President Luiz Inacio Lula da Silva says a pioneering factory in southern Brazil that produces "green" plastic clearly shows the value of sugarcane-based ethanol.

"It demonstrates to the world that ethanol can find an important place even in sectors that once depended solely on oil," the president said Friday during the opening of the factory.

"I am sure this does not happen by chance, but because Brazil has learned how to reconcile natural soil wealth and climate with heavy investment in research and technology," he said.

The factory has a capacity to produce 200,000 tons of "green" polyethylene a year and will consume about 462 million liters of ethanol per year.

Braskem, the company that owns the factory, said the suppliers would adopt sustainability criteria such as compliance with environmental guidelines and laws related to the reduction of greenhouse gases.

The factory said it would contribute to the fight against climate change by capturing up to 2.5 tons of CO2 for each ton of plastic produced.

The president said Brazil has invested 16 billion U.S. dollars in the development of agro-energy technology since 1975 and will maintain its commitment to environmental protection.

Bernardo Gradin, head of Braskem, said Brazil was the world's most competitive ethanol producer.

"This plastic is unsurpassed in the fight against climate change. In essence, the green plastic is made from CO2," he said.