Shell is teaming up with ethanol producer Cosan to launch a multi-billion dollar biofuel venture in Brazil called Raizen.

Raizen will produce each year 2 billion litres of ethanol, which is made from sugar cane. Biofuels are widely used across Brazil and are expected to make up more than 40% of the country’s transport fuel mix by 2030.

Worldwide use of biofuel could be on the up too, as Shell expects the current biofuel demand to rise from 3% today to about 9% by 2030.

Cosan’s Chairman Rubens Ometto Silveira Mello called the venture “a turning point in the search for alternative energy sources,” while Peter Voser, Shell Chief Executive Officer said: “Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix.”

Part of the appeal is sugar cane’s lower carbon emissions, added Mark Gainsborough, Shell Executive Vice-President for Alternative Energies: “Brazilian sugar-cane ethanol is one of the most sustainable and lowest-CO2 biofuels available.”

Unica, the Brazilian sugar-cane industry association estimates that Brazilian sugar cane yields 7,000 litres of ethanol per hectare compared with 2,500 litres for a hectare of wheat in Europe.

It is estimated that Raizen will have 40,000 employees and a market value of $12billion.