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Latin America can become a ‘global benchmark’ for biofuels

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Erasmo Carlos Battistella, CEO of ECB Group, spoke with BNamericas about the company’s US$800 million Omega Green biofuels project.

The Brazilian biofuels industry is growing. Ethanol consumption is expected to rise to 50Bl in 2020, a 30% increase from 2015.

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Around 90% of new car sales in the country are fitted with flex-fuel engines, combining ethanol produced from sugarcane and gasoline.

And Brazilian companies are looking for opportunities in other, more advanced biofuels. Such is the case of ECB Group, which recently announced it would open an advanced biofuels plant, called Omega Green, in neighboring Paraguay.

Erasmo Carlos Battistella, CEO of ECB Group, spoke with BNamericas about the plant, the company’s plans in the biofuels industry, and why Brazilian investors are eyeing Paraguay when thinking about big projects.

The Omega Green complex is expected to cost more than US$800mn and will produce biodiesel and kerosene. It will use 100% renewable energy.

BNamericas: Why Paraguay?

Battistella: There are a series of factors that justify the choice of Paraguay. In the first place, Paraguay has been working to attract investments and there was an official invitation by the government for companies to evaluate the country’s possibilities.

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Secondly, Paraguay has established itself as an environment of consistent legal security for private investment, and we’ve heard from other Brazilian investors that the Paraguayan government has complied with the agreed terms to make investment viable.

Another factor is Paraguay’s macroeconomic and fiscal scenario, as the country has kept balanced accounts, presenting robust growth and a lower and more competitive tax burden [than neighboring countries].

And then there are the very important technical conditions, as Paraguay is a big producer of our needed raw materials, such as soy and animal fat, and it offers competitive logistics for exporting through the Paraguay river.

BNamericas: What raw material will the plant use?

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Battistella: The most important raw material is soybean oil, and Paraguay is a significant producer of oilseeds. Omega Green’s production will be 20,000b of advanced biofuels per day, which will represent demand of around 20% of the country’s total soy output.

It’s also possible to use animal fat, which doubles the environmental gain, as the material no longer has an impact through elimination as it’s converted into a raw material for a type of biofuel that reduces greenhouse emissions by 85%.

BNamericas: Where are you getting financing for the project?

Battistella: The project is in its financial structuring phase, which will involve banks of international renown. ECB Group will also invest its own resources. Institutional investors and sovereign funds focused on sustainable development will also participate.

BNamericas: How do you evaluate the economic situation of Paraguay? Do you think the country has a regulatory framework attractive for investors?

Battistella: Paraguay has proven to be one of the safest places [in the region] for private investment in the last few years. The tax burden is very competitive, there is a desire coming from the government to stimulate the creation of new companies, new jobs and attract new technologies and knowledge.

What we’ve seen is a serious commitment spurring economic growth, which is a fundamental component for the success of an investment of the scale of Omega Green.

BNamericas: What’s the future of biofuels in South America? Which countries are attractive besides Paraguay?

Battistella: South America, through countries such as Brazil, Paraguay, Argentina and others, has ample potential to become a global benchmark when it comes to production of biofuels.

We already have a consolidated industry in the ethanol and biodiesel sectors, and we can go even further with renewable diesel and renewable aviation fuel [renewable kerosene].

We have a large supply of raw materials and know-how that allows us to envision our region as a future OPEB [Organization of Biofuel Exporting Countries].

ECB Group has been active in the biofuels sector for almost two decades, mainly through BSBios, the country’s [Brazil’s] biggest producer of biodiesel, and we’re always interested in opportunities for growth and investments in new opportunities within the biofuels sector.

BNamericas: Who will be your main clients for Omega Green’s production?

Battistella: Initially, production from Omega Green will be sold in the international markets that signed the Paris Agreement, such as the UK, Germany, France, Canada and a part of the US. Any large consumer of oil-based diesel that is committed to reducing greenhouse gas emissions is a potential buyer of the advanced biofuels we’ll be producing in Paraguay.

BNamericas: Who will be your main competitors? What is your competitive advantage?

Battistella: Currently, there is no production of renewable diesel in the Southern Hemisphere. The world’s main producers are in Europe, North America and Singapore.

Omega Green’s estimated daily production will make us one of the three biggest players in the international market, and will make us pioneers in the production of HVO [hydrotreated vegetable oil] and SPK [synthetic paraffinic kerosene] below the equator.

BNamericas: What are the main technological innovations to be deployed at the plant?

Battistella: Our studies predict lower power use for biofuel production than originally anticipated, a reduction of 85%. We’ll also have a gas reutilization system that amplifies the environmental benefits even more while reducing the greenhouse impact of our production.

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