Brazilian producers put 2G ethanol plans on hold
Large-scale production of second generation ethanol in Brazil remains a distant prospect amid doubts over its viability, an industry analyst has told BNamericas.
Julio Borges, a director at São Paulo consultancy firm Job Economia, said local sugarcane mills do not have the means to invest in technology for the fuel.
"Second generation ethanol is still not profitable for anybody," Borges said in a telephone interview.
"It has proven to be disappointing in the US and here in Brazil it hasn't had proven results. So we'll wait and see. Local producers are not necessarily unconvinced by second generation ethanol. But their concerns lie in other areas, like overcoming their day-to-day difficulties."
Brazil's ethanol sector has been hit by government subsidies on gasoline, which make the biofuel unable to compete.
According to Borges, investments in new technology will only be possible if the government removes fuel price controls and offers new fiscal incentives to ethanol producers.
In March, Brazil's state-run energy giant Petrobras shelved plans to begin 2G ethanol production this year amid sweeping budget cuts prompted by a corruption scandal and falling oil prices.
Spain's Abengoa and local producers Granbio and Raizen are among private firms investing in the biofuel in South America's largest country.
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