BioCycle October 2011, Vol. 52, No. 10, p. 48
While livestock and agro-industrial waste streams are abundant, incentives to build more biodigester capacity in Brazil is slowed by plentiful and inexpensive renewable hydropower.
Neil Veilleux and Erica Marcos

AS a major agricultural producer, Brazil has abundant resources to drive biogas production. It is the world’s fourth largest pork producer, the second largest ethanol producer (generating over 30 billion liters of ethanol and biodiesel in 2010), and has a large presence of beef and poultry slaughterhouses – all industries that provide good feedstock for anaerobic digestion. Moreover, the Brazilian government has been a leader in renewable and agriculture-based energy production. Over 89 percent of Brazil’s electricity is derived from renewable energy, primarily from the country’s hydroelectric resources. In spite of this, Brazil’s policy makers have not historically developed stable support for biogas and, as a result, the market has been slow to emerge.
More recently, however, Brazilian biogas development has been the topic of renewed interest from domestic and international policy makers. In 2010, the Global Methane Initiative (GMI), a collaboration between national governments and international organizations to capture methane emissions and use them as a clean energy source, conducted a “Resource Assessment for Livestock and Agro-Industrial Wastes” in Brazil. The purpose was to identify and evaluate the potential for incorporating anaerobic digestion into livestock manure and agro-industrial waste management systems. It showed significant capacity for biogas development, especially within the livestock and agricultural commodity processing sectors.

Energy, Environmental And Technical Landscapes
Within Brazil, industry stakeholders and policy experts point to three major challenges that have slowed biogas market development: Absence of incentives and financing tools from governmental organizations or financial institutions; Lack of regulations or policies that require use of biodigesters; and Poor historical performance of biogas digesters (and/or the lack of skilled labor to manage them).
First, in markets like Germany, where the biogas industry has seen vibrant growth, project development has been driven by long-term energy contracts known as feed-in tariffs. Structured to provide energy producers with stable cash payments for electricity based on what the technology needs to be profitable, feed-in tariffs are usually developed to support a country’s renewable energy targets or greenhouse gas emission reduction goals. In Brazil, the fact that hydropower provides residents and businesses with relatively low cost, renewable and emissions-free electricity, has arguably dampened policy makers’ need to promote development of new renewable electricity resources like biogas. Inexpensive hydropower also makes biogas project economics particularly challenging for electricity production. Even in cases where the government provides special incentives for nonhydro renewable energy production, biogas is not cost competitive.
For example, ANEEL, Brazil’s electricity regulatory agency, recently approved regulations allowing renewable energy resources under 5 megawatts (MW) – like biogas, biomass and wind projects (as well as small hydro projects under 1 MW) – to compete for utility energy contracts through an auction-based mechanism. The auction is intended to encourage renewable energy-based economic development opportunities for farmers, businesses and local communities. Biogas projects, however, have not fared well under the program, primarily because they are not cost-competitive. According to representatives from ANEEL, wind power projects have been the primary beneficiary of the auctions. In cases where biogas projects do receive power purchase contracts, they are doing so by entering into bilateral agreements with private end users.
Second, environmental quality concerns are often cited as an important factor driving biogas market development in Brazil, as anaerobic digestion could be deployed to mitigate nutrient loading and other water pollution impacts – especially within the agro-industrial sector. For example, in Rio Grande do Sul, a major pork producing area in southern Brazil, high levels of organic effluents pollute surface waters, creating significant health and operational challenges for local water treatment authorities. These include eutrophication, harming local biodiversity and increasing mosquito and black fly populations as well as the diseases transmitted by these pests. In some cases, strong algal growth from eutrophication has even made it necessary to halt hydropower electric production in the past.
Responding to these and similar challenges, in 2010 Brazil passed new “reverse logistics” waste management regulations. Under the new rules, waste generators – including the livestock industry – must create a management plan and implement a set of procedures designed to facilitate collection and recovery of solid waste for reuse in production or some other means of environmentally adequate disposal. The regulations also provide incentives encouraging creation of cooperatives to develop projects, knowledge sharing, technical innovation and environmental monitoring, among other initiatives. Over the long term, these regulations and incentives could benefit the biogas market, though as industry stakeholders point out, they do not directly incentivize use of biodigesters.
Within Brazil’s farm sector, digesters compete with a variety of manure management storage and treatment options. The most common is the Esterqueira, an open tank or lagoon where manure is stored, stabilized, and eventually removed and spread as fertilizer. The Esterqueira meets the government’s basic regulatory requirements and is relatively inexpensive to install. Upgrading to an anaerobic digestion facility, which provides improved environmental controls as well as a higher quality fertilizer, would require considerably greater upfront expense to farmers, which in many cases overwhelms the economic benefits. As a result, stakeholders in Brazil indicate that biogas technologies are not receiving adequate incentives to support its potential to minimize environmental and health hazards.
Finally, biogas projects in Brazil have suffered from a long history of technical challenges. For example, in the 1980s and 1990s, several hundred biogas projects were developed in Brazil, when the state and federal government agencies offered incentives encouraging project development. However, over time, facilities were shut down due to technical challenges. In Paraìba State (Northeast region), for example, around 200 digesters were installed on rural properties during the 1980s. Currently, less than 5 percent are working and over 95 percent of owners do not intend to reactivate their digesters. According to representatives from Sansuy, a Brazilian PVC manufacturer active in the biodigester market, the vast majority of digesters were shut down due to their lack of large-scale production capacity or inadequate operational expertise.
More recently, however, technical challenges appear to have been at least partially addressed as biogas digesters have become more sophisticated and standardized. The Ministry of Agriculture and Food reports that the most commonly used model, referred to as a PVC membrane biodigester with continuous flow, typically has a digester volume of 150 cubic meters, a 0.8 mm PVC cover, a hydraulic retention time of about 30 days, and an internal combustion motor and a 1 mm PVC gas holder with a capacity of 136 cubic meters. According to a 2011 AgSTAR survey of on-farm biogas recovery systems, Sansuy patented a simple PVC biodigester technology that has achieved “tremendous success.” The company installed approximately 700 biodigester units in various sizes in Latin America.

Investment Opportunities And Technical Support Networks
To make projects economically viable, biogas project developers in Brazil commonly seek out alternative forms of funding or financing. Through the United Nation’s Clean Development Mechanism (CDM), industrialized countries with greenhouse gas emission (GHG) reduction commitments under the Kyoto Protocol are permitted to meet part of their commitments by investing in GHG emission-reduction projects, like biogas, in developing countries. Projects in developing countries must lead to emission reductions that are real, measurable and long-term. Those meeting the CDM criteria can earn certifiable emission reductions (CERs) for each ton of CO2-equivalent GHGs reduced. CERs are then traded and sold to entities in developed (i.e. Annex I) countries. As of June 2009, approximately 373 CDM projects had been developed in Brazil.
International support via CDM has been important in providing incentives to finance biogas projects in Brazil (primarily large projects). However, the Kyoto Protocol expires in 2012, and no agreement exists to extend the program. There is no guarantee, therefore, that CDM will continue beyond 2012. Moreover, Japan, Canada and Russia – three of the most significant parties to Kyoto outside the European Union – have indicated that they will not support the Kyoto Protocol past 2012. This regulatory risk is compounded by the fact that it can take one to two years (or more) to verify and register CDM projects. However, given the existence of national and institutional climate change commitments outside of the Kyoto Protocol, like the European Emissions Trading System (ETC), it is possible that going forward Brazilian projects can trade carbon credits under bilateral agreements or in voluntary markets. Ensuring these options exist will be important for the continued development of Brazil’s biogas market.
The Global Methane Initiative (GMI) is an international network of experts that provide technical assistance to developing country partners for methane capture and clean energy project development. Initially launched as part of the US Environmental Protection Agency (EPA) as the Methane to Markets program, the GMI recently has been expanded and relaunched with additional support from the European Commission, the Asian Development Bank and the Inter-American Development Bank.
GMI’s focus in developing countries is driven in large part by developing country partners and the steering committees or subcommittees created to support them. Each developing country (e.g. Brazil) creates subcommittees to assess methane emissions in major sectors including agriculture, landfill gas, coal and mines, and oil and gas systems. Within each subcommittee, delegates meet twice a year to discuss issues related to emission protocols, technical assistance and potential for technology transfer. Each subcommittee also develops a resource assessment, where experts and regional partners conduct detailed analyses to assess opportunities for methane reduction projects. It is then the responsibility of the host country to develop a comprehensive strategy. Although a resource assessment has been conducted, Brazil has not developed a comprehensive country-wide strategy to manage its methane emissions. With the right strategy in place, though, the GMI network will provide additional assistance such as training, capacity building, technology transfer, or resources for site specific opportunities.
Going forward, international initiatives like CDM (or the voluntary carbon markets) and GMI could play a big role in market development for Brazil’s biogas industry. CDM and GMI bring funding resources, financial expertise, technology transfer, and other technical support to Brazil. Additionally, by collaborating directly with local stakeholders, these initiatives could help spur Brazil’s domestic policy agenda for biogas. Brazil is slated, for example, to develop a national methane strategy as part of the GMI initiative. To this end, domestic stakeholders have raised a number of innovative policy ideas that could encourage greater biogas market growth, from developing national and state policies to encourage greater production of domestically produced biofertilizers to incentivizing thermal energy use from biogas. Looking ahead, if these policies gain traction, Brazil could become a leading biogas market.

Neil Veilleux is a consultant with Meister Consultants Group in Boston, Massachusetts. Erica Marcos was a summer fellow at Meister. The Global Methane Initiative Resource Assessment for Livestock and Agro-Industrial Wastes in Brazil cited in this article is available at: www.globalmethane.org.