Argentina Biodiesel Industry
Lic. Gustavo Idígoras
Lic. Sabine Papendieck
Buenos Aires, 14 of December 2011
ARGENTINE SOY COMPLEX •
Within the agricultural sector, Argentina is a key player on a global level, leading in the four most important productions: soybean, sunflower seed, maize and wheat. Argentina is the third largest producer of soybeans after the United States and Brazil. •
Soy is now the most important oilseed in the world and its cultivation is the most relevant Argentine agricultural sector. In our country the first lots were planted in the 1960s in southern Santa Fe from the 70's starred in a strong expansion. The total crop area in Argentina has risen over the last 10 years and the productivity has risen due to double‐
cropping counting and the introduction of the genetically modified soybeans (Roundup Ready (RR) soy).
•
Soybean production and its by‐products in Argentina include the production of soybean and the manufacture of soymeals and pellets for animal feed, soybean oil, biofuel and glycerin. ARGENTINA BIODIESEL PRODUCTION
Producción de Biodiesel en Argentina
2007 - 2011 - en millones de toneladas
2.5
2.0
1.5
1.0
0.5
0.0
2007
* Proyectado
Source: CARBIO
2008
2009
2010
2011*
DOMESTIC CONSUMPTION OF BIODIESEL •
The Argentine soybean industry differs from the United States and Brazil. •
A very small percentage of soybeans are consumed domestically in Argentina. •
Despite a growing poultry and swine industry, Argentina’s soybean meal use still accounts for less than 5% of their total soybean meal production. Soybean oil is mainly exported.
•
Regarding biofuels, Argentina has a framework that regulates and promotes the production and use of biofuels domestically since 2007.
•
Since then the industry also supplies the domestic market contributing to the diversification of the country's energy matrix and improvement of the sustainability of its fuels.
•
The actual blending mandate is of 7% of biodiesel in diesel.
BIOFUELS MARKET OUTLOOK 2020 OECD – FAO
Future International scenario – Org Economic Cooperation and Development
•
Global biodiesel production is expected to increase to almost 42 bnl by 2020. The European Union is expected to be by far the major producer (51%) and user (57%) of biodiesel. Other significant players are Argentina (9%‐2%), the US, India and Brazil.
•
Imports are only expected to be significant in the US and EU.
•
Argentina should remain the major exporter of biodiesel. ARGENTINA FIRST WORLD SUPPLIER OF BIOFUELS
Source: Argentina Custom
Argentina´s Biodiesel Exports in tons
2007
2008
2009
2010
2011
January
50,2
42.980,40
25.288,00
153.916,30
111.267,70
February
103,3
24.419,60
49.301,90
111.096,50
96.839,50
March
98,6
55.717,30
67.903,60
69.118,30
114.534,70
April
383
55.426,40
86.779,80
107.824,90
108.822,60
May
2.344,30
41.230,40
90.638,60
80.998,50
146.989,40
June
4.084,10
26.189,40
98.145,60
142.724,90
152.611,20
62,3
63.374,70
133.033,40
99.267,60
160.490,40
August
17.144,90
82.729,10
126.652,30
141.729,50
159.879,30
September
29.540,00
115.619,40
142.346,70
84.731,40
159.671,40
October
29.817,80
117.012,50
98.716,40
129.718,20
151.986,10
November
14.624,80
47.494,50
108.910,40
111.401,60
December
70.111,70
52.598,40
121.946,80
130.979,20
July
Total
Source: Argentina Custom
168.364,93
724.792,21 1.149.663,43 1.363.506,87 1.363.092,27
EXPORTS DESTINATIONS
2008
• Main destination: US
• The Argentine biodiesel exports to the USA were so important due to the plash and dash biodiesel subsidy in the U.S. market. 2009
• The US ended the splash and dash regime.
• And also Argentina lost in 2009 the GPS benefit (duty free regime) in the USA because its exports of biodiesel exceeded the competitive need limitations and became to the American law sufficiently competitive.
• The UE started an investigation over the Canadians and American imports of biodiesel.
• The USA was replaced by European destinations: mainly Netherland and Spain.
2010
• The UE imposed measures against the Canadians and American imports.
• The US disappeared from the list of main destinations of our biofuels.
• The EU concentrated the Argentine exports of biofuels.
• Peru appears as a new regional opportunity.
ARGENTINA BIODIESEL EXPORTS 2011 JAN‐NOV
US$ FOB
Month
1
2
3
4
5
6
7
8
9
10
11
12
Total
2011
127.784.190
111.899.447
173.997.101
180.764.441
200.219.861
126.710.093
233.241.934
202.176.306
180.515.522
275.722.450
79.121.952
1.892.153.296
Source: Argentina Custom
2010
119.071.821
93.719.368
100.257.680
97.165.191
63.292.176
140.559.839
117.644.591
95.901.172
71.663.834
119.390.580
122.413.140
139.514.209
1.141.079.392
Growth rate
2011/2010
7,3
19,4
73,5
86,0
216,3
‐9,9
98,3
110,8
151,9
130,9
‐35,4
‐100,0
65,8
NEW INVESTMENTS BIOFUEL SECTOR IN ARGENTINA
•
•
•
•
•
•
•
UNITECBIO (Extension)
PATAGONIA BIOENERGIAS (Extension)
RENOVA (Extension)
DREYFUS (Extension)
CARGILL (new investment)
NOBLE (new investment)
Smallers plants (around 20 projects of 50.000 tons each)
TOTAL: US$ 450.000.000 •
AS A CONCLUSION WE CAN HIGHLIGHT:
•
Argentinean biofuel production, domestic consumption and exports all set new records in 2011.
•
This year the domestic production is estimated to reach 2.2 millions of tons.
•
Argentina’s biodiesel industry expanded not only because of favorable conditions for growing soybeans, but also because of a new B7 blending mandate
•
Argentina is currently the world's eighth biggest biodiesel producer in terms of capacity, and second only to Brazil in Latin America. Last year global biofuels production increased 17% to reach a record high of 105 billion liters, up from 90 billion liters in 2009. •
Argentina is the first world exporter of biodiesel
EU27 Market
UE Biodiesel imports
Imports EU27 and Member States / Argentina for commodity 38249091 Biodiesel 61,82% ‐ 1.180.000 ton.
Import Value (1000 EURO)
Partners/Year
2010
2008
2009
2010
870.765,22
Spain
65,47 117.580,98 337.685,36
355.071,69
Netherlands
40.005,56 357.841,56 294.344,41
60.337,79
Italy
10.822,68
33.932,56 157.161,06
60.113,60
Belgium
10.606,39
27.714,51
81.574,39
29.702,23
France
3.543,16
10.149,60
EUR27
65.043,26 537.069,61 870.765,22
6.382,69
EU27 Imports ‐ main partners for commodity 38249091 Biodiesel
Partner/Year
Argentina
Indonesia
Canada
Malaysia
India
Croatia
Singapore
Norway
Ecuador
For.JRep.Mac
Turkey
UAE
China
Others
Total EXTRA‐EUR27
Source: Eurostat
2008
65.043,26
115.936,71
1.628,25
28.370,07
7.113,19
370,65
346,77
1.034,82
0,02
3,01
2.572,70
597,94
1.111.337,75
1.334.355,14
Import Value (1000 EURO)
2009
537.069,61
94.318,58
77.435,72
69.744,56
13.714,47
1.586,53
10.351,27
2.254,17
1.873,20
26,80
191.600,87
999.975,78
4.238,17
3.184,25
2.380,12
2.072,92
2.035,10
1.170,06
904,19
1.408.507,63
Source: Eurostat
EU RED
EUROPEAN UNION DIRECTIVE ON RENEWABLE ENERGY
The sustainability challenge
EU’s Renewable Energy Directive (EU‐RED) Biofuels requirements
On 23 April 2009, the EU adopted the Renewable Energy Directive (RED) which established:
‐
a 10% target for the use of renewable energy in road transport fuels by 2020, and ‐
an environmental sustainability criteria that biofuels consumed (produced or imported) in the EU have to comply with. ‐
This includes 2 mandatory targets:
1. a minimum rate of direct Greenhouse Gas (GHG) emission savings on a life cycle basis compared to fossil fuel ‐ (35% in 2009 and rising over time to 50% in 2017), 2. a restrictions on the types of land that may be converted to production of biofuels feedstock crops –
No conversion of land with high carbon stock since January 2008 (wetlands, continuously forested areas, peatlands) .
–
No raw material from land that had high biodiversity value from January 2008 (primary forest, biodiverse grassland, nature protection areas)
GHG savings
•
Can be obtained by:
1. calculation of ‘actual value’ ‐ according to the methodology in the Directive; or
2. using ‘default value’ established in the Annex V of the Directive (the default value for soybean biodiesel is 31%); or
1. a combination of both
Implementation of the sustainable criterias
Adequate standard of independent auditing needed:
9according to EU Member States rules, or
9alternatively the Commission can accredit ‘voluntary schemes’ as sufficient.
On 19 July 2011, the Commission recognised seven voluntary schemes: ISCC (International Sustainability and Carbon Certification) Bonsucro EU
RTRS EU RED (Round Table on Responsible Soy EU RED) RSB EU RED (Roundtable of Sustainable Biofuels EU RED) 2BSvs (Biomass Biofuels voluntary scheme) RBSA (Abengoa RED Bioenergy Sustainability Assurance)
Greenergy (Greenergy Brazilian Bioethanol verification programme) This recognition applies directly in 27 EU Member States.
The Sustainability of the Argentine biodiesel
The CARBIO Sustainability Certification Scheme (CSCS) for EU –
RED Compliance
•The CSCS has been developed to demonstrate the sustainability of the soybean biodiesel and their consequent inputs (biomass, intermediate products), produced or traded by them, in conformity with the EU RED.
•The CSCS has been developed by the board of CARBIO (Argentine Biofuels Chamber composed by the most important producers of Soybean Biodiesel in Argentina – they represent the 95% of the national production and exports), with the help of the Ministry of Agriculture, other governmental bodies as INTA, and external advisors. •CSCS covers all the Soybean Biodiesel production chain, from the soybean production to the biodiesel factories and transshipment points or ports. It has been designed to cover only the production of Argentine Soybean Biodiesel.
•
GHG emission savings: •
Default values (Annex V of RED) will be used for soybean cultivation, transportation and distribution.
•
•
Actual values will be calculated for processing.
Compliance with the land origin of sustainable soybean •
is proved by using the Maps Methodology developed by INTA showing the Approved “Go”
Areas. They are based on satellites images, soil charts, administrative land registers and site surveys. First Gathering Points (elevator directly from the farm) or Conversion Units receiving soybeans straight from farmers will verify that soybeans come from Approved “Go” Areas using official transport documentation. (“Carta de porte”)
•
Mass balance calculation systems are required to all Members participating in CSCS. •
Independent Verification Bodies CARBIO IS CURRENTLY RESPONDING THE ASSESSING REPORT OF THE COMMISSION.
GHG Savings of typical Argentine Biofuels vs. fossil fuel
• Argentina and the USA has formally asked the EU to reconsider the default values associated to the soybean methyl ester of the Annex V.
• The request is justified in scientific terms ‐ the 31% have been reached by the EU Research Joint Center old methodology using the unrealistic scenario of biodiesel made from Brazil soy
oil esterified in the EU.
• The JRC is working with a new methodology since 2008, which must be included in the RED and the Argentinean case scenario must become the reference, updating then the default values of the directive. BENEFITS OF THE ARGENTINE PRODUCTION
•
•
•
•
The Argentinean production is a No till production system based on the absence of tillage and the presence of a permanent soil cover (crops or crop residues). This system allows producing without degrading the soil, while improving its physical, chemical and biological conditions. Also, it allows using soil water more efficiently – a natural resource that is commonly a limiting factor in dry land crops production. Therefore, No Till achieves high productive levels that are stable in the long term and in harmony with environment.
The primary production of soybean is located less than 300 km from the crushing plants.
The crushing plants (oil and biofuel) are top hi‐tech machinery. Today, the Argentinean oil and biofuel industry is considered the most efficient in the world.
The biodiesel plants are connected with the export port San Lorenzo in the Paraná River through pipes (reducing considerably the GHG emissions of inland transport).
Indirect Land Use Change ‐ ILUC
•
EUROPEAN COMMISSION IS FORESEEN TO SET UP NEW REQUIREMENTS ON ILUC IN THE SHORT TERM
•
THE DISCUSSION REMAINS OPEN. A DECISION IS EXPECTED BY EARLIER 2012
•
All the studies until today:
– fail to take into account the positive impact of increased oilseeds production in increasing animal feed production,
– contain flawed calculations on the amount of substitution between vegetable oils, and – fails to include improvements in agricultural productivity among its calculations.
ARGENTINA, BRAZIL, USA, CANADA HAVE FORMED A STRATEGIC ALLIANCE IN BRUSSELS AGAINST NEGLIGIBLE OR WITH NONE SCIENTIFIC EVIDENCE MEASURES RELATED ILUC.
•
Conclusions
9 Argentina has enormous potential for producing and marketing biofuels in domestic and external markets, based on excellent soybean agricultural and crushing competitiveness.
9 Argentinean biodiesel producers are heavily increasing their investment in facilities to increase production.
9 Renewable Energy Directive in the EU is an opportunity for biofuels producers in Argentina, considering that the national industry met the sustainability criteria established in the directive.
9 The global regulation of biofuels and the sustainability of the national final product is opening new markets for the national industry of biofuels.
THANK YOU
Director
Consultant
Lic. Gustavo A. Idígoras
Lic. Sabine Papendieck
Tel‐Fax: (5411) 4342‐4088 – [email protected]
Av. Rivadavia 717 – 7º – 704 – Buenos Aires – Argentina (C1002AAF)