Shell and Cosan: Fuelling a Lower-Carbon Future With Biofuels
/PRNewswire-FirstCall/ — Shell (NYSE: RDS.A) (NYSE: RDS.B) and Cosan today
launched a multi-billion dollar joint venture that will become a leading
producer of the low-carbon biofuel, ethanol made from sugar cane. Named
Raizen, this major retail and commercial fuels company will operate in
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In one of the biggest biofuels deals to date, Shell is combining its
extensive retail experience, global network and research in advanced biofuels
with Cosan’s technical knowledge of producing biofuels on a large scale.
Raizen will produce and sell over 2 billion litres a year of the
lowest-carbon biofuel commercially available – ethanol made from Brazilian
Shell is already one of the largest distributors of sustainable biofuels:
now it is moving for the first time into production. The deal with Cosan is a
major development in Shell’s strategy of investing for selective growth in
its fuels business.
Raizen will distribute biofuels and over 20 billion litres of other
industrial and transport fuels annually through a combined network of nearly
4,500 Shell-branded service stations. In
fuels company. Plans would extend the company’s reach in future years to
export more ethanol to other key markets.
Low-carbon biofuels will be the most practical and commercially realistic
way to take carbon dioxide (CO2) out of transport fuel in the coming years
and will be a vital part of the future energy mix.
The joint venture also combines Shell’s expertise and technology
partnerships in advanced biofuels with Cosan’s experience in the commercial
production of low-carbon biofuels. This has the potential to accelerate the
commercial production of biofuels from crop waste and inedible plants.
Raizen’s 24 mills can process up to 62 million tonnes of cane into sugar
or ethanol each year, with the flexibility to adapt to market demand.
“We are building a leading position in the most efficient
ethanol-producing country in the world,” says
Executive Officer. “Low-carbon, sustainable biofuels will be increasingly
important in the global transport fuel mix.”
“This is a turning point in the search for alternative energy sources,”
says Rubens Ometto Silveira Mello, Cosan’s Chairman of the Board. “Raizen is
a clean, renewable and economically viable solution.”
New energy policies in
lower-carbon fuels for transport. Biofuels make up around 4% of transport
of road-transport fuel demand. Shell expects this to rise to about 9% by 2030.
likely to make up more than 40% of the country’s transport fuel mix by 2030,
double today’s proportion. Raizen’s current annual production capacity will
be enough to meet nearly 9% of
At the pump Brazilian motorists are offered the choice of pure ethanol or
a blend of petrol (gasoline) and ethanol. Around 90% of the country’s new
cars can run on either fuel type.
“The Raizen business model, which combines Shell and Cosan assets and has
direct access to consumers, is a breakthrough in the biofuels sector,” says
The sugar cane-to-ethanol process used by Raizen is the most efficient in
turning biomass into fuel. Brazilian sugar cane yields 7,000 litres of
ethanol per hectare of cane compared to, for example, 3,800 litres for a
hectare of corn in the
according to Unica, the Brazilian sugar-cane industry association.
“Sugar cane is the most efficient plant we know in converting sunlight
into energy,” says Professor
Department Sao Paulo State University.
Turning sugar cane into ethanol offers a number of environmental benefits
over other biofuel production processes. As it grows, sugar cane generally
absorbs CO2 at a greater rate than other biofuel crops such as soy.
Ethanol made from Brazilian sugar cane produces around 70% less CO2 than
petrol, when the cultivation and production processes are taken into account.
Since 2003 the use of ethanol in
of the CO2 that the petrol it has replaced would have produced, according to
By-products from turning sugar cane into ethanol are recycled as organic
fertiliser. Plant waste, called bagasse, is burned to produce power for the
processing mills and surplus energy is supplied to the national grid.
To further improve productivity, Raizen will use its own advanced
geographical information system to monitor its land. This allows its
scientists to make accurate predictions about crop yields and adjust
fertiliser or pest control, for example, to help boost production.
“Brazilian sugar-cane ethanol is one of the most sustainable and
lowest-CO2 biofuels available,” says Mark Gainsborough, Shell Executive
Vice-President Alternative Energies. “We expect the development of advanced
biofuels to benefit from Cosan’s feedstock and its expertise in large-scale
biofuels production. This has the potential to accelerate the future
commercial viability of cellulosic ethanol.”
The deal includes part of Shell’s interest in the firm Iogen, which uses
enzymes to break down plant waste into ethanol, as well as Shell’s interest
in Codexis, developers of “super-enzymes” for the faster conversion of plant
waste into transport fuels.
Raizen will work to improve the sustainability of its operations. Sugar
cane for ethanol requires little water to be added because
rainfall provides natural irrigation. In the industrial process Raizen has
been introducing a system that recycles up to 90% of water used.
Raizen supports the development of varieties of sugar cane to suit
regional climate and resist disease. To protect cane from pests, it breeds
and releases natural predators, further reducing the use of chemical
As a member of Bonsucro, formerly the Better Sugarcane Initiative, Raizen
has joined with other producers, non-governmental organisations and other
experts to establish an EU-approved certificate for sustainable sugar-cane
production. This covers areas such as human rights and the impact of
activities on biodiversity.
Raizen is working towards achieving certification for all ethanol
produced by its own operations over the coming years. It also plans to have
certified all ethanol produced from suppliers’ cane.
Current sugar-cane production in
around 0.9% of the country’s land. Government legislation forbids industries
from entering sensitive areas such as rainforests or land needed for other
food crops, and from displacing food crops into other sensitive areas.
National laws also recognise the rights of indigenous communities and their
claims to land ownership. The main sugar-growing areas are hundreds of
kilometres from the Amazon rainforest.
Raizen is well advanced in phasing in mechanised harvesting, ahead of
requirements due to come into force in the main Brazilian sugar-cane growing
suitable land (with a slope of less than 12%). CO2 emissions can be reduced
because it avoids the need to burn the hard straw, a necessary step in manual
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For more information, interview requests or photography, please contact: Shell Media Relations David Williams +31-70-377-3600 Shell Investor Relations Europe - Gustavo Bursztyn: +31-70-377-3996 United States - Ken Lawrence: +1-713-241-2069 http://www.shell.com Cosan Media Relations Daniela Christovao +55-11-3897-9797 http://www.cosan.com.br