A trio of Italian and British entrepreneurs are advancing a $114 million plan to turn the waste from Brazilian sugar cane production into pellets that can be burned in coal-fired and thermal plants.
Their São Paulo-based start-up, Brazilian Pellet, expects to finalize a $45.5 million loan syndicated by the Inter-American Development Bank that would provide two-thirds of the financing for its first burst of development, in the first quarter of 2010.
Several million dollars in seed money came from the three founders, Diego Maurizio Zannoni, Giancarlo de Filippo and David J. Instance, through their Luxembourg-based holding company.
The company intends to build several plants that would process bagasse, a byproduct of sugar cane production, into small, dense pellets that can be burned for fuel.
Mr. Zannoni, an aeronautical engineer, said he has a patent pending on the process which he developed over a two-year period, and tested successfully in a pilot project. He said that Essent Trading, a Dutch energy trading company owned by the German utility RWE, certified the pellets as meeting European Union standards for solid biofuels.
Mr. Zannoni also said that Brazilian sugar mills burn most of their own bagasse to create energy in cogeneration plants, and increasingly have been selling the excess power to the national grid. But 20 percent of the excess bagasse, or about 25 million tons, is left to waste, Mr. Zannoni said.
Brazilian Pellet plans to begin production in the third quarter of 2010 in its first plant in São Paulo, home to more than half the production of Brazil’s sugar cane industry — the world’s largest.
By 2015, Brazil Pellet plans to reach 520,000 tons a year of pellet production, an amount that would produce 2,420 gigawatt-hours annually.
The company plans to sell the pellets to companies in industries like textiles, dairy and brewing that generate steam to power turbines in their manufacturing process.
In Europe, it plans to initially sell the pellets to biofuel traders like Essen, which would then sell it to coal-fired plants. Such plants are increasingly employing biofuels to help them meet tightening European Union standards
for carbon emissions. The E.U. has called for 20 percent of total energy consumption to come from renewable sources by 2020.
The European Biomass Association predicts that by 2020 the European Union will use 100 million tons a year of pelletized biofuels from about 13 million tons this year. Now, most European biomass pellets are made from sawdust, a byproduct of the wood processing industry, Mr. Zannoni said.
The company said its process is carbon neutral because the bagasse, if not used, would break down and release dangerous emissions.
“If you just let the bagasse decay it releases methane, and that’s 20 percent more dangerous to the ozone layer than carbon dioxide,’’ said Ivan Nuñez, a banker with the IDB arranging the financing for Brazilian Pellet. “So, burning it instead gives you carbon credits.’’
In fact, a study released last month by the U.N.E.P.’s International Panel for Sustainable Resource Management suggested that biofuels made from production residues, like bagasse, were generally considered beneficial for the environment.
“The nice thing about bagasse is that it’s just garbage,’’ said Gloria Jacobovitz, an adviser to Brazilian Pellet. “It’s different from other biomass because it’s a waste product rather than a plant grown specifically to create energy.’’