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Ethanol
Fuel in
Brazil
Kevin Ung

CONTENTS
What is Ethanol?
Ethanol in Brazil
History
Prices and Effects
Comparison with US
Social Implications
Food vs. Fuel

What is Ethanol Fuel?

Ethanol is an alcohol found in alcoholic beverages.

It is most often used as motor fuel mainly as

biofuel additive for gasoline.

Ethanol, unlike petroleum, is claimed to be a form

of renewable energy that can be produced from
agricultural crops such as sugar cane, potato, and
corn.

Ethanol is widely used in Brazil and in the US and

together both countries are responsible for 89
percent of the worlds ethanol fuel production in
2009.

Annual Fuel Ethanol

Production
Top 10 countries
(Millions of U.S.
Worl Country
2009
2008
2007
gallons per year)
d
Rank
1

United States

10,750.00

9,000.00

6,498.60

Brazil

7,264.73

7,053.39

5,943.87

European Union

1,069.52

733.60

570.30

China

541.55

501.90

486.00

Thailand

435.20

89.80

79.20

Canada

290.59

237.70

211.30

India

91.67

66.00

52.80

Colombia

83.21

79.30

74.90

Australia

56.80

26.40

26.40

10

Other

247.27

World Total

20,221.83

17,916.48

14,036.37

Ethanol in Brazil

Largest and most successful bio-fuel programs

in the world, involving production of ethanol
fuel from sugarcane, considered to have the
worlds first sustainable biofuel economy

Sugar cane plantations cover 3.6 million

hectares of land with productivity of 7,500
liters of ethanol per hectare, compared with
U.S. 3,000 liters

http://www.youtube.com/watch?v=qarMPRyaNLM

History of Ethanol Fuel in

Brazil

Dates back from the 1970s and relates to Brazils

sugarcane based ethanol fuel program, which allowed the
country to become the worlds 2 nd largest producer of
ethanol.

Sugarcane has been cultivated in Brazil since 1532 and

was one of the first commodities exported.

Ethanol is obtained as a by-product of sugar mills

producing sugar and can be processed to produce
alcoholic beverages, ethanol fuel or alcohol for
industrial uses.

Sugarcane ethanol as fuel in Brazil dates back late

1920s and early 1930s with the introduction of the
automobile.

1973 Oil Crisis

Resulted in gasoline shortages and awareness on the

dangers of oil dependence

Brazilian government began promoting bioethanol as a fuel.

Phase out Gasoline. Blending gasoline with ethanol.

The decision to produce ethanol from sugarcane was based

on the low cost of sugar at the time, the existing idle
capacity for distillery at the sugar plants, and the
countrys ample tradition and experience with this
feedstock.

Brazilian carmakers modified gasoline engines to support

hydrous ethanol.

The government made it mandatory the blend of ethanol fuel

with gasoline. Pure gasoline was no longer sold.

3 Important initial
drivers for the ethanol
industry
1. Guaranteed purchases by the state-owned oil
company, Petrobras
2.

Low-interest loans for agro-industrial ethanol

firms

3.

Fixed gasoline and ethanol prices where

hydrous ethanol sold for 59% of the
government-set gasoline price at the pump.

These incentives made ethanol production

competitive

Ethanol Production and

Sale Fall

Gasoline prices fell sharply as a result of

lower gasoline prices, but mainly because of a
shortage of ethanol fuel supply in the local
market.

Supply could not keep pace with the increasing

demand required by the now significant ethanolonly cars, the government began importing
ethanol in 1991.

Consumers lost confidence on the reliability of

ethanol fuel supply. Began selling or
converting their cars back to gasoline fuel.

Flexible-Fuel Vehicles

Confidence on ethanol-powered vehicles was restored

only with the introduction in the Brazilian market of
flexible-fuel vehicles in 2003. Commercial success.

Key innovation in the Brazilian flex technology was

avoiding the need for an additional dedicated sensor to
monitor ethanol-gasoline mix which lowered the cost.

Flex vehicles together with mandatory blend of 25%

ethanol with 75% gasoline have increased ethanol
consumption.

Diesel engines

Motorcycles

Prices and Effect on Oil

Consumption

Due to the lower energy content of ethanol

fuel, full flex-fuel vehicles get fewer miles
per gallon.

Ethanol price has to be between 25-30% cheaper

per gallon to reach the break even point.

Since 2005, ethanol prices have been very

competitive without subsidies.

Brazilian gasoline taxes are high around 54%

while ethanol fuel taxes are lower and vary
between 12% to 30%. This differential taxation
favors ethanol fuel consumption.

Comparison with the United

States

Brazils sugar cane-based industry

efficient than the U.S. corn-based
cane ethanol has an energy balance
greater than ethanol produced from

is more
industry. Sugar
seven times
corn.

Brazil is able to produce ethanol for 22 cents per

liter while US is 30 cents per liter.

Sugarcane is one of the most efficient photo

synthesizers in the plant kingdom, able to convert
up to 2% of incident solar energy into biomass.

Ethanol fueling stations in the country of Brazil

is 100% while US is only 1%.

Ethanol Productivity in
Brazil

Social Implications

Sugarcane has had an important social contribution

to some of the poorest people in Brazil by
providing income usually above the minimum wage
and a formal job with fringe benefits.

Ethanol production sector maintains more than 600

schools, 200 nursery centers and 300 day care
units.

Legislation requires 1% of the net sugar cane

price and 2% of the net ethanol price must be
devoted to medical, dental, pharmaceutical,
sanity, and educational services for sugar cane
workers.

Effect on food prices

Some environmentalists have expressed fears that the

market place will convert crops to fuel for the
rich, while the poor starve and biofuel cause
environmental problems.

http://www.monbiot.com/2004/11/23/feeding-cars-notpeople/

Food vs. Fuel debate reached global scale in 2008 as

a result of the international communitys concerns
regarding the steep increase in food prices.

Many worry about filling their gas tanks but many

others around the world are struggling to fill their
stomachs.

The End