By Roberto Samora
SAO PAULO, Sept 1 (Reuters) – An agreement aimed at phasing out the use of native forest wood for energy generation in Brazil’s corn ethanol plants has been put on hold, a reforestation industry association told Reuters, creating uncertainty for investments in eucalyptus plantations.
The agreement signed in June between the state government of Mato Grosso and the local prosecutor’s office has been put on hold by state Governor Otaviano Pivetta, who postponed issuing a decree meant to establish the rules for the phase-out.
The rapidly growing corn ethanol sector is increasingly viewed through an environmental lens because many corn ethanol mills use native wood — natural trees growing from the Amazon rainforest — as fuel to turn corn into biofuel, raising concerns that the industry could be incentivizing illegal deforestation.
Industry advocates say plantation-grown eucalyptus offers a more renewable alternative of biomass for corn ethanol plants but requires long-term investment and regulatory certainty, while native wood tends to be cheaper.
“Investment is indeed affected. For anyone considering investing in forests, this raises a yellow flag,” said Fausto Takizawa, president of Mato Grosso’s reforestation association, Arefloresta, which represents companies of the corn ethanol sector among other firms.
Under the pledge brought forth by Mato Grosso’s prosecutor office, consumption of native wood from deforestation would drop to zero by 2035, but the Mato Grosso state government recently requested a legal review of a proposal that would allow large consumers to meet up to 5% of their energy demand with native wood.
Mato Grosso’s commitment follows an inquiry by the state’s prosecutor’s office into potential illegalities in the use of native firewood to power corn ethanol plants, which are multiplying fast in the state.
The state currently has 14 corn ethanol plants, with plans for over 10 more in the coming years, according to industry figures.
According to Arefloresta, around 10 billion reais ($1.94 billion) in investments would be needed to supply existing and planned corn ethanol projects with renewable biomass like eucalyptus plantations. That could expand Mato Grosso’s eucalyptus tree area to 400,000 hectares (988,422 acres) by 2030 from about 165,000 hectares currently.
Mato Grosso’s state government did not reply to a request for comment.
($1 = 5.1454 reais)
(Reporting by Roberto Samora; Writing by Fabio Teixeira; Editing by Aurora Ellis)
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