I well remember when I took over the editorship of the journal some 14 years ago, the global price of sugar was hovering at around 6 cents/lb, and Brazil was the only cost competitive producer. In India, some factories at the time were making more money out of selling surplus cogenerated power than sugar. Fast forward to 14 years later, with the global industry reeling under low sugar price from 5 years of surpluses, in Brazil, some of the leading companies (e.g. Cosan, Biosev, Sao Martinho) have been bailed out by their cogen units producing as much as a third of their revenues from the sale of surplus power to national grid.
Advances in scientific, technical and technological offer variety of opportunities to best utilize by-products and waste streams generated during beet and cane sugar processing to produce not simply valuable, but high value co-products. Yet, there is little evidence that many companies are proactively taking advantage of progress to further their business. At least that is the general impression left from the survey of the global press by International Sugar Journal1 of investment in new build activity.
In the emerging economies, rising energy demands have woken up policy makers in Brazil, India and Thailand to drive their cogen sector to expand surplus production. In the article published in this issue by two economists from International Sugar Organization (ISO), they note that in the case of the industries with well-developed co-generation models and supportive government policies electricity sales may reach up to 15% of the sector’s total gross revenue from sales of sugar and ethanol. In centre-south in Brazil, where around 90% of Brazil’s cane is grown, cogen output expanded by 17% from 2013 to 2014. Over the past six months, there have been a variety of announcements noting investments in the bagasse-based cogen sector in India, Philippines, Swaziland, Thailand, Colombia, Kenya, Brazil, Uganda and Fiji.
But Thailand’s Mitr Phol’s announcement recently that it is investing US$4.5 million in installing solar farms to expand its renewable energy mix production certainly invites some admiration. With solar-powered panels becoming less expensive and more efficient, the sector has seen a boom in investment. According to the recent UNEP report2, of the US$270 billion invested in the renewable energy sector globally in 2014, US$150 billion went to solar power.
In the beet sugar sector, AB Sugar is outstanding in fully profitizing by-products and waste streams, from using waste heat and carbon dioxide to grow tomatoes in glass houses to selling dirt tare settled in ponds to landscape gardeners. Taking the baton from AB Sugar is France’s Cristal Union and the Dutch company Cosun. The latter two companies are investing in the developments in the emerging bioeconomy to produce isobutene from sucrose and personal care products, paint and coatings, and composite materials from beet pulp, respectively. Cristal Union has partnered with the biotech start-up Global Bioenergies to produce 50,000 tonnes of isobutene from sugar beet. Isobutene is a platform chemical used to produce a variety of end products, including lubricants, paints, rubber and fuels. With the support from European Biobased Industries Consortium, Cosun is coordinating the project which aims to extract value from sugar beet pulp in the order of between 20 and 50 times more.
With big chemical giants Bayer and Basf along with variety of start-ups working actively to produce commodity chemicals from carbon dioxide, it is only a matter of time before licensing opportunities beckons for entrepreneurs managing sugar factories to exploit.
There should be little doubt that diversifying drives competitivity, particularly amidst stagnant low prices and volatility. Technological progress is there to be exploited. Doubtless, policy makers need to support incentivisation, and investors to see there is a compelling business case.
1 See articles appearing in International Sugar Journal 2015, 117 (1399): 484-487 and 2014, 116 (1389): 692-696
2 UNEP (2015) Global trends in renewable energy investment 2015