Environmental and Economic Impacts of Ethanol Pipelines in Brazil: A Case Study

Abstract Around 90% of the ethanol produced in Brazil is trucked. Trucking is a fast, reliable, and widely available mode; however, it also stands out as the most polluting, unsafe, and often most costly. As ethanol production is expected to increase in Brazil, optimizing the ethanol freight system, both for export and domestic distribution, provides opportunities for greenhouse gas mitigation, cost savings, reduced congestion along transportation corridors, and short-term job creation. In addition, improvement in logistics also allows a greater storage capacity for ethanol. This paper assesses the economic feasibility and potential greenhouse gas savings of building new ethanol pipelines in Brazil. The calculations are performed in a standard discounted valuation framework and are applied to an actual pipeline project in development by the consortium Logum Logistica S.A. The results indicate that the project will yield substantial value for the pipeline operator (approximately US$305 million in present value) and substantial greenhouse gas savings (approximately 17.5 million Mg over 30 years).