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/ All categories of countries are / Brazil’s Elon Musk? Interview with Erasmo Carlos Battistella, CEO, ECB Group

Brazil’s Elon Musk? Interview with Erasmo Carlos Battistella, CEO, ECB Group

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Erasmo Carlos Battistella: Omega Green in Paraguay will be the first advanced biofuels plant in Latin America, indeed the first one in the whole southern hemisphere. It is an $800million project that will produce renewable diesel (HVO) renewable aviation fuel, also known as SPK. ECB Group already has two biofuel plants in Brazil, so we are used to building and operating complex renewable fuel facilities. Our existing plants make ethanol from maize or sugar cane and biodiesel from animal fat and all types of vegetable oil, such as soy, sunflower and palm. However, Omega Green is different because it’s a second-generation biofuel plant.

What are the advantages of 2nd-generation biofuels?

ECB: Second-generation biofuels use the same raw materials, however, by applying different technological processes it produces fuels with very different qualities. So here in Paraguay Omega Green will be using lots of waste products from the country’s large agricultural sector. We will have a ready supply of oils from the meat, chicken and pork industries plus plenty of vegetable oil, especially from soy, where Paraguay is the world’s fifth-largest producer.

The crucial difference between the first and second-generation biofuels is the technology. We apply hydrogen to the feedstock to produce the reaction that transforms them into fuel. It’s an energy-intensive process that allows us to produce an array of different fuel products, in the same way that a conventional refinery produces petrol, diesel and aviation kerosene. This second-generation technology is already well established in the US and Europe but not yet in the southern hemisphere.

The second-generation biofuels have a lot of advantages. They are ‘drop-in’ fuels. That is to say you can use anything from 1% to 100% of this fuel in conventional vehicles. First-generation biofuels have to be used as part of a mixture with conventional fossil fuels, however these second-generation fuels can be put straight into a car or plane without any problems. That’s a crucial difference because it makes the potential size of the market much bigger than a biodiesel that can only work in combination with a fossil fuel. It also means that second-generation biofuels can have a greater positive impact on the environment:  advanced biofuels are today one of the main tools for reducing CO2 emissions.

The other important characteristic is that they can work at much lower temperatures. First-generation biofuels can only work at minus 5 degree Celsius, whereas Omega Green will produce fuel that can work at minus 45 degree Celsius, optimal for use by airlines, an industry that needs effective solutions to reduce CO2 emissions. Again, that makes it a much more versatile fuel. We are building the plant with cutting-edge technology from Honeywell, which already provides renewable jet fuel for the US Airforce.

How are you open to working with UK plc?

ECB: The British bank Barclays is already working closely with us on raising finance for the development of Omega Green, so I expect we will see lots of UK private equity funds and family offices investing directly or indirectly in the project. Then there is also the area of green finance, where London is a global leader. Finally, there are direct business opportunities. We want to sell lots of our biofuel to the UK, because we recognise that is a market where firms are looking for environmentally-friendly solutions.

I’m sure that British Airways would love to reduce the emissions on its flights, and our product can help them do that. Or if you look at Transport for London – we could replace the diesel currently being used in London buses with HVO, for the same cost and cut emissions by 90%. It is literally as simple as switching the fuel. You don’t need to make any modifications to the engine – indeed the manufacturer’s guarantee is still valid if you use our second-generation biofuel because it’s of such a high quality.

Surely electric vehicles are a big threat to your business model?

ECB: No – not at all. We are selling something that is complimentary and we are both trying to fix the same problem – emissions. What people need to realise is that biofuels are liquid solar energy. What I mean by this is that our fuel derives its energy from plant or animal fats and oils. Given that the animal obtains its energy from eating grass or feeds, then the source of all of our energy are plants. The plants, as we all know, get their energy from the sun via photosynthesis. So that means that the energy source for all of our fuels is the sun – that’s why biofuels are liquid solar energy.

They use much more copper, lithium and rare earth metals than a conventional car, so making an electric vehicle produces extra emissions…

I support electric vehicles as long as they are reducing emissions. But if the electricity that powers the battery is coming from gas or coal fired power plants, as is the case in most of Europe, Asia and the US today, then we have a problem. Another issue is the electric cars themselves. They use much more copper, lithium and rare earth metals than a conventional car, so making an electric vehicle produces extra emissions. Finally, we need to look at what happens to the battery once it has been used. If it is not processed responsibly it will cause further environmental damage. There haven’t been many studies into the lifecycle of electric vehicles and batteries, which is a marked contrast to the biofuel industry where we are forced to adhere to rigorous standards from planting the seed to producing the fuel.

Then you have the utility factor. I think second-generation biofuel is a much more practical option for most consumers because it can simply be poured into existing engines. That is especially true in the aviation industry – biofuel can power a commercial flight from London to Sao Paulo, which isn’t possible with a battery.

Don’t biofuels impact on food use?

ECB: That’s a myth. With second-generation biofuels the technology allows you to use agricultural waste products. For example, with soy we don’t use the soy bean but the oil that is produced as a bi-product. People do not eat soy oil – indeed the market currently has a surplus of 40 million tonnes per year. It’s the soy flour that is used to make animal feed that helps to produce the cows, chicken and pigs that the world needs. In fact, the support that the biofuel industry gives soy by purchasing surplus soy oil encourages farmers to plant more soy, thereby increasing overall food supply. If you don’t believe me ask the chef at your local restaurant if they use soy. They would rather olive oil, sunflower oil or any other type of oil that to cook with soy oil.

How is coronavirus impacting your project?

ECB: The dramatic crisis is demanding from companies important changes in their way of working. One of those changes is undoubtedly the energetic matrix that we will have once economic activity returns around the world. This global downturn shows what we can achieve in reducing emissions. Today it is the economic recession that is bringing down the level of emissions, but the question we must ask ourselves is: will we increase emissions again once the economy recovers? I believe that we have an opportunity for a structural change in global energy and to achieve an economy that coexists better with the environment. Advanced biofuels are at the forefront of that change and we are proud to be part of that change.

Source: Latam Investor

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Alejandro Cabrera

About Alejandro Cabrera

Alejandro's expertise fits well with his Special Projects position within GTSA. His cross-cultural international business experience working along aside large foreign companies in Argentina, Brazil, Chile and Uruguay giving expert advice related to M&A and Joint Venture negotiations. He is fluent in English, Spanish, French and Portuguese

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