Sugarcane Ethanol Passes Critical Test in California Low Carbon Fuel Standard, Says Brazilian Sugarcane Industry Association

SACRAMENTO, California - California Air Resources Board votes to recognize sugarcane ethanol’s carbon reduction levels

Sugarcane ethanol passed a critical test today as the California Air Resources Board (CARB) approved its long-awaited, first-of-its-kind Low Carbon Fuel Standard (LCFS). While the Brazilian Sugarcane Industry Association (UNICA) continues to provide evidence that sugarcane ethanol’s carbon intensity is even lower than initially calculated by CARB, today’s decision means sugarcane ethanol will be in greater demand in California in the years to come.

“The verifiable 90% greenhouse gas reduction delivered by sugarcane ethanol provides a source of low carbon fuel that achieves the goals of California’s ambitious regulation, with room to spare,” said UNICA President & CEO Marcos Jank following the vote in Sacramento.

The LCFS is designed to reduce by 10% the carbon intensity of all transportation fuels used in California by 2020. As part of broader climate change regulations, CARB is calculating the carbon intensity of all fuels offered in the state. It has determined that the carbon intensity of gasoline is about 95 grams of carbon dioxide per megajoule (gCO2/MJ), meaning that gasoline must reduce its carbon intensity to 86 gCO2/MJ by 2020 to meet the LCFS.

Additives such as biofuels will help gasoline meet the 10% reduction target, since many — sugarcane ethanol included — offer a much lower carbon intensity than gasoline. While preliminary CARB calculations indicate that sugarcane ethanol has a direct carbon intensity of 27 gCO2/MJ, the comments submitted by UNICA to the Air Resources Board on April 17 point out that the 10-member Board failed to account for basic elements of sugarcane production and ethanol processing that directly affect that result. These include expanding mechanization of the cane harvest, increasing cogeneration and significant, ongoing reduction of pre-harvest field burnings.

“We congratulate California for leading the world in encouraging low carbon fuels. But any realistic evaluation of carbon emissions from sugarcane farming in Brazil must reflect the strict policies being implemented and action already taken to phase out sugarcane burning, increase mechanical harvesting and expand cogeneration output,” said Joel Velasco, UNICA Chief Representative in North America, who was present at the Board meeting today in Sacramento.

UNICA’s April 17 letter, its second submission to CARB on this issue, also addresses the controversial calculations resulting from so-called indirect land use change impacts from sugarcane expansion. The letter supports numerous comments from stakeholders and mentions specifically a letter to CARB by 111 Ph.D. Scientists, stating the science used to determine such impacts is quite limited, highly uncertain and open to misuse, through selective enforcement of such impacts. UNICA urges CARB to revisit the methodologies in its land use change modeling over the coming months.

Under the regulation approved today, CARB will continue to work on calculations for carbon intensity values. The Board committed to an investigation, to include input from outside expert groups and be completed by the end of 2009, to evaluate land use and other indirect effects of all transportation fuels. For biofuels, the experts group evaluation should include “productivity of biofuels per acre of land, water use, low carbon agricultural practices that improve carbon sequestration in soil, and creation of protein and electricity co-products” among others. Moreover, the Board decided the results of this investigation and subsequent recommended changes to the LCFS would be presented to the Board on or before January 1, 2011, when the LCFS becomes binding. Following that, the Board will review the LCFS every three years.

According to Velasco, with CARB determined to push forward with indirect land use calculations, the best available data and research should be considered before rushing to conclusions. “Indirect land use changes must accurately represent the dynamics of Brazilian agriculture today. We are confident that a data driven analysis will conclude that indirect land use change from sugarcane cultivation in Brazil is marginal at best,” he added.

To download UNICA’s second letter to the California Air Resources Board, submitted on April 17, use the link below: www.unica.com.br/download.asp?mmdCode=50F82F75-EA2D-4BB6-8832-B81C15EFFD8E%20

ABOUT UNICA

The Brazilian Sugarcane Industry Association (UNICA) represents the top producers of sugar and ethanol in the country’s South-Central region, especially the state of Sao Paulo, which accounts for about 50% of the country’s sugarcane harvest and 60% of total ethanol production. UNICA develops position papers, statistics and specific research in support of Brazil’s sugar, ethanol and bioelectricity sectors. In 2008, Brazil produced an estimated 565 million metric tons of sugarcane, which yielded 31.3 million tons of sugar and 25.7 billion liters (6.8 billion gallons) of ethanol.

MORE INFORMATION: CDN Corporate Communications - Sao Paulo, Brazil Rosa Webster - +5511-3643-2707 / rosa.webster@cdn.com.br Marli Romanini - +5511-3643-2756 / marli@cdn.com.br Mariane dos Santos - +5511-3643-2730 / mariane.santos@cdn.com.br

Source: Brazilian Sugarcane Industry Association (UNICA)

Rosa Webster, +5511-3643-2707, or rosa.webster at cdn.com.br, Marli Romanini, +5511-3643-2756, or marli at cdn.com.br, Mariane dos Santos, +5511-3643-2730, or mariane.santos at cdn.com.br, all of CDN Corporate Communications, for Brazilian Sugarcane Industry Association