This is a CTP of initiative: RIPESS/ Ecocitrus (Brazil)
Ecocitrus, while thinking of investing in a new segment and finding a sustainable way to dispose of their waste, hired a company from São Paulo to carry out an analysis of the environmental impacts. One of the findings of the study was the possibility of generating methane gas. The company from São Paulo, noticing Ecocitrus’s potential, proposed a partnership in which they would have control of the processed gas and Ecocitrus would have the substrate, the fertilizer. After internal discussions in the cooperative, Ecocitrus made the decision not to accept the proposal and seek other partners that sought a fair business relationship.
"At the time we had no money to invest. They were talking about a R$40,000,000 (around US$12,245,524) or R$50,000,000 (around US$15,306,905) investment. That was in 2007 or 2008, and we didn’t have that money. We would never have the money to invest, to make this whole process with the technology they developed. Well, then we decided to make our own process. We’d develop our own technology" (Ecocitrus VP).
"What led our partners to have this idea was that our aerobic process… it’s needed for the composting process, but there are some downsides, which are the gas emissions, the odor... So, although we’re proud to be making a compound for our farms, at the same time we were also a polluter because of the CO2 emissions, some ammonia and even CH4. It was possible to catch these gases and retrieve them and make some money out of it. Then we told the cooperative: we can make a 'revamp', we can re-engineer the process. We’d keep the same input and output, the final compound would be a more matured compound, and since we use bio-fertilizers on the properties of the citrus industry partners, we’d have a more stable, more qualified product for our properties. Moreover, we could have more other income sources to add value to the plant and this money would be through the recovery of the gases of this process, without losing anything. So this is what came out of it: we’d develop it and we’d share what we don’t have, which is the gas" (Technician In Charge of the composting plant and biogas).
After deciding that Ecocitrus would try to carry out the process without the aid of the São Paulo company, they had to seek regional partners to implement the project:
"Ecocitrus sought to make the methane project a reality. The other partners, both in Naturovos and in Sulgás, came to join efforts and help us with what we wanted to do" (Ecocitrus VP).
"That’s when Naturovos entered this process, because Naturovos needed to properly allocate their waste. Their substrate, chicken manure. They intended to do this because Naturovos is one of the biggest egg producers. When you talk about large-scale production of eggs, they export a lot. So they came to help us" (Ecocitrus VP) .
With Naturovos’s raw material and the production technique, it was time to think of how to commercialize the bio-methane. The first step was self-consumption, distributing to producers and for using in the cooperative’s cars. The second step was to commercialize and that depended on an agreement with the state, through Sulgás, a partnership that has not yet been settled in its entirety:
"We mastered the art of making it. Now it’s time to take this knowledge and take it to the commercial field. But in the meantime we started to produce gas and socialize it with our farmers, who saw fit to use this gas, since we don’t charge anything, as it’s still in development. Forty cars are part of the project today. Most of them are partners who use the fuel, they’ve been using the fuel for two years. And we use for our internal use, our personnel transport. All of the cars in the cooperative are converted to gas and used our local fuel. That’s why we generate this energy, for self-consumption" (Technician In Charge of the composting plant and biogas).
"There’s a law today that states that the government deals with compressed gas. It's the same as if we made a well and found oil; we wouldn’t be able to do anything with it. We can produce oil, but only Petrobras (state-owned) can process it and sell it. It’s no different with gas. Only Sulgás can sell it down here in Rio Grande do Sul. So they came to us. Today we produce and consume, we don’t commercialize it. That depends on the state" (Ecocitrus VP).
The actors involved in this CTP are part of three different segments: a cooperative, a state institution and a private company. This partnership initiated through Ecocitrus’s partners, who sought to improve the bio-methane gas production process:
"Ecocitrus proposed to share the emissions, the gases. That wasn’t palpable; it was a lost income source. An income source that existed, but wasn’t available and that was the relationship. Naturovos was a partner, a company that sent manure waste and they saw fit to develop a project to capture the gases and share the resulting gas. Initially, it was thought to make electricity and we couldn’t do it. Over time, we realized it was better to make compressed gas out of it. That’s when Sulgás comes in. Since it’s the natural gas concessionaire of Rio Grande do Sul, it was willing to collaborate with some important assets such as analyzer, high pressure compressor, fuel dispensers, and it was incorporated into the process" (Technician In Charge of the composting plant and biogas).
In addition to the partnership with the institutions mentioned above, Ecocitrus also had the help of regional universities, which help in the research and development process. Moreover, the process was so innovative that it generated the first Brazilian legislation on biomethane.
"We got universities involved in the process. UNIVATES for bioreactors, for example. We made other partnerships with other suppliers and in two years we started producing useable gas. It was this plant that favored the ANP (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – National Agency for Petroleum, Natural Gas and Biofuels) to implement the Biomethane Ground Zero Rule, because he had the variables. We start collecting this data and we offered it to the ANP and they used it to model and issue the rule, which is number 08/2015, also called the Biomethane Ground Zero Rule" (Technician In Charge of the composting plant and biogas).
The help of Ecocitrus in creating legislation on it is interesting to analyze the institutional voids. In Brazil there were still institutional gaps on the subject of biomethane gas, which was not investigated and regulated by the competent authorities. With the partnership of Ecocitrus with private companies, government and universities, it was possible to create an industrial plant that would allow a solid analysis on the subject, allowing the start of discussions on the current legislation in Brazil today. Thus, a social innovation filled an institutional void for research, development of new expertise and new ways of doing.
"Today, as well, for example, this incentive I think it should come from the state itself, so you produce renewable energy. I think this is a gap. The state and federal government should encourage initiatives like ours. They were able to invest and they’re using their own resources to produce renewable energy. Knowing how we’re going to have problems with energy in the future, you see that there’s very little support, from both the state government and the federal government. I think there’s a very big gap there" (Composting plant technician and partner-producer).
2007-2008 – Hiring of consulting company for a technical analysis of composting plant
2011 - "And on September 20th, 2011, everyone involved, Ecocitrus, Naturovos, Sulgás, while visiting Itaipu, made the decision to begin Research and Development. Ecocitrus and Naturovos to create biogas from the waste that would be available from the composting plant" (Technician In Charge of the composting plant and biogas).
2014 - An initial feasibility is made, a project is created and submitted to FINEP (Financiadora de Estudos e Projetos - Funding Authority for Studies and Projects), by Ecocitrus and Naturovos, but because Ecocitrus had no collateral Naturovos presented the project. Ecocitrus won the project. R$19,000,000 (around US$5,812,708). But because of a lack of collaterals, the project was shelved.
Discussions have always existed and in this case especially the challenges were very obvious. Because it was not a central process for the cooperative, producers did not believe it and did not support the investments that would be carried out. The process of turning waste into gas was not something so simple to be understood by farmers, who did not believe that its implementation would be possible:
"We have our doubts at the beginning of every project. We believe it will work, it's a dream, but later you start wondering if it is really going to work. ‘Can we really do this? Can we really produce biogas and generate energy?’ It’s not a very palpable thing and we don’t have many solid examples close to us where we can point at it and go, ‘Oh, okay, that generates gas! I insert that here, I go there and I fill up my car!’ So it was something that was a little distant. But then, with the knowledge that we have, we saw it was doable, but we always want to see it to believe it. Of course, there were doubts, but we always believed in this project. If you look at us today, with the biogas that we have, it feels like a miracle sometimes how we managed to get here. Because you see the residue reached a certain point and then a few meters below it has turned into another product, and I go there and I pick up my car and fill up the tank. It’s such a wonderful thing that we’re able to produce it, that a cooperative of farmers is able to produce it. It’s wonderful for sure" (Composting plant technician and partner-producer).
Farmers have come to have a better understanding of the investment when they could begin to use the gas in their vehicles, even noticing the environmental and social benefits that this ensued: "After they were able to fill up their cars there, they changed their minds. Until then, there was a lot of mistrust, ‘Will it work? Will it? Will it? Will it?’ Even today, some people don’t quite understand the greatness of this project. It’s like Abari says, 'It’s much greater than just saving energy or just using CNG for fuel.’ Biomethane is awesome, it’s all about ecology. The sustainability is much higher than that, it’s something that wants to go far beyond what we can imagine, it even has social impacts" (Composting plant technician and partner-producer).
Even though the partners are taking advantage of the gas produced at the plant, this is not the main project of Ecocitrus, which still remains a cooperative producer of citrus. When the first financial problems began to appear, Ecocitrus decided not to invest in the project anymore, keeping the structure as is, that is, producing the gas to give a correct destination for their waste and for themselves, but not to take the project to a new level, which would be to commercialize it:
"But over time, Ecocitrus, by internal decision, since it’s a cooperative, didn’t feel fully comfortable to join a private company for a project. So, because it’s not the core business of this cooperative to produce biogas or compost, Ecocitrus focused on agribusiness. And as it is in financial difficulties and needs to give up on an asset, it decided to let go of composting and biogas" (Technician In Charge of the composting plant and biogas).
Another challenge that appeared was regarding the private enterprise. The principles of the two organizations are very different, as well as their management structures and decision-making. At one point, to attend a public call to invest in the marketing of gas, it was necessary to give assets as collateral, which Ecocitrus did not have. Naturovos decided not to take the risk alone and the 19-million-real project was lost because of incompatibility of principles and management models:
"In around 2014, FINEP’s call of 2014, we won. It was R$19 million to do this project. We’re supposed to do the project with Naturovos, in the same platform. To produce it so we could apply to Sulgás. But we qualified for BRDE, BNDES, Rio de Janeiro, everything was all right. Now we needed to provide some collateral. Ecocitrus no real collateral because we’re in agribusiness. It’s as if making two investments at the same time. Naturovos interpreted that it wasn’t their core business, since they produce eggs, not biogas. Since we couldn’t provide some collateral, it became dangerous... Looking back, a private for-profit enterprise associating with a cooperative, which is volatile because it’s a company that can change its view, there was no trust between parts. We don’t trust capitalism either. You know? So the two parts are together, but both fully mistrust each other. One because it has at its core the financial result at any price, and the other because it can have widespread disruption for decision-making and this can hamper relations. So we had to give up because we couldn’t get funding and we couldn’t pay for it some other way. We missed it. We came so close and we couldn’t finish. We were back to square one" (Technician In Charge of the composting plant and biogas).
The project, from its conception, was very thought out and studied by those involved in the decision-making, and all the interviewees mentioned that they would have done it again under the same conditions. It is known that many difficulties were faced, including financial ones, but they report that the benefits generated were much higher, not only for Ecocitrus, but for the whole society:
"The cooperative, indelibly, benefitted from it, paid for it… It’s just hard to demonstrate, because the more you want to show, the more evident it is to the other party that this hinders business. You have to imagine that the anaerobic process was, above all, an improvement of the composting process and had the clear objective of improving the bio-fertilizer for our properties. So much so that our reactors are the only reactors in the world that are biodynamic. The biodynamic project is very interesting. So if you do the math, when people look at gas, it was done like this or like that. When you look at the whole picture, the main objective was fully justified" (Technician In Charge of the composting plant and biogas).
Another factor that was pointed out was that the benefits were not financial, but environmental and social, through sharing knowledge and reorientation of a new way of doing things in the cooperative and the region. The Ecocitrus challenged the dominant institutions in seeking new expertise, starting new projects and thinking about the social and environmental gains, even before the financial ones.
"So if you say, 'Oh, but the cooperative or some other guy didn’t gain anything...' No. The company gained a lot. So understand this. The knowledge wasn’t kept. We never made a patent out of it, none of that. The whole intention was to spread the news, to socialize it. So that’s how the cooperative provided a service to society. It’s much bigger than what we can figure, because it was able to allow, within its framework, the development of a process that became this. It socialized… Above all, it socialized knowledge, which is the noblest of all. ‘There’s no gain.’ No. There’s a lot of gain. Sometimes it’s not just one person that gains something, it’s the society. And this, perhaps the purity of the process, to have enabled people to think about this in an economical way, because the environmental and social outcomes are clear. You see? I wouldn’t change a thing. I’d do it all over again, even with all the difficulties" (Technician In Charge of the composting plant and biogas).
Regarding learning, the interviewees commented on the gains for the environment and how they learned to respect this process in order to ensure the lowest possible environmental impact:
"What we want here is to constantly improve the processes that we have, both in the production of biogas as an organic fertilizer and waste treatment. Always looking to respect the environment, so that we generate the least possible impact on the environment. Our goal here is to treat waste and not generate more waste or more impacts on the environment. I think this is our focus today. And we want to work for the people who work with us, both our internal collaborators here, as well as the people walking into our units, such as carriers, so they also have a better environment. So they don’t see this unit as, 'Oh, this is a dump.’ No, this is not. It’s a waste treatment center that generates quality products that will benefit the population as a whole" (Composting plant technician and partner-producer).
Another factor that was identified as important was learning to work with institutions with such different and opposite perspectives as:
"This project is so successful, that we’d repeat it many times. Because it comes out of nothing - absolutely nothing - and you can... I think the great learning of this project was the process, not the resulting gas. Because today, it’s like, 'Man, making gas is the easiest thing ever. You just purify it, serve it, remove the CO2 and that’s it.’ But the process was remarkable. Well, first you make two completely different entities come together, even with their full mistrust. And it’s not mistrust that comes with Ecocitrus or Naturovos but with the capitalist system. They look socialist, but it’s not really, they’re associativists, that is, people working in an association towards a common good, in search of an objective" (Technician In Charge of the composting plant and biogas).
The excerpt of the interview below summarizes a few learning points that Ecocitrus had throughout this CTP: a better understanding of the social process, the economic issues, the environment and decision-making, with such different partnerships:
"Was it a new technology? People use it everywhere, but it’s not used in Brazil with simplicity and efficiency – with a beginning, middle and end - and we brought to Brazil, in all seminars, congresses, the concept of the ten sides, to show that this business is much broader. There are many sides involved, and that’s an extraordinary process. You have the social side, the economic side, the environment and the weather, involved because you avoid carbon emissions, and you make it good for individuals and also for the collective" (Technician In Charge of the composting plant and biogas).
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