Brazil's eucalyptus sector faces uncertainty due to delayed curbs on the use of native wood fuel

A reforestation association said that an agreement to phase out the use of native forest wood in Brazil's corn-ethanol plants for energy production has been put on ice, creating uncertainty for investment?into eucalyptus?plantations.

Otaviano Pivetta has put the agreement between the Mato Grosso state government and the local prosecutor on hold. He delayed issuing the decree that would have established the rules of the phase-out.

Many corn ethanol plants use natural wood from the Amazon rainforest as fuel to convert corn into biofuel. This has raised concerns that this industry may be encouraging illegal deforestation.

Plantation-grown eucalyptus is a renewable biomass alternative for corn-ethanol plants, but it requires long-term investments and regulatory certainty. Native wood is cheaper.

"Investment has been affected." This raises a yellow flag for anyone who is considering investing in forests.

According to the Mato Grosso prosecutor's office pledge, the consumption of native wood resulting from deforestation will drop to zero by the year 2035. However, the Mato Grosso government has recently requested that a proposal be reviewed by a lawyer to allow large consumers up to 5% to their energy needs to be met by native wood.

Mato Grosso’s commitment follows an investigation by the state prosecutor’s office into possible illegalities in the use of native firewood to power corn ethanol factories, which are multiplying rapidly in the state.

According to industry figures, the state has plans for more than 10 corn ethanol plants in the next few years.

Arefloresta estimates that around 10 billion reais (1,94 billion dollars) would be required to supply corn?ethanol plants with renewable biomass such as eucalyptus plantations. This could increase Mato Grosso’s eucalyptus tree area from 165,000 hectares to 400,000 hectares (or 988,422 acres), by 2030.

The state government of Mato Grosso did not respond to a comment request.

(source: Reuters)