SAO PAULO (Reuters) - Ethanol will be one of the main items on the agenda of Brazilian President Jair Bolsonaro’s official visit to India in January, sugar and ethanol industry group Unica said on Tuesday.
Unica’s head, Evandro Gussi, said the Brazilian government will discuss ways to assist India in boosting its ethanol program, such as increasing production and blending ethanol with gasoline, which could help reduce the country’s sugar stocks and boost global prices for the sweetener.
“India could have large economic and environmental benefits boosting its ethanol program,” said Gussi, who will be in India with Bolsonaro in the visit.
An increase in production and blending of ethanol in India would reduce the need for the Indian government to subsidize the sugar sector and also reduce its oil and gasoline import bills, Gussi said.
Larger ethanol blending in gasoline, he said, could also help reduce pollution in large cities, a critical problem in India.
Unica estimates that ethanol use in Brazil in 2019 will lead to total emissions reductions of 80 million tonnes of carbon. Brazil blends gasoline with 27% of ethanol, and 90% of the car fleet can run on 100% hydrous ethanol due to flex engines.
“India could sharply reduce pollution with ethanol. It is a low hanging fruit for them,” he said.
The Brazilian government is currently questioning India’s subsidies to the sugar sector at the World Trade Organization, saying official financial help, particularly for sugar exports, hurts trade rules and keeps global prices low.
Julio Maria Borges, a sugar and ethanol expert at Sao Paulo-based consultancy JOB, said adding flexibility to the sugar sector with the possibility to also produce ethanol could prevent production at a loss for some countries, including India.
He said in a report that Brazil sugar exports in the current season would not have generated enough money for mills to cover costs plus depreciation. Ethanol sales, however, would have covered those costs and provide gains of around 15%.
Reporting by Marcelo Teixeira; editing by Steve Orlofskyand Leslie Adler