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close this bookSustainable Energy News - No. 06 September 1994 (INFORSE, 1994)
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The Brazilian Ethanol Programme General Evaluation and Prospects

by Emillio Lebre La Rovere,
COPPE/UFRJ and If IED

Since the introduction of sugar cane plantations by the European colonies in the 16th century, Brazil has always been an important producer end exporter of sugar. The Brazilian government's major answer to the problems of the fluctuating trend of international sugar prices and the increasing burden of the petroleum bill after 1973 has been to install the Ethanol Programme.

Presently, it remains the largest commercial application of biomass for energy production and use in the world. After launching the Programme in 1975, the ethanol production from sugar cane increased from 0.6 Gl (billion liters) to the 1991/92 season level of 12 Gl per year. Apart from this, 8.6 Mt of sugar and 73 Mt of bagasse from 229 Mt of sugar cane are produced in the same season harvested on approximately 4 Mha.

Gasoline - Gasohol - Ethanol

The task for the first five years was to replace petrol by gasohol (20% ethanol). This was completed easily without engine modification in light gasoline vehicles. On the production side, idle production capacities and the flexibilities of existing distilleries were used to shift from the production of sugar to that of ethanol.

After the second oil crisis, a decisive new step was taken to extend the use of ethanol to light vehicles using pure ethanol. The Brazilian automotive industry (mainly branch offices of major European and American car makers) agreed to the minor technical changes required in the manufacturing of such cars. The investment effort required for this phase of the Ethanol Programme was funded through soft loans by the government. Tax reductions made ethanol and the ethanol powered car prices highly attractive to the consumers. Today, 4.2 millions of ethanol-powered cars consume 10.5 Gl of ethanol per year and 1.3 Gl of ethanol is used for the rest of the cars in the country.

Ethanol in Crisis

The sharp decrease of oil prices in the international market in the mid-eighties seriously affected the cost-effectiveness of the Ethanol Programme. The government stopped funding the building of new distilleries and therefore limited the production capacity. The incentives for the consumption of ethanol, however, carried on.

Ethanol consumption growth slowed down but did not stop. From more than +27% per year between 1981 and 1986, the growth rate went clown to 1.3% per year between 1986 and 1992. As a result in 1989 and 1990 a supply crisis took place and affected the credibility of the Ethanol Programme considerably. The share of new ethanol-powered cars in the total amount of cars sold on the market shrank from almost 100% in 1988 to around 4% during the crisis, to stabilize at a number oscillating between 10% and 20%.

This new equilibrium has been reached at the cost of a net increase of ethanol rate in petrol. Today it has gone down by an average of 12%, showing large seasonal and regional fluctuations. Therefore, the very existence of the Ethanol Programme is in question. The Program needs a rationalization of its working principles. Petrobras (the Brazilian state-owned company responsible for petroleum production and marketing) envisages abandoning its role in the transport and distribution of alcohol to lessen its financial losses caused by storing and marketing ethanol.

Environmental protection has become the most important cause governing the need to continue with the Ethanol Programmer the city of Sao Paulo has obtained the licence to retain a production of 22% of ethanol in its Gasohol in order to limits the acute problem of air pollution in the city. The other regional capitals of Brazil have applied for the same. Yet this strategy is competing with new oil-based gasoline blends with higher oxygen content which are being successfully launched in the market by all the market by all major oil companies (including Petrobras).

Environment

The future of the Ethanol Programme is not only linked to its economical and social impacts but also to its ecological ones. This programme successfully demonstrated the technical feasibility of large-scale ethanol production from sugar cane and of its use to fuel car engines. Further, the purely alcohol powered car engine, a major technical innovation of the programme, shows emission rates slightly lower than that of the petrol-powered car engines and equivalent readability, comfort and durability.

Important productivity gains in sugar cane production and processing have also taken place (1977: 2600 1 of ethanol per ha; 1987: 39001/ha; 1991: 54001/ha). Acontinued decrease of the production cost of alcohol of more than 3% per year has taken place since the beginning of the Ethanol Programme. Moreover, the carbon released into the atmosphere when bagasse and ethanol are consumed for fuel is compensated by an equivalent quantity of carbon absorbed by sugar cane during its growth The avoided emission of 9.45 MtC for the year 1990-91 corresponds to almost 13% of the total emissions of carbon due to energy consumption in Brazil in 1990. Accounting only for the substitution of gasoline, the use of ethanol has avoided the release in the atmosphere of an average of 5.86 MtC/year from 1980 till 1990.

Economy

The Brazilian case well illustrates the large CO2 emission abatement potential at reasonable costs if investments in ethanol production could benefit from international funding. The transfer of an adequate amount of financial resources from industrialised countries in appropriate soft terms is required in order to make feasible a positive contribution to curb the increase of the greenhouse effect.

Support for the Ethanol Programme from agencies such as the World Bank has been rather insufficient in the past. Besides the reshaping of their actions, new mechanisms to fund small regret sustainable energy development strategies are sorely needed. The implementation of the

United Nations Convention on Global Climate Change has a crucial role to play in this. A first step would be the allocation of a considerably larger amount of financial resources to the Global Environment Facility (GEF) and its use to support the viability of these strategies, in Brazil as in other developing countries.

Brazilian government efforts also should be directed to promoting the production and use of ethanol and bagasse through the adoption of appropriate energy pricing policies, mechanisms for information dissemination, adequate institutional building, providing soft funding facilities and measures to foster research and development efforts in this area. In this connection, it should be recognized that complete deregulation and privatization of energy sectors hardly will allow for removing non-econonic barriers to sustainable energy development strategies.

For further details see Emironmentional/Benefits of the Brazilian Ethanol Programme by E. L. La Rovere and P. Audinet in the Proceedings of the First Biomass Conference of the Americas. vol. 11, p. 1533-1546, National Renewable Energy Laboratory, Burlington, September 1993.