Biofuel future

25 April 2008

The world is closely following Brazil's progress in developing a cost-effective fuel. With its sugarcane-based ethanol, Brazil may become energy independent this year.

At current prices, that nation can make ethanol for less than gasoline. Although ethanol gets less mileage than gasoline, it is still cheaper per mile driven in Brazil.

The United States and other countries have concentrated on making ethanol from corn, which costs about a third more than Brazil's product. The difference in price results largely from the extra step required to turn the corn into sugar before distillation to alcohol. It could take US producers decades to make corn-based ethanol as cost-effective as its sugar-based counterpart, according to the U.S. Department of Energy.

Not only is sugar the cheapest source of ethanol, but Brazil has optimal conditions for growing the crop – plenty of land, rain and cheap labour. So do many of the world's poorest nations, including those in the Caribbean and sub-Saharan Africa.

Brazil and the United Kingdom have issued a report detailing how annual sugar production in southern Africa could more than double from 700,000 hectares to 1.5 million hectares over the next 10 to 15 years. If that happens, sugar producers in countries such as Zambia, Tanzania and Angola could end up responsible for 7.3 billion litres of ethanol a year, creating hundreds of thousands of jobs while sidestepping US$1.6 billion in gasoline imports and gaining US$2.9 billion from ethanol exports, according to the 2 June issue of Latin Trade magazine.

Although Brazil also would continue to profit from producing sugar for ethanol, the country may gain even more as a supplier of technology to the rest of the world. Brazil's technological advantage grew from the support of its political leaders over the last three decades.

The oil shocks of the 1970s hit the nation particularly hard because it imported 80% of its fuel at the time. In 1975 Brazil's military leader, General Ernesto Geisel, mandated that the nation's gasoline supply be mixed with 10% ethanol. That level steadily increased to 25% over the next five years.

To help the new industry, the government offered sugar companies cut-rate loans to build ethanol plants and guaranteed prices for their product. Government-funded research at a Brazilian Air Force laboratory resulted in the development of three ethanol-powered cars by November 1976 – a VW Beetle, a Dodge, and the Brazilian Gurgel.

In 1979, Brazil's new leader, General Joao Baptista Figueriredo, required sugar companies to ramp up production and the state-run oil company, Petrobras, to make the fuel available at filling stations. In addition, car companies received tax breaks to produce ethanol-powered vehicles.

Within a year, every foreign and domestic auto company in Brazil sold an ethanol-only car. Mostly because government price supports made the fuel 35% cheaper than gasoline at the pump, the cars were a big hit with consumers.

Fluctuations in oil prices and cuts in ethanol price supports left many Brazilians feeling conflicted about whether to buy gasoline- or ethanol-powered cars. In response, automotive engineers developed cars that ran on either fuel equally well.

Today, Brazilians driving such cars can decide at 29,000 gas stations which fuel makes the most sense economically. Some consumers prefer ethanol for ecological reasons because it releases less carbon dioxide than fossil fuels.

Recently, US political leaders have cited Brazil as a role model in cutting dependence on imported oil. Legislation approved in Iowa provides funding for truck stops to convert tanks and pumps to biodiesel made from soybeans as a replacement for diesel. Other states are making similar moves.

Such transitions may seem revolutionary for SC&RA members throughout the world but, using carbohydrates instead of fossil fuels to run cars, is hardly a new idea. Henry Ford's first car was made to run on ethanol.

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