Use of biofuel (ethanol) in light vehicles
With the aim of reducing its GHG emissions related to logistics activities, Iguá sought to use biofuels in the fleet
The use of sugarcane ethanol as fuel in Brazil dates to the beginning of the last century. Since then, biofuel has been used as a mixture in gasoline. In the 1970s, with government incentives, the national automobile industry introduced vehicles with engines powered exclusively by ethanol.
In the early 2000s, vehicles with flex fuel engines were launched, which can use any fuel mixture (ethanol and gasoline), or even just ethanol. Currently, ethanol represents around 48% of the transport matrix.
Fuel production has also evolved technologically, mainly with the production of second-generation ethanol, which is ethanol produced from by-products of ethanol and sugar production, representing an increase in biofuel production without the need to increase crop areas.
Furthermore, in recent years, there has been an increase in ethanol production from second-crop corn, which is corn grown in post-production areas for other products, avoiding competition between the production of biofuels and food.
It is also worth highlighting the implementation of the National Biofuels Policy in 2017, created as part of the Brazilian NDC compliance process and encouraging the use of biofuels (1).
With the development and dissemination of research demonstrating that burning ethanol provides a reduction in emissions of up to 90% compared to gasoline (2), and the large supply of fuel originating, for the most part, from sugar cane, Iguá’s operations decided to use ethanol in its flex vehicles from July 2021, except where biofuel is not offered by the accredited network of gas stations.
In 2021, seeking to achieve its GHG emissions reduction objective linked to its sustainability strategy, Iguá's Fleet Management Policy established the priority use of ethanol as a fuel. Iguá's operations, spread across six Brazilian states, migrated its fleet of light vehicles to the flex fuel solution, making it possible to supply both gasoline and ethanol.
Implementing the solution proved a major challenge, given the volume of gasoline used exceeded 20% of total fuel consumption in 2021. Additional barriers included cultural issues, prejudice toward ethanol (ethanol vehicles produced in the country did not always function properly, which discouraged their use), and the cost-benefit ratio in some cities (in Brazil, fuels are subject to different state taxes, making their final cost to the consumer quite variable).
The company then launched an engagement process, with educational campaigns and periodic monitoring of consumption of each type of fuel. Operational leaders also played an important role in facilitating the shift, providing positive reinforcement and guidance. In the 2022/2023 review of the policy, the use of ethanol that was previously preferential became mandatory, with an exception in place when there is no ethanol at the accredited gas station.
Control is carried out by vehicle management and supply platforms – Iguá uses a specific card for refueling, which requires prior accreditation from gas stations. Furthermore, each vehicle has its own fuel card. All supplies are recorded, including the quantity and type of fuel purchased. Using the same resource, it is possible to block the purchase of gasoline, for example, in a flex fuel vehicle, permanently or temporarily. Some Iguá units put stickers on the fuel tank caps of their vehicles, indicating mandatory use of ethanol.
In 2023, two years into its implementation, the volume of gasoline fell by half, as well as the average supply per license plate, even with the vehicle fleet being expanded due to the acquisition of the new operations. These numbers reflect how a well-crafted policy can achieve great results and positive effects to company culture and the environment.
Targeted emissions sources
Scope 1, Mobile combustion category, own fleet vehicles.
2021: about 1,615t CO2e
2022: about 1,090 tCO2e
More than 30% reduction
The main benefit, in addition to the reduction of GHG emissions and other pollutants in the fleet, was the reduction of costs in leasing flex vehicles, given their greater availability, and the use of vehicles with reduced power (moving from 1.6 vehicles to 1.0).
As Brazil is one of the countries that produces the most ethanol in the world, in times of crisis, like the pandemic that occurred in 2020, it can still guarantee easy access to fuel, with a greater margin of safety in supplies. In case of lack of fuel at stations, ethanol is refilled quicker than gasoline.
Based on data obtained from management platforms and the current average price of fuel in Brazil, there is no significant reduction in costs, as ethanol is a fuel that provides less autonomy compared to gasoline – that is, in 95% of cases, the ratio cost x autonomy are equal on a daily basis.
Impact beyond climate and business
The incentive to use biofuels in the organization recognizes the Renovabio Program, created to meet part of the Brazilian NDCs (1), in addition to expanding the country's energy security.
Furthermore, encouraging use strengthens the national industry, which generates more than 700,000 formal jobs (3).
It is important to highlight that, like any large monoculture, the planting of sugar cane and corn has associated negative environmental impacts, with emphasis on possible effects on biodiversity and land use.
The RenovaBio Program, as well as other legal requirements, such as the Brazilian Forest Code, exercise command and control to manage this production.
It is worth highlighting, once again, the importance of second-generation ethane and second harvest ethanol, in addition to practices such as direct planting, as ways of reducing these impacts.
Typical business profile
The solution can benefit companies with an updated active fleet, and where it is possible to prioritize flex or ethanol-powered vehicles when purchasing or leasing. Furthermore, the availability of biofuel at local gas stations should be considered.
The solution is low-cost and can be implemented across all sectors. Companies must establish a clear journey based on guidelines approved by its leadership. On this journey, it is necessary to identify whether there is an opportunity to use biofuels, that is, the availability of a fleet and fuels. It is also necessary to conduct efficiency tests on the use of renewable fuels within the organization's operational reality, considering the type of fleet required to carry out daily activities, daily mileage, year of the fleet, and maintenance processes. This data must be considered in composing technical and financial feasibility analyses.
The organization must also carry out training and engagement processes for its employees, seeking to generate knowledge of the benefits of ethanol. Locally, teams responsible for fleet management must evaluate and develop supply networks to ensure the availability of fuel.
Management of the organization responsible for establishing policy.
Local and corporate fleet management teams responsible for ensuring a fleet of flex vehicles and controlling the use of fuel.
Local Environmental Management teams, responsible for training and engagement processes.
All employees who drive the vehicles.
Fuel suppliers and the entire network involved.
Key parameters to consider
Solution maturity: In Brazil, ethanol fuel is a very technically mature solution, having been used on a large scale since the 1970s/1980s. Vehicles with flex fuel engines emerged in the early 2000s.
Technical constraints or pre-requisites: The organization must have a fleet of ethanol (single fuel) or flex fuel vehicles. It must also implement a (preferably computerized) system that controls the purchase of fuels in real time. In some cases, these systems make it possible to block the acquisition of fossil fuels.
Additional specificities: It is very important that the place of use has ethanol available at gas stations, which is a reality in the vast majority of regions in Brazil.
Other: The organization, when positioning itself for the priority use of a certain fuel, must be willing to develop local supply networks, in partnership with suppliers.
Implementation and operations tips
As already mentioned, to encourage buy in and support of the policy, internal and external engagement was necessary, and leaders served as fundamental links to success. In some locations, ethanol is still more expensive than gasoline, depending on distance from production centers, taxes, and local incentives, which needs to be considered in the cost-benefit ratio.
Furthermore, there were many instances when ethanol was unavailable at the time of refueling. The positioning of management teams in the provision of resources and development of supply networks is thus a fundamental step. The training and engagement of end users (drivers) is key to success, especially in places where the choice is still in their hands, at the time of refueling.