### MEMORANDUM

TO: EPA Doc ket ID No. EPA

- HQ

- OAR

- 2015

- 0111

FROM: Paul Argyropoulos, Office of Transportation and Air Quality, US EPA

DATE: Meeting Date was October 22, 2015

SUBJECT: Meeting with representatives UNICA and Dentons

EPA Attendees: Paul Argyropoulos

Dallas Burkholder David Korotney
Paul Machiele

NBB Attendees: James Rubin, Dentons

Leticia Phillips , UNICA

Meeting Summary:

The representatives provided general comments on their positions on the proposed RFS Volume
Rule and some additional verbal updates on Brazilian sugarcane crop reports and projections for ethanol export volumes. A follow

- up email was submitted later and is included in the text of this
memo to the docket.

Text from 10

- 17

- 15 Email from Leticia Phillips to Paul Argyropoulos

Dear Paul, As promised, please find attached the document that reflects the numbers I gave you in regards to Brazilian sugarcane ethanol production for this harvest. We have also included information regarding exports to China. In regards to the INDC proposal of Brazil to the UN, and the numbers the government was projecting for ethanol production by 2030, I have found the video of the Minister of Mines and Energy, Eduardo Braga, confirming the 50 billion L mark for 2030.
President Dilma was also present in the event

- that took place last week in Piracicaba

- and she reconfirmed Brazil's commitment to increase ethanol production and participation in the fuel mix as part of the country's commitment at COP21 in Paris. I tried to transl ate the passages of the speech, but it seems like president Dilma confused billion liters to million tons, when repeating what Minister Braga said. In any case, below the link to the video and my attempt translation of
these moments.

Please let me know i f you have any questions or need any additional clarification. Best regards,
Leticia

https://www.youtube.com/watch?v=jxBnQ0ZAeA4&feature=youtu.be

### Minute 22:32 Minister Eduardo Braga: “and today, here, we saw, Beth something that nurtures

and justifies the speech and commitment that our country, through our president Dilma made of going from 30 billion liters of ethanol to 50 billion liters of ethanol. Governor, this is n ot a small challenge, but the pioneer model that CTC implements here...

Minute 44:08 President Dilma Rousseff: In December we will participate in the COP21, in December we need to show how we will meet our goal, that it is a ambitious goal, the goal of,
base d in 2005, reducing our GHG emissions in 43%. One of the basis of this reduction is of 43% is for sure in the fuel matrix, which is the most diff icult segment to promote GHG em issions reduction in the world. We have one advantage here, no car in Brazil mov e in this country without ethanol. We built this along the years. We are committing ourselves to an ambitious goal for ethanol, like Minister of Mines and Energy said from (30 to 50 million tons) of ethanol in our fuel matrix. I am sure that, after July wh en I saw the production of cellulosic ethanol, and also after seeing all the technological innovation here today, we are able to meet and probably exceed this goal. We know this conference will be an important moment for us to show the world how we produce ethanol here and what is the future we map for this area of activity. Be sure that we will make this clear in December in Paris, we will make clear that our goals are not only achievable but Brazil will show, once more, that this renewable energy is, with out a doubt, what
the worl d expects from us in this area.

Attachment

### Updated Information on Brazil’s Sugarcane Production

– October 2015

1. 2015/2016 Harve st estimate

- Brazil

Source: UNICA. Note: 1 thousand ton; 2 million liters. 3 ATR is equivalent to TRS

- acronym used to "Total Recoverable Sugars". Note: corn
ethanol production by the Center

- South region is considered.

2. Sugar cane crushing history and ethanol and sugar production in Brazil

– 1990/91 to 2015/16 (estimate)

Source: UNICA and MAPA. 2015/16

– estimate.

The 2015/2016 harvest will reach a new record of eth anol production in Brazil, a nd should

exceed the 30 billion

- liter mark

– an increase of more than 1.5 billion lit ers if compared to the previous harve st (2014/2015), which reiterates t he existence of a high production capacity

installed in the country. 2014/2015 2015/2016-e

632.127 657.100 3,95%

35.548 34.100 -4,07%

12.095 12.002 -0,76%

16.300 18.062 10,81%

28.394 30.064 5,88%

85.640 86.746 1,29%

135,48 132,01 -2,56%

sugar 43,56% 41,26% -5,30%

ethanol 56,44% 58,74% 4,09% Hydrous ethanol 2

Total ethanol 2

ATR 1

ATR/ ton of sugarcane 3

Share (%) Crop year Products Var. (%)

Sugarcane 1

Sugar 1

Anhydrous ethanol 2Th e sugarcane crushing should reach its historical record on the current agricultural cycle. In

c ontrast, the projected sugar production for the 2015/26 harvest shows the lowest result of

the last 5 harvests (i.e. from the 2010/11 to 2014/15 harvest , the man ufactured amount of sugar was superior than the estimate value for the current agricultural cycle

– 2015/16). This behavior reflects the permanence o f a production mix that favors ethanol production

, following the historic al pattern ( graphic 3 ).

3. His to rical evolution of the destination of the sugarcane processed by the Center

South region. Values in %

Source : UNICA. It is estimated that the quantity of left over sugarcane (“bisada” cane) 1 may reach 30 million tons, leading the expectations of an early start to the next harvest (2016/2017). These characteristics refer to a probable bigger offer of ethanol and sugarcane for the 2016/17 harvest, when compared to the current harvest results (2015/16), even if the canefield is aging.

With regard s to the Br azilian expo rts of ethanol, it is estimated that it will exceed in up to 0

. 5 billion liters the volume commercialized in the previous cycle ( 2 014/2015) of 1,39 billion

lit ers. From April (beginning of the crop) to September (last month for which statistica l data is available), Brazil exported 786 million lit ers. Today is projected the total volume exported in

the current ha rvest add to about 1,8 billion lit ers.

1 Sugarcane unmil led in the current harverst and, therefore, available for harvest in the next agricultural cycle (2016/2017)4. Ethanol exports from Brazil. Values in millions of liters.

Source: SECEX

– Brazili an Secretariat of Foreign Trade

The volume exported from Brazil to China in September 2015 reached unprecedented 73
millions of liters. In the accumulated of April 2015 to M arch 2016 there are indications that

the total e xports to the Chinese market will t otal 180 million liters

– i.e., more than 100 million

liters remain to be exported. It is believed that this peak export to China is an one

- off event ; a window of opportunity tha t arose, as shown in the historical data below. China does not

appear as a tra ditional destination to Brazilian ethanol.

Along these lines, it is noteworthy that the arbitration between prices charged defines the

commercialization of biof uels between market agents

.


### 5. Ethanol exportation from Brazil to China . Values in m 3

Harvest Brazilian Exports (a) Brazilian Exports to China (b) Percentage (b/a)

Source: SECEX. *accumulated April to September Safra Exportação Brasil (a) Exportação Brasil para China (b) Participação (b/a)

2005/06 2.615.622 0 0,000%

2006/07 3.691.610

2007/08 3.624.823 47 0,001%

2008/09 4.721.898 4.046 0,086%

2009/10 3.165.592

2010/11 1.905.621 24 0,001%

2011/12 1.892.026 14.944 0,790%

2012/13 3.482.800

2013/14 2.605.640

2014/15 1.393.891

2015/16* 786.024 89.567 11,395%Additionally, there is a regulation in China that restricts the use of imp orted ethanol as fuel. Only government agencie s (SOE) a re authorized to import fuel ethanol and, even then

, these imports are commonly performed only as a test to check the country’s viability to import biofuel.

In the current line up of et hanol there is no chartered ship to China.