2. PETROBRAS
Cautionary Statement
The presentation may contain forecasts about future events. Such forecasts
merely reflect the expectations of the Company's management. Such terms as
"anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek",
"should", along with similar or analogous expressions, are used to identify
such forecasts. These predictions evidently involve risks and uncertainties,
whether foreseen or not by the Company. Therefore, the future results of
operations may differ from current expectations, and readers must not base
their expectations exclusively on the information presented herein. The
Company is not obliged to update the presentation/such forecasts in light of
new information or future developments.
Cautionary Statement for US investors
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves that
a company has demonstrated by actual production or conclusive formation
tests to be economically and legally producible under existing economic and
operating conditions. We use certain terms in this presentation, such as oil
and gas resources, that the SEC’s guidelines strictly prohibit us from including
in filings with the SEC.
2
3. Mas esta estrutura gera externalidades negativas
•Projected increases in global energy demand and emissions dominated by
power, and industry that represent 49% and 18% of projected CO2 emissions
through 2030;
•Transport sector dominated by oil represents only 21% of projected increase in
CO2 emissions through 2030.
World Energy-Related CO2
World Primary Energy Demand
Emissions by Sector
Increase 2004-2030 (14,341 million tonnes) Increase 2004-2030 (5,891 million tonnes)
5% 4%
7% 8%
3% 28%
2%
21%
49%
27%
18%
28%
Coal Oil
Power Generation Industry Gas Nuclear
Hydro Biomass and waste
Transport Residential Services*
Other renewables
Other**
* Includes agriculture and public sector ** Includes international marine bunkers, other transformation and non-energy use
Source: World Energy Outlook 2006
4. Mas esta estrutura gera externalidades negativas
Chinese industrialization distorts all emission projections
2020
27,982
Million Metric Tons of Carbon Dioxide • China emissions are growing 10
GDP - Billion 2000 dollars times faster than US;
19,073
20,274 • By 2020 China GDP will have
surpassed US GDP but so will CO2
emissions.
9,287 9,960
9,009 7,543
4,532 • 53% result from power
2,343 2,899
1,981
556
generation as compared to
40% for rest of world
OCDE (*) USA Russia China India Brazil reflecting rapid
Carbon Dioxide Emission GDP industrialization.
Export Orientation by Countries to USA
(percent of GDP)
Average period 2001-05
5.9%
• Reflecting dependence of Chinese
growth on exports particularly to the US;
3.1%
• CO2 trading mechanisms reflect transfer
1.4% of CO2 emissions and not necessarily
reduction.
Russia China Brazil
Source: EIA - International Energy Outlook 2006 and IMF Report (*) without USA
5. Mas esta estrutura gera externalidades negativas
•Regional Distribution of CDM Projects concentrated in China and secondly
India with major power generation concerns;
•Russia and Brazil have lagged due to use of natural gas and hydro-electricity
for power;
•Energy for transport has not benefited from carbon trading mechanisms as
they require assertive government policies that are not addressed by KT;
•Renewable fuel projects are usually too small for complex carbon trading
mechanisms
Location of CDM Projects (Sellers) Percentage Share of Projected CO2 Emissions
Rest of Latina 2004 - 2030 Reference
America
6% Africa
Others 3% 5%
7%
3%
Brazil 19%
4%
R of Asia
7%
China
India 61%
12% 73%
Brazil Russia India China
6. BRIC energy consumption patterns are very different and reflect power generation
• China and India high CO2 emissions from oil Growth Rate 2003-2030
and coal for power represent more than 91% 6.9%
6.3%
and 88% respectively;
• Russia predominance of cleaner natural gas 5.3%
5.0%
represents 54% of energy sources;
4.4%
• Share of renewable energy sources in Brazil 3.5%
and natural gas represents 43% of energy 3.1%
sources. 2003
2.6%
2.1%
6% 6% 4% 1.4%
8%
3% 2% 3% 7%
37%
22% 25%
31%
54% OCDE Russia China India Brazil
1%
6% Carbon Dioxide Emission GDP
• Projections suggest higher GDP growth
45%
and CO2 emissions growth in India and
66% 50%
20% 57% China so that oil and coal surpass 90% of
energy consumption;
22% 18%
6% • Continued use of natural gas in Russia;
OCDE Russia China India Brazil
• Brazilianuse of natural gas and
Hydroelectricity other Renewable Energy
Nuclear Energy renewables could surpass 50% of
Natural Gas
Oil
consumption by 2030.
Coal
Source: EIA - International Energy Outlook 2006
7. But transport sector can still contribute to emission reductions (IEA alternative
scenario)
Increased use of renewable Alternative Increase in
Reference Increase in
Demand 2004-2030 (mtoe) fuels can contribute to reduce Demand 2004-2030 (mtoe)
projected increase in energy
for transport by 7 %, to 15 % 45
if adequate policies followed.
1,023
659
77 132
42
Bio 2004-2030 Oil Bio Other
Oil Bio Other Reference - Alternative
5% Total: 836 mtoe
Total: 1,142 mtoe
18% United States
36% OECD Europe
OECD Pacific
The direct benefits in 4% Other OECD
emission reductions would Brazil
be equally distributed 9% China
India
between US, Europe OECD 5% Other Asia
and the rest of the world 2% 16% Rest of World
4%
8. Brazil is the 1st country to reap benefits from Ethanol
Because program is government regulated there are no benefits from KT but benefits
of reduction in CO2 emissions have already materialized;
Used up to 10% in petrol, ethanol substitutes lead
Alcohol Exports
and MTBE as an oxygenate, withour any change in 2005
engines, without harmo to air or groundwater End of regulation
1999 FFV
160000
Beginning of the
During this sector deregulation
140000
period,
ethanol PROÁLCOOL
120000
utilization Alcohol Vehicles
saved 644 10000
million ton.
of CO2 80000
emission
60000
1000 BEP
Accumulated effective economy:
40000
1 Billion boe ~US$ 52 bi
20000
CNG
ETHANOL 0
GASOLINE
1972 1976 1980 1984 1988 1992 1996 2000 2004
Source: MME, BEN 2006
9. Ethanol can be introduced also as a partial or full substitute for petrol: up to
25% (Brazil) partial motor adjustments require participation of automobile
industry; up to/over 85% requires flex-fuel vehicles, consumer preference
(price/performance).
Source:Henry Joseph Jr. ANFAVEA - Volkswagen
10. Of the original incentives to promote ethanol only lower taxes on
vehicles have survived the whole program because of benefits to car
manufacturers and consumer preferences:
• Ethanol price lower than petrol
• Guaranteed return to ethanol producer
• Lower taxes for ethanol powered vehicles
• Loans to increase ethanol production
• Service stations obliged to sell ethanol
• Strategic inventories of ethanol
Other tax incentives may be applicable such as circulation taxes,
higher taxes on petrol vis a vis ethanol
11. Quais seriam os motivos do diferencial de produtividade brasileira ?
Brazil has already made substantial progress in cost reduction of ethanol
• Substantial savings can and have been achieved in costs of reducing CO2 emissions
through renewable fuels but which are not addressed by Kyoto Treaty
Greater production cost reduction when Ethanol Engine Relative Performance*
20 compared to gasoline.
140 132,4%
120 110,0% 110,0%
18 103,3%
100
80
16
60
40
14
20
US$/GJ 2002
0
12 Consumption
Power
10 Gasoline 100% Gasohol 22% Ethanol 100%
8
6
4
2 1980 1985 1990 1995 2002
0 Ethanol prices in Brazil Rotterdam regular gasoline price Source: Goldemberg 2004
*Source: Volkswagen (Brazil) - Presentation prepared for review within The Warren Centre for Advanced
Engineering at Sydney University
12. Incentives are required to develop logistics for renewables in the USA for example;
Such as those that exist and are being expanded in Brazil.
US Ethanol producers
are concentrated in
upper mid-west with
little or no integration
with oil facilities
Ethanol Logistics System in Brazil
• While most oil and
product pipelines run
from the south to
northeast, north or
southwest;
• Shipment in the
Pacific will have a
comparative
advantage in
supplying California.
13. Diferenças de produtividade na cana de açúcar
Latin America offers excellent potential to increase ethanol production
• Incentives are required to associate better use of natural resources which could contribute in
reducing and not transferring CO2 emissions;
• Availability of lands, water and low labor cost also benefit production in Central and South
America.
Latin America has the largest potential arable land per capita
and only uses 13,9% of it.
Sugar-Cane Productivity
Potential Arable Land % of Potential Arable Land
Yeld per Hectar actually in use
(1.000 ha per capita)
72.41 73
71.13 2.2 61.4
67.77 69.34
55.6
1.7 48.6
1000 Kg/Ha
0.6
13.9
0.2
Asia USA Central South Brazil Asia and Europe North Latin Asia and Europe North Latin
America America Pacific America America Pacific America America
World Average
Source: FAO
14. Diferenças de produtividade na cana de açúcar
33% of the world’s internal renewable water resources are concentrated in
Central and Latin America;
Annual water use by sector
Internal renewable water resources Latin America and
Brazil Caribbean
(m³ per capita – 1997)
18% 9%
35000 33.097
19%
30000 27.673 21%
61% 73%
25000
20000 World
15000
20%
10000
6.984 9%
5000 71%
0
World Latin America and Brazil
Caribbean
Agriculture Domestic Industrial
Source: FAO
15. Energy output/input ratio is likely to be greater in tropical climates
Increasing Efficiency in Raw Material Use is not addressed in KT
Raw Material Energy output / energy input
Wheat 1.2
Corn 1.3 – 1.8
Sugar Beet 1.9
Sugar Cane (under Brazilian Production Condictions) 8.3
Tomorrow
Potential ethanol production would grow by more than 100% based on Lignocelluloses Biomass technology
Molasses
yields only 85 l
of ethanol,
1 metric ton of
sugar cane But
Cane bagasse
yields 185 L of
ethanol
Base
calculation
15
16. Mas esta estrutura gera externalidades negativas
Petrobras 2011 CO2 Emission Targets
In line with its sustainability objectives Petrobras has established its
own emission targets apart from its efforts in renewable fuels.
To allow the definition of the targets, future GHG emissions were estimated
based on the Company’s Business Plan for 2007 – 2011, adopting 2005
total GHG emission as an initial reference. The BAU baseline defined this
way was then used as a reference to set yearly avoided GHG emission
targets, as shown in the following table:
2006 2007 2008 2009 2010 2011
Avoided GHG emission target
(million tones of CO2 equiv) 1.13 1.79 3.56 4.15 3.93 3.93
Percentage of baseline year
emissions 2.20% 3.50% 6.90% 8.10% 7.60% 7.60%
The total amount of GHG emissions to be avoided from 2006 to 2011 (18.5 million
tonnes of CO2 equivalent) is equivalent to about 36% of the 2005 emission figure
(51.56millionCO2e)
17. Mas esta estrutura gera externalidades negativas
Summary
• Bulk of projected emissions come from power generation not
transport;
• China and India will benefit most from carbon trading and
emission limitations because of coal and oil requirements for
power while Russia and Brazil use more cleaner natural gas
and hydro for power;
• Renewable fuels are flexible in their implementation but
require adequate incentives and taxation mechanisms to
encourage participation of entire energy chain (producers,
distributors, car manufacturers and consumers)
• Comparative advantage of production in the tropics of
renewable fuels requires revision of agricultural trade barriers
which are not provided for in Kyoto.
