IFC invests $70m to boost Brazilian biogas, ethanol production
The $70 million (€59 million) financing for Grupo Cocal (Cocal) will strengthen the diversification of the country’s energy matrix, expanding the company’s ethanol and biogas production. The project will contribute to the renewal of Cocal’s sugarcane plantations, with agricultural and ‘climate-smart’ techniques.
The financing package consists of $40 million (€33 million) from IFC’s account and $30 million (€25 million) mobilised with two other financial institutions, Banco Itau BBA and the Netherlands-based Rabobank.
IFC’s loan will support Cocal’s $92 million (€77 million) investment programme, which includes the construction of a biogas production unit in the municipality of Narandiba (Sao Paulo State); the renovation of 27,000 hectares of sugar cane, and the replacement of agricultural machinery and equipment.
IFC’s resources will be used specifically for the construction of the biogas production facility and in agricultural practices that have vertical gains in production, qualitative gains in raw material, use of technology and precision agriculture.
“Cocal has focused on innovation and strengthened its environmental, social and governance practices,” said Paulo Zanetti, managing director of Cocal.
“Thus, the investment in projects in the industrial and agricultural sector represents an environmentally and socially viable solution, while generating versatile, clean, and competitive products for the region, boosting the local economy and regional development.
“It also allows Cocal to fit into the RenovaBio Programme by promoting the use of biofuel and biofertilisers, offering an alternative outside the fossil-based production chain.”
The investment will enable Cocal to produce biogas, biomethane, CO2, and electricity from vinasse and filter cake - noble industrial by-products from the sugarcane milling process.
Initially, biogas will replace fossil fuels in the industries and distributed by Cocal’s trucks. As of July 2022, the product will also be distributed to homes, businesses, industries, and vehicles in the region of Presidente Prudente, Narandiba and Pirapozinho (in Sao Paulo State), via a pipeline built in partnership with GasBrasiliano. Biogas will also be used to replace diesel in Cocal’s automotive fleet.
Carlos Leiria Pinto, IFC’s country manager in Brazil, commented: “This project is aligned with one of IFC’s pillars in Brazil, which is to make environmental and social sustainability a business driver for agribusiness.
“Increasing the share of sustainable biofuels and clean energy in the country’s energy matrix is strategic for Brazil to reach the goals established in the Paris Agreement.”