaintyorevenlackofscientificknowledgeaboutmany

parametersusedinthemodel,anextensivesensitivityanalysisisalwaysrecommendedwhenusingnumbersfromCGEmodelstopolicyimplementation,asdiscussedandappliedinMorgan

42B.L.TurnerII,EricF.Lambin,AnetteReenberg,Theemergenceoflandchangescienceforglobalenvironmentalchangeandsustainability,PNASvol.104,no.52(Dec.26,2007).


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andHenrion(1990)43,Websteretal.(2003)44,DeVuystandPreckel(1997)45andPearsonandArndt(2000)46.Inthisway,webelievethatthesinglecarbonintensitynumbergeneratedfromtheGTAPimplementationofonlyfivescenarios(forsugarcaneethanol)orsevenscenarios(forcorn

ethanol)isscientificallyweakandalegallyquestionablemethodtorepresentthecomplexityandbroadpossiblepathwaysrelatedtolandusechangesfromanykindofbiofuelexpansion.WestronglyurgeCARBthatpriortoimplementationofthisregulationaSystematic

SensitivityAnalysis47shouldbeappliedontheanalysis,consideringthepossiblerangeand

probabilitydistributionfunctionsofkeyparameters.Givenourteamofscholarsandresearchers,andalsoourpartnershipwithBrazilianresearchinstitutions,weareabletooffersomehelptoCARBinsettingupandimplementing,orevenperforming,suchsystematicsensitivityanalysisforsugarcaneethanol.

2.

SizeoftheShockCGEmodelsareusedtoperformanalysisofpolicyinstruments(e.g.,taxesandsubsidies),technologicalchanges,andchangesinresourcessupply.ItisuncommontofindintheCGEliteraturedemandshocks,asimplementedbyCARB.Thatsaid,wewereevenmoresurprisedtoseethatCARBchosesuchlargedemandshocks.Thebasisforthechoiceofthesizeofthesugarcaneethanolshock(2billionsofgallons)isnotexplainedintheStaffReportorduringpublichearings.SuchanexaggeratedshockintermsofthepotentialofproductionbeingexportedfromBrazilinthenextdecadeisnotjustifiedbyrecenttrendsandavailableanalysis.TotalBrazilianethanolexportshaveexpandedbylessthan

850milliongallonsfrom2001to2007,accordingtotheMinistryofMinesandEnergy.48Ashockof2billiongallonsrepresentsaboutanincreaseinethanoldemandfromBrazilofabout55percent!Asevidencethatthesizeoftheshockfundamentallyaltersresults,whenwerantheGTAPmodelusedbyCARBwithaslightlysmallershock(increaseethanoldemandfromBrazilin1.5billionofgallons),weobservedsmallerlandusechangesandsmallerILUCcarbonintensitynumbers(Table1).

43Morgan,M.G.,andM.Henrion,1990.Uncertainty:aguidetodealingwithuncertaintyinquantitativeriskandpolicyanalysis.CambridgeUniversityPress,Cambridge.44WebsterM.,C.Forest,J.Reilly,M.Babiker,D.Kicklighter,M.Mayer,R.Prinn,M.Sarofim,A.Sokolov,P.Stone,C.Wang,2003.ClimaticChange61(3):295320.45DeVuyst,E.A.,P.V.Preckel,1997.Sensitivityanalysisrevisited:Aquadraturebasedapproach.JournalofPolicyModeling19(2):175185.46Pearson,K.,C.Arndt,2000.ImplementingSystematicSensitivityAnalysisUsingGEMPACK.GTAPTechinicalpaper3,CenterforGlobalTradeAnalysis,PurdueUniversity,Indiana.47AdditionalinformationonSystematicSensitivityAnalysiscanbeobtainedfromImplementingSystematicSensitivityAnalysisUsingGEMPACK(2000)byPearson,KenandChanningArndt,GTAPTechnicalPaperNo.03.48OfficialdataforethanolsupplyanddemandbalanceinBrazilisavailableonlineathttp://www.mme.gov.br/site/menu/select_main_menu_item.do?channelId=1432&pageId=17036.


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Table1:GTAPmodelingresultsforsugarcaneethanollandusechangewithalternativeshocksizes(ScenarioA)

Shocksize 2billionsgallons 1.5billiongallons

Totallandconverted(millionha) 1.28 0.92Forestland(millionha) 0.43 0.31Pastureland(millionha) 0.85 0.61

Brazillandconverted(millionha) 0.89 0.64Brazilforestland(millionha) 0.30 0.22Brazilpastureland(millionha) 0.59 0.42ILUCcarbonintensity(gCO2e/MJ) 56.7 50.6Sources:CARBdocumentationandauthorscalculation(GTAPoutputsavailableathttp://www.iconebrasil.org.br/).Note:CO2emissionswerecalculatedusingemissionfactorsfromthearrayEMISSCTR.Theamountofforestryandpasturelanddisplacedwasmultipliedbytheemissionfactorsofthementionedarray.Forestgainedandcropswerenottakenintoconsideration.

Inshort,asthesizeoftheshockreallymattersintermsofILUC,westronglyrecommendthatCARBuseamorerealisticprojectionoftheincreaseinthedemandofsugarcaneethanolfrom

Brazil,takingintoconsiderationaspectssuchasthetotalproductioncapacityinplaceandtheinvestmentstoexpandtheproduction.And,asnotedabove,CARBshouldperform

systematicsensitivityanalysisofthealternativeshocksizes,giventheuncertaintyaboutthe

incrementalcapacityinthenextdecades.WeagaincanhelptoprojecttheincreaseinproductioncapacityinBrazilandalsotoimplementtheshocksinGTAP.

3. CattleIntensificationTheusefulnessanddesirabilityofaneconomicmodelresidesinitscapacityofrepresentingrealityusingthesimplestpossiblerepresentationofthephenomenaunderstudy(approach,theory,equations,relationships).Thereisstrongevidenceofcattleintensificationoccurringthe

sametimeastheexpansionofsugarcane,oilseeds,coarsegrains,andcommercialforeststakingplaceinBrazilsince2001.Inthelastdecadeorso,comparingdatafromthe1996and2006AgriculturalCensusespresentedinTable2,itcanbeobservedthatpasturelandhasdecreasedandcattleherdhaveincreased.Followingthesametrend,beefproductionandexportshavealsoincreaseddespitethereductioninpastureland.Also,arecentstudyhasshownthatmostofthesugarcaneexpansionisoccurringonoldpastureland,althoughthecropisalsoexpandingoveragricultureland(Nassaretal.,2008)49.

49Nassar,A.M.,Rudorff,B.F.T.,Antoniazzi,L.B.,Aguiar,D.A.,Bacchi,M.R.P.andAdami,M,2008.ProspectsoftheSugarcaneExpansioninBrazil:ImpactsonDirectandIndirectLandUseChanges.In:SugarcaneEthanol:ContributionstoClimateChangeMitigationandtheEnvironment.Zuurbier,P,Vooren,J(eds).Wageningen:WageningenAcademicPublishers.


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Table2:BrazilianAgricultureCensus:PastureArea,CattleHerdandPastureProductivitybyRegions

1996 2006

PastureArea CattleHerd StockingRate PastureArea CattleHerd StockingRate

(ha) (heads) (heads/ha) (ha) (heads) (heads/ha)

Brazil 177,700,469 153,058,275 0.86 172,333,073 169,900,049 0.99

RegionNorth 24,386,622 17,276,621 0.71 32,630,532 31,233,724 0.96

RegionNortheast 32,076,340 22,841,728 0.71 32,648,537 26,033,105 0.80

RegionSoutheast 37,777,049 35,953,897 0.95 32,071,529 34,994,252 1.09

RegionSouth 20,696,546 26,219,533 1.27 18,145,573 23,888,591 1.32

RegionCenterWest 62,763,912 50,766,496 0.81 56,836,902 53,750,377 0.95

Source:IBGE,AgriculturalCensus,availableathttp://www.sidra.ibge.gov.br/bda/pesquisas/ca/default.asp?o=2&i=P(Preliminarydatafor2006)

AscanbeseeninTable2,thehighernumberofanimalsperunitofland(stockingrateindex)demonstratesthatpastureyieldsarebeingimproved.Higherstockingrateandhigherbeefproductionsuggeststhatpastureyieldstendtogrowwhenmorepasturelandisreleasedfor

cropsandotheruses,whichmeansthatpastureyieldsrespondstronglytocattlepricechanges.ThelowlevelofpastureintensificationreinforcesargumentthatthereisstillconsiderableroomforevengreaterimprovementsonpastureintensificationinBrazil.Inotherwords,thisdatasuggeststhatpastureintensificationiselastictoprice.Anempiricalanalysisofthepastureyield(measuredbythestockingrateindex)responsetopricesispresentedinTable3.AccordingtoICONEscalculations,pastureyieldpriceelasticityinBrazilis0.6,muchhigherthanthecropyieldelasticitiesusedintheGTAPscenariospresentedintheCARBStaffReport.Table3:ResultforPastureYieldwithrespecttoRealPrices,inlogarithm

50

Coefficient(1)

tStatistic Probability

RealPrice(2) 0.60 8.83 0.000000

DummyforHighYield(3) 0.64 12.62 0.000000

Constant 2.26 9.46 0.000000

Rsquared 0.92

AdjustedRsquared 0.90

NumberofObservations 28

Notes:(1)UsingPesquisaPecuariaMunicipal(PPM)forcattleherdandpastureareafromAgriculturalCensus(1996and2006),bothfromIBGE.;(2)Realpricesfor1996and2006for14BrazilianRegions.(3)Dummyvariableforregionsthathadyieldhigherthanonein1996.Source:ICONE,underlyingdataandregressionsavailableathttp://www.iconebrasil.org.broruponrequest.

SuchphenomenahighresponseofpastureyieldstopriceschangesmustbecapturedbytheGTAPmodel.However,theresultsfromGTAPaboutlandusechangesduetotheincreaseinsugarcaneethanolproductionshowastrongdecreaseinpasturelandassociatedtostrongreductioninforestland.GivenourknowledgeaboutthedynamicsofagricultureinBrazil,CARBresultssuggestthatthepasturelandisbeingreplacedbysugarcaneandothercrops,andthatpasturelandisadvancingontoforestareas.ThisanomalyinCARBresultsmaybeduetothesmallelasticityofcropyieldswithrespecttoareaexpansion,whichrequiressignificantlymore50WecanprovideanyinformationregardingtheresultspresentedinTable3forCARB,aswellasthedataandtheregressionsusedtoestimatetheparameters.


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pastureareatoplaceanewsugarcaneplantationorrecoverthedisplacedproductionofothercropsbysugarcane.Wewilladdressourconcernsaboutthiselasticitybelow,butfirstwebelieveCARBmustaddresshowlivestockproductionincorporatedintothemodel.Anothermodelingissuethatisgeneratingverylowintensificationisrelatedtothe

representationofthelivestockproductiontechnologyinthemodel.Oneaspectofsuchtechnologyisthepossibilityofimperfectsubstitutionamongseveralprimaryfactorsandinputs,asdescribedinBiruretal.(2008).51Themodelassumesalowelasticityofsubstitution(0.2)amongallprimaryfactors(naturalresources,land,labor,andacapitalenergycompositefactor)inallregionsofthemodel.IfwelookattherealityonthegroundandcomparethetechnologyoflivestockproductioninBrazilandtheUnitedStates,wewillobserveamuchmoreintensifiedprocessinUnitedStatesandaveryextensiveuseoflandinBrazil.Intermsofmodeling,itwouldimplysomewhathigherelasticityofsubstitutionamongprimaryfactorsinBrazilthaninUnitedStates.Asanexperiment,inTable4,wehaveimplementedtheGTAPmodelusedbyCARBwithahighervalue(0.4)forthiselasticityinBrazilthaninotherregions(0.2),andhaveseensubstantialdifferencesintheresults,withhigheruseandintensificationofpasturelandinBrazilandlessdeforestation.The0.6pastureyieldelasticitypresentedbeforereinforcestheargumentthattheelasticityofsubstitutionforpastureshouldbehigherinBrazil.Table4:GTAPmodelingresultsforsugarcaneethanollandusechangewithalternativeelasticityofsubstitution

amongprimaryfactorsinlivestockproduction,ScenarioA

ElasticityofSubstitutionamongprimary

factorsinlivestockproduction0.2everywhere

0.2everywhere

but0.4inBrazil

Totallandconverted(millionha) 1.28 1.33

Forestland(millionha) 0.43 0.20

Pastureland(millionha) 0.85 1.13

Brazillandconverted(millionha) 0.89 0.95

Brazilforestland(millionha) 0.30 0.08Brazilpastureland(millionha) 0.59 0.88

ILUCcarbonintensity(gCO2e/MJ) 56.7 39.3

Note:CO2emissionswerecalculatedusingemissionfactorsfromthearrayEMISSCTR.Theamountofforestryandpasturelanddisplacedwasmultipliedbytheemissionfactorsofthementionedarray.Forestgainedandcropswerenottakenintoconsideration.Sources:CARBdocumentationandauthorscalculation(GTAPoutputsavailableathttp://www.iconebrasil.org.br/).

Insum,westronglybelievethattheGTAPmodelusedbyCARBshouldtakeintoconsiderationthehigherelasticitiesofsubstitutionamongprimaryfactorsinthelivestockproductionsector

inBrazil,wherelivestockintensificationispotentiallyhighandisoccurringinpractice.Wewill

beworkingonestimatingsuchelasticityandimplementingtheGTAPmodelwithsuchhigherelasticity.

51Birur,D.K.,T.W.HertelandW.E.Tyner,2008.ImpactofBiofuelProductiononWorldAgriculturalMarkets:AComputableGeneralEquilibriumAnalysis.GTAPWorkingPaperNo.53,CenterforGlobalTradeAnalysis.PurdueUniversity,WestLafayette,IN.Availableat:https://www.gtap.agecon.purdue.edu/resources/download/4034.pdf


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4. ElasticitiesandScenariosAsourexpertsdiscussedwithCARBstaffrecently,thecombinationofdifferentelasticitiesinalternativescenarioshasconcernedusgreatly.WhenwecompareCARBscenariosacrossalternativebiofuelsfeedstock,itisclearthatthechoiceofelasticitieswasinconsistent,ifnot

haphazard,aswasalsothenumberofscenariosimplemented.Asexample,thecentralvalueoftheelasticityofcropyieldwas0.4inthecaseofthesevencornscenarios,butitwasonly0.25forallsugarcaneethanolandsoybeanbiodieselscenarios.Asthiselasticityisappliedtoallcrops,thereislittlejustificationtoapplyinghighernumbersincornscenariosthaninotherfeedstockscenarios.CARBstaffhasexplainedtousthattheunevenapplicationofelasticitieswasnotonpurposebutaresultofhavingspenttoomuchtimetryingvariouscornscenarios.Asaconsequence,thestaffinformedus,themodelersgeneratedmorerunsandwereabletofigureoutthatthe0.25forcropyieldelasticitywasabettervaluetoassume.Fromamodelingtestingandcalibrationperspective,itiseasytounderstandthepressureandvariousruns.Nevertheless,thereremainsnocredibleexplanationastowhythebetterchoiceaboutelasticitieswasnotappliedinthesamewayacrossalternativebiofuelsfeedstockscenarios.Unevenapplicationofthemodelparametersyieldsresultsthatshouldnotbeused.Asaresult,westronglyurgeCARBstaffandexpertstorunthesamenumberofscenariosandsamecombinationofelasticitiesforallbiomasssourcestobeabletoachieveafairandbalancedprocess.

5. ElasticityofCropYieldswithRespecttoAreaExpansion

CropYieldswithRespecttoAreaExpansionexpressestheyieldsthatwillberealizedfromnewlyconvertedlandsrelativetoyieldsonacreagepreviouslydevotedtothatcrop.OnpageIV20oftheStaffReport,itisassertedthat:becausealmostallofthelandthatiswellsuitedtocropproductionhasalreadybeenconvertedtoagriculturaluses,yieldsonnewlyconvertedlandsarealmostalwayslowerthancorrespondingyieldsonexistingcroplands.ThefactthatalmostallofthelandwellsuitedtocropproductionhasalreadybeenconvertedcanbetrueintheUnitedStatesandtheEuropeanUnion.But,inmanyotherpartsoftheworld,asinLatinAmerica,andparticularlyBrazil,thereisconsiderable,potentiallywellsuitedagriculturalareaforcropexpansion.Somestudieshaveshownthispotentialintermsoflandavailabletoagricultureorbiomassproduction,asChouetal.(1977)52,EdmondsandReilly(1985)53andBotetal.(2000)54showus.Suchresearchsuggeststhattheelasticityofcropyieldswithrespecttoareaexpansionispotentiallylargerinthoseregionswithlargerlandavailability.

52Chou,M.,D.P.HarmonJr.,H.Kahn,andS.H.Wittwer,1977.WorldFoodProspectsandAgriculturalPotential.NewYork:Praeger,316p.53Edmonds,J.A.,andJ.Reilly,1985.GlobalEnergy:AssessingtheFuture.NewYork:OxfordUniversityPress.54Bot,A.J.,F.O.NachtergaeleandA.Young,2000.LandResourcePotentialandConstraintsatRegionalandCountryLevels.Rome:FoodandAgricultureOrganizationoftheUnitedNations,WorldSoilResourcesReport90.


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Moreimportantly,theGTAPmodelishighlysensitivetothevalueofthiselasticitysincetheindirectlandusechangecarbonintensitycanchangemorethan75%whenthiselasticityvariesfrom0.25to0.75.WenotethatCARBstaffchosevaluesrangingfrom0.5to0.75(exceptonescenarioforsugarcaneethanolinwhich0.8wasusedforBrazil)tobeusedintheGTAPmodel

runsthoughthereisnodetailedexplanationastothebasisofsuchdecision.Infact,fromamicroeconomicperspective,wewouldhardlyexpectinvestmentsinnewareasiftheyieldofthenewcropwouldbehalfofthetraditionalarea,asassumedwithanelasticityof0.5proposedbyCARBstaff.EmpiricaldatainBrazilshowsthatthecropyieldelasticitywithrespecttoareaexpansionshouldbearound0.90.95,ratherthanintherangeof0.5to0.75.TheanalysisoftheempiricaldataispresentedinTable5,butfirstweoutlinethestepsthatwereusedtopreparethedata:

a. Consideringthetimehorizonfrom2001to2007,the558IBGEmicroregionsweredividedinnewandtraditionalareasaccordingtothegrowthinplantedareaforcropsandallocatedareaforpastures.The10percentlargestgrowthmicroregionswereconsiderednewareasandtheremainingmicroregionsthetraditionalareas.

b. Yieldsfornewandtraditionalareasarecomparedtothecorrespondingyear.Forexample,in2007thesugarcaneyieldinthenewareaswas83.4tonsperhectare,whileinthetraditionalareasitwas64.8tonsperhectare.

c. Themeasurethatrepresentstheyieldelasticitywithrespecttotheareaexpansionis

presentedinthelastcolumnofTable5(20072001).Thevaluesinthiscolumnaretheratiooftherelationbetween2007and2001yields(newandtraditional).Intuitively,in

thecaseofsugarcane,thisvaluesuggeststhatahectareinthenewareaofthecrophasayieldthatis95percentoftheyieldinthetraditionalarea,iftheincrementwouldhavetakenplaceinthetraditionalarea.

Table5:YieldElasticitywithRespecttoAreaExpansion:EstimatesforBrazil

(tonsperhaforcropsandanimalsperhaforpasture)

2001 2007 20072001

Activities(1)

Yield

New

Areas

Yield

Traditional

Areas

New/

Traditional

Areas

Yield

New

Areas

Yield

Traditional

Areas

New/

Traditional

Areas

New

Area/Traditional

Area(2)

Sugarcane 76.68 56.86 1.35 83.38 64.78 1.29 0.95

Soybean 2.77 2.59 1.07 2.84 2.75 1.03 0.97

Corn 3.46 3.17 1.09 3.70 3.74 0.99 0.91

Rice 3.42 3.09 0.91 3.80 3.79 1.00 1.11

Pasture(3) 0.76 0.95 0.81 1.34 1.12 1.20 1.48

Sources:(1)Considering10%ofthe558IBGEmicroregionsthathadthelargestareaincreasebetween2001and2007(basedonPesquisaAgricolaMunicipalIBGEdata);(2)Yieldrelationfornewareaswithrespecttotraditionalonesduetoexpansionbetween2001and2007.Thismeasureistheequivalentofthecropyieldelasticitywithrespecttoareaexpansion;(3)Pastureyieldistheratiobetweencattleherd(basedonPesquisaPecuariaMunicipalIBGEdata)andpasturearea(basedonBrazilsAgriculturalCensus)fortheyears1996and2006.Theexpansionwascalculatedbasedontheincreaseoncattleherdfrom2001to2006.


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Wenotethatalthoughthereisnopastureyieldelasticitywithrespecttoareaexpansion,wealsocalculatedthatmeasuretoshowthatnewareasofpasture,asitisthecaseforcrops,producethesameasthetraditionalareas.

Inshort,basedonthisanalysis,werecommendthatCARBrunallscenariosforBraziliansugarcaneethanolusing0.90cropyieldelasticitywithrespecttoareaexpansion,inorderto

avoidoverestimationsoflandconversionforBrazil.

6. Adjustmentsforsugarcaneyield

TheStaffReportsuggeststhattheGTAPresultsonsugarcanelandusechangewereupdatedtoreflectthe8.2percentincreaseinBraziliansugarcaneyieldsobservedbetween2001andtheaverageforthe20062008timeperiod.However,thephysicalyieldofthesugarcaneplantisnottheonlysourceofyieldgainsintheproductionofsugarcaneethanol.TheyieldgaininTotalRecoverableSugars(TRS)shouldalsobetakenintoaccount.AccordingtotheMinistryofAgriculture,LivestockandSupply(2007)55,theTRSpertonofsugarcanewas138.7in2001and149.47in2006anincreaseof8.3percent.(Wenotethatthisresultwouldbeevenhigherifofficialdatafor2007and2008werealreadyavailable.)TRSisameasureoftheenergycontentofthesugarcane.56HigherTRSareobtainedovertimeduetodifferentimprovementsinsugarcaneproduction,suchasbettervarietiesandharvestingperiod.TRSisconvertedintosugarorethanolusingtechnicalfactors.AccordingtoCONAB,57thefollowingfactorsareusedforethanol:

1literofanhydrousethanol 1.7651kgofTRS1literofhydrousethanol 1.6913kgofTRS

1kgofsugar 1.0495kgofTRSUsingthosefactors,theaverageethanolproductionperhectarefor2001was5,457liters[(69.44x138.7)/1.7651]whilefor20062008theaverageincreasedto6,365liters[(75.13x149.47)/1.7651].Inotherwords,includingtheyieldgainsinTRS,theethanolyieldhasincreasedby16.6percent(6,362/5,457=1.166).Consequently,werecommendCARBadjustsugarcanelandusechangetoreflectthetotalgainsinyield,whichis16.6percent,ratherthan8.2percent.58

55Seetable5ofthefollowingstudy:MinistriodaAgricultura,PecuriaeAbastecimento.2007.BalanoNacionaldaCanadeAcareAgroenergia.EdioEspecialdeLanamento(availableatwww.feagri.unicamp.br/energia/bal_nac_cana_agroenergia_2007.pdf).56TechnicalexplanationaboutTRScanbeobtainedinthefollowingpublication:Macedo,I.C(organizer).2007.SugarCanesEnergy:TwelveStudiesonBrazilianSugarCaneAgribusinessanditsSustainability.Berlendis&VertecchiaandUNICAUniodaAgroindstriaCanavieiradoEstadodeSoPaulo.SoPaulo(availableathttp://english.unica.com.br/multimedia/publicacao/).SeealsoSEABRA,J.E.A.Anlisedeopestecnolgicasparausointegraldabiomassanosetordecanadeacaresuasimplicaes.Campinas:UniversidadeEstadualdeCampinas,FaculdadedeEngenhariaMecnica,2008(PhDThesis).57Seepage45ofthefollowingstudy:CompanhiaNacionaldeAbastecimento(CONAB).2008.PerfildoSetordeAcaredolcoolnoBrasil.Braslia(availableathttp://www.conab.gov.br/conabweb/download/safra/perfil.pdf).58WhenwepresentedthisargumentinameetingwithARB,itwasraisedaquestionaboutreductioninbagasseproductionbasedontheargumentofamassconservation.Theargumentwasthatifmoreenergyisextractedfromatoneofsugarcane,it


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B. CarbonIntensityCalculations

InadditiontotheimprovementsintheGTAPassumptionsandparametersdescribedabove,itisnecessarytoadjustthecarbonemissionsfactorforeachtypeoflandusechange.Thecommentsbelowareanattempttoimprovethecarbonintensitycalculationsforsugarcaneethanolscenarios.Wesuggestthreemaintargetareasforoptimizingthemodeloutcomes.

1. CarbonDataforLatinAmericaUsedasDefaultValueforBrazilConsideringthatmostofthelandusechangeduetosugarcaneexpansiontakesplaceinBrazil(62%asanaverageofthe5scenarios),itisessentialthatemissionfactorsvaluesusedforBrazilareaccurate.However,theemissionfactors(asCO2equivalent)usedintheCARBanalysiscamefromtheWoodsHoledata,whichconsidersLatinAmerica(aregiontwicethesizeofBrazil)aswhole.ThisapproximationresultsinhighervaluesthantheonesobservedinBrazil,whereconsiderablemoreresearchoncarbonstocksisavailable.

PeerrevieweddataforBrazilianecosystemsarecomparedwithWoodsHoledefaultvalues,aswellasdataforpasturelandcarbonstocks,inTables6and7.DatafromAmaralatal.(2008)59indicatetotalcarbonstocksindifferentnaturalvegetationrangefrom71.5MgC/haforCerrado(typicalsavannah)to271.0MgC/hafortropicalforest.Thesamestudyindicatestotalcarbonstocksinpasturelandrangefrom42.0MgC/haindegradedpasturesto58.5MgC/hainmanagedpasture.Table6:Carbonstocksindifferentlanduses,consideringbothaboveandbelowcontent,inMgCperhectare

Landuse Above Below Total

Tropicalevergreenforest 200 98 298

Tropicalseasonalforest 140 98 238

Tropicalopenforest 55 69 124

Temperateevergreenforest 168 134 302

Temperateseasonalforest 100 134 234

Grassland 10 42 52

Desert 6 58 64

Source:WoodsHole(http://www.arb.ca.gov/fuels/lcfs/ef_tables.xls)

shouldexpectedthatlessbagasseisproducedandthenlessbagasseshouldbetakenintoaccountinthecogeneration.TherealityisthattheamountofbagasseinformedforthecogenerationintheGREETanalysisisbasedoncurrentnumbers,whichmeansthatitisthebagasseproductionwithhigherTRS.IftheTRSwouldnothavegrownfrom2001to2006,morebagassewouldbeavailableforcogeneration.SeeoutcommentsinSectionIIundersugarcanefarming.59Amaral,W.A.N.;Marinho,J.P.;Tarasanthy,R.;Beber,A.;Giuliani,E.EnvironmentalsustainabilityofsugarcaneethanolinBrazil.In:Sugarceneethanol:contributiontoclimatechangemitigationandtheenvironment.Zuurbier,P;Vooren,J.vande(eds).Wageningen:WageningenAcademicPublishers,2008.


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Table7:Carbonstocksindifferentlanduses,consideringbothaboveandbelowcontent,inMgCperhectare

Landuse Above Below Total

Tropicalforest 200 71 271

CerradoWoodySavannah 33.5 53 86.5

CerradoTypicalSavannah 25.5 46 71.5CampoLimpoGrasslandSavannah 8.4 72 80.4

ManagedPasture 6.5 52 58.5

DegradedPasture 1.3 41 42.3

Source:Amaraletal.(2008)

GiventheavailabilityofpeerrevieweddataforcarbonstocksinBrazil,werecommendthatCARBadoptthedatainTable7initsemissionsvalues.

2. ForestLostandGained

ItisnotclearhowthecarbonfactorsforforestgainedwereconsideredinCARBcalculations.SuchcoefficientsshouldbemultipliedbytheareaofforestincreasinginsomeGTAPregionstoestimatetheamountofcarbonbeingsequestered,sincelandusechangesfrompasturetoforestwouldimplyanetcarbonuptake.However,thecarboncoefficientsinthemodel(GTAParrayEMISSCTR)donotincludecarbonfactorsrelatedtoforestgainedandthen,thecarbonemissionsbeingcalculatedbyGTAPdonotaccountforthemodelresultsaboutreforestation.Werecommendthatforestgainedbeconsideredascarbonuptake.

3. CropsCarbonEmissionFactors

ThecurrentCARBassumptiondoesnotconsideranycarbonuptakefromcrops,eventhoughthereisampleliteratureoncropcarbonuptakefromaboveandbelowgroundbiomass.UnlessCARBcanprovideevidenceastowhyacropscarbonupdateshouldnotbeconsideredinthemodeling,webelieveCARBmusteither(a)usecropspecificdefaultvaluesforcropsthatshowsignificantareavariationor(b)usedefaultvaluesforthemostimpactingcroponlandusechanges(i.e.,sugarcane).Sugarcaneexpansionscenariosshouldusethecarboncontentspecifictothiscropbecausemostofthecropvariationisrelatedtosugarcane.Consideringthemostconservativeestimateforsugarcaneuptake,whichconsidersjustthebelowgroundsoilcontent,carbonstockwouldbeanaverageof49.25MgC/ha(IPCC,2006).60ButwenotethatIPCCdoesnotrecommendthe

useofgeneraldefaultvalueswhencountryspecificdataareavailable,asitisthecaseofBrazil.Infactthereisavastandwelldocumentedofliteratureoncarbonuptakefromsugarcane(Cerri,198661;Macedo,200862).

60IPCC,2006.GuidelinesforNationalGreenhouseGasInventories,preparedbytheNationalGreenhousegasInventoriesProgramme.In:H.S.Eggleston,L.Buendia,K.Miwa,T.Ngara,andK.Tanabe(eds.)Japan:IGES.61Cerri,C.C.,1986.DinmicadaMateriaOrgnicadoSolonoAgroecossistemaCanadeAucar.Tese(livredocencia).EscolaSuperiordeAgriculturaLuizdeQueiroz,Piracicaba,SP,Brasil.


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Table8:Carbonstocksindifferentcrops,consideringbothaboveandbelowcontent,inMgCperhectare

Below(1)

Above(2)

LAC HAC Vegetation

TOTAL(3)

Maize 31.0 42.0 3.9 40.4

Soybean 31.0 42.0 1.8 38.3

Cotton 23.0 31.0 2.2 29.2

Sugarcane(4) 41.5 57 17.4 66.65

Average 31.63 43.00 6.33 43.64

Sources:(1):IPCC,2006.Guidelinesfornationalgreenhousegasinventories,preparedbytheNationalGreenhousegasInventoriesProgramme.In:H.S.Eggleston,L.Buendia,K.Miwa,T.Ngara,andK.Tanabe(eds.)Japan:IGES;(2):Macedo,I.C.;Seabra,J.E.A.,2008.MitigationofGHGemissionsusingsugarcanebioethanol.In:Sugarcaneethanol:contributiontoclimatechangemitigationandtheenvironment.Zuurbier,P;Vooren,J.vande(eds).Wageningen:WageningenAcademicPublishers.;(3):itwasconsideredtheaverageofLACandHACvalues;(4):theaverageofburnedandunburnedsugarcanewasconsidered.

Inconclusion,regardlessofthealternativeused,carbonemissionfactorforcropsshouldrepresentanetcarbonuptakewhenitreplacespasture.Furthermore,bothaboveandbelow

groundcarbonmustbeconsidered,aswasdoneintheotherlanduseestimations.C. ProposedScenariosforCARBsILUCCalculations

ThissectionpresentsasetofalternativescenarioscombiningthesuggestionsdiscussedinthepreviouspartsofthisSectiononILUC.Thescenariospresentedbelowaredividedintwogroups:

(i) Table9showstheresultsoflandusechangeandcarbonintensityresultingfromchangesmadeintheparametersoftheGTAP(shocksize,elasticityofsubstitutionamongprimaryfactorsinlivestockproduction,elasticitywithrespecttoareaexpansion,adjustmentsforsugarcaneyields)thatareproposedabove;and

(ii) Table10depictstheresultsintermsofcarbonintensitydepartingfromthelandusechangescenariopresentedinTable9andmakesthenecessaryadjustmentsincarbonuptakefromforestgainedandfromcropsexpansion.

TheresultspresentedinTable9arebasedonashocksizeof1.5billiongallon,onanelasticityofsubstitutionamongprimaryfactorsinlivestockproductionof0.4forBraziland0.2inothercountries,onacropyieldelasticitywithrespecttoareaexpansionof0.9andonanadjustmentforsugarcaneandTRSyieldsof16.66%.Thecarbonintensityforthatscenario,accountingonlyfortheemissionsassociatedwithforestryandpasturesconversion,is25.3gCO2e/MJ,about

halfofthevaluesproposedinTableIV12oftheproposedregulation.

62Macedo,I.C.;Seabra,J.E.A.,2008.MitigationofGHGemissionsusingsugarcanebioethanol.In:Sugarcaneethanol:contributiontoclimatechangemitigationandtheenvironment.Zuurbier,P;Vooren,J.vande(eds).Wageningen:WageningenAcademicPublishers.


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Table9:GTAPModelingResultsforSugarcaneEthanolLandUseChangewithAlternativeScenarios

1. Shocksize 1.5billiongallons

2. Elasticityofsubstitutionamongprimaryfactorsinlivestockproduction

0.2everywherebut0.4inBrazil

3. Cropyieldelasticityw/areaexpansion 0.9

4. AdjustmentforsugarcaneandTRSyields 16.66%

Totallandconverted(millionha) 0.60 Forestland(millionha) 0.01 Pastureland(millionha) 0.59 Brazillandconverted(millionha) 0.35 Brazilforestland(millionha) 0.07 Brazilpastureland(millionha) 0.42 ILUCcarbonintensity(gCO2e/MJ) 25.3

Source:CARBdocumentationandauthorscalculation(GTAPoutputsavailableuponrequest).Note:CO2emissionswerecalculatedusingemissionfactorsfromthearrayEMISSCTR.Theamountofforestryandpasturelanddisplacedwasmultipliedbytheemissionfactorsofthementionedarray.Forestgainedandcropswere

nottakenintoconsideration.

DepartingfromthescenariodrawninTable9,asetofthreecalculationsforcarbonintensityarepresentedinTable10.Theunderlyingprinciplesofallofthemarethesame:forestgainedandcropsexpansionshouldbetakenintoaccountasacarbonuptake,followingthecommentsabove.Inthecaseofforestgained,thereisnodifferenceinthecalculationsastheemissionfactorsobtainedinthearrayEMISSCTRweremultipliedbytheforestgainedandaccountedasacarbonuptake.Thedifferentalternativesrelyoncropscalculations.InAlternative2,theincreaseincropareais

multipliedby18MgCO2e/hacitedinthefileef_tables.xls,sheetGTAPEFs.However,asarguedintheprevioussection,thosefactorsdonotrepresentthecarbonuptakeassociatedtosugarcane,oilseedsandcoarsegrains.Evenwithverylowemissionfactorsforcrops,itcanbeobservedthatthesugarcanecarbonemissionisstronglyreduced(12.4gCO2e/MJ)incomparisonwiththedepartingscenario(25.3gCO2e/MJ).MorereliablecarbonemissionsforsugarcaneinBrazilareusedinAlternative3.Theemissionfactorofthisalternativeis66.65MgC/ha(244MgCO2e/ha),aspresentedinTable8.BothCinvegetationandbelowgroundweretakenintoaccountinthisfactor.Inthatalternative,carbonemissionsbecamepositive,confirmingthatsugarcaneisuptakingcarbon,ratherthanemitting.Alternative4isbasedonanaverageofaboveandbelowcarbonemissionsfactorsofthecropspresentedinTable8(43.64MgC/ha),withoutdifferentiatingsugarcaneinBrazilaswasthecaseinAlternative3.Negativeemissionswerealsoobtainedinthatalternative.AlthoughTables6and7clearlyshowthatcarbonemissionsfactorsusedinWoodsHoleforLatinAmericaoverstatesemissionsinBrazil,becauseemissionfactorsforBrazilianecosystemsarelower,wedecidednottochangeemissionsfactorsforforestsandpasturelandsinthe


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alternativescenariospresentedinthissection.However,itisworthmentioningthatmoreprecise(specificdataalreadyavailableinpeerreviewliterature)carbonemissionsfactorsshouldbeusedforBrazil,giventhatthemajorityofthesugarcanelandusechangeistakingplace,forallscenarios,inBrazil.

Table10:CarbonIntensityUsingLandUseChangefromTable9andAlternativeScenariosforCarbonUptake

AlternativeScenariosILUCcarbonintensity

(gCO2e/MJ)

1.DepartingScenario(Table9) 25.3

2.DepartingScenario+CarbonUptakeofForestGained(arrayEMISSCTR)+CarbonUptakeofCropsfromGTAPEfsef_tables.xls(18MgCO2e/ha)

12.4

3.DepartingScenario+CarbonUptakeofForestGained(arrayEMISSCTR)+CarbonUptakeofCropsRestofWorldfromGTAPEfsef_tables.xls(18MgCO2e/ha)+CarbonUptakeforSugarcaneBrazilfromTable8(244MgCO2e/ha).

9.4

4.DepartingScenario+CarbonUptakeForestGained(arrayEMISSCTR)+CarbonUptakeCropsfromTable8(160MgCO2e/ha)

10.7

Source:AuthorsCalculationsavailableuponrequest

ThelargevariationsinthevaluespresentedinTable10makesclearthatbothforlandusechangeandforcarbonintensitycalculationsresultsarehihglysensitivetocriteriaandparametersused.NotonlychangesinGTAPparametersleadtostrongreductionsinlandconvertedasaresultofsugarcaneexpansion,butalsotheinclusionofthecarbonuptakeinforestgainedandcropsexpansionmayrevertcarbonemissionstocarbonuptake.

GiventhatBrazilianagriculturedynamicsareasignificantdeterminantinlanduseandthattheanalysisabovedonewithsupportoftheleadingagriculturaleconomistsinBrazilrunscountertoCARBspreliminaryresults,westronglyurgeCARBtorevisitthemethodologiesusedinthelandusechangemodelingcarefully.WithrespecttoGTAPanalysis,therevisionshouldfocusonimprovementstobetterrepresentthecomplexdynamicsoftheBrazilianagriculture.Withrespecttocarbonintensitycalculations,CARBshouldreviseallcarbonemissionfactorsusingspecific,crediblevaluesforBrazilianecosystemsaswellascarboncreditsresultingfromforestgainedandcropsareaexpansion.Oncethoseimprovementsareimplemented,wefullyexpectthatCARBwouldconcludethat

BraziliansugarcaneILUCismarginal,asweendeavoredtodemonstrateinthisdocument.


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IV. CONCLUSION

WecommendCARBforitsassessmentofthelifecycleemissionsassociatedwiththeproductionofsugarcaneethanol.However,webelievetheanalysisassessmentrequiresacomprehensiveupdatewithmoreaccurateandrealisticdatafromcurrentexperienceandanticipatedtrendsinBrazil.

AsforGREETCAmodeling,perhapsnootherissuedeservesgreaterattentionthanthecreditsresultingfromthecombinationofreducedfieldburning,increasedmechanization,andimprovedboilerefficiency,whichwereabsentinCARBsanalysis.AsforestimatesofindirectlandusechangesbasedonGTAPmodeling,whilewestrenuouslydisagreewiththeassertionsthatILUCcanbeaccuratelycalculatedatthismoment,webelieveanumberofcriticalelementsareabsentfromtheStaffReportanalysis,particularlyanexplanationoftheassumptionsmade,supportingevidenceforelasticitiesused,andunderstandingoflandandcattledynamicsinBrazil.

Itisimperativethattheselanduseissuesbeproperlyaddressedinordertohavearobustandmeaningfulcalculationofthecarbonintensityofbiofuels.WithoutadoubtanILUCpenaltyof46gCO2/MJforsugarcaneethanolhasnoscientificbasis.Asevidencedbythelevelofanalysisofthisletter,theremaywellbecarboncreditsgeneratedinsugarcaneproductionifthemodelisreasonablycalibrated.WehopethisletterwillcontributetoimprovingthedevelopmentoftheLCFSinCaliforniaandremainatyourdisposaltoansweranyquestionsyouoryourcolleaguesmayhave.Sincerely,MarcosS.JankPresident&CEO

JoelVelascoChiefRepresentativeNorthAmerica

cc: Dr.DanielSperling

Mr.KenYeagerMs.DoreneD'Adamo,Esq.Mrs.BarbaraRiordan

Dr.JohnR.Balmes,M.D.Ms.LydiaH.Kennard,Esq.Ms.SandraBergMr.RonRobertsDr.JohnG.Telles,M.D.Dr.RonaldO.Loveridge

UNICA Comments to CARB on Sugarcane Ethanol

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