Looking Beyond The Horizon

Innovative Technologies & Services

How Brazil made it possible with ethanol? – Consumer hedging bets at the pumps

Posted by evolvingwheel on November 24, 2007

Last week my good friend Shalabh mentioned about a CNN program on Brazil’s independence from Middle East oil. The program delineated the story of ethanol and the growth of an economy around that. I got interested about it and started digging for more information. In fact I am also looking for that video. Meanwhile, I stumbled upon an article published by the Wall Street Journal early last year. The article has a very interesting perspective. It doesn’t talk much about the stats and the numbers. However, it gives a nice case study of Brazil’s long-term vision back in early 70’s. You can take a peek at [As Brazil Fills Up on Ethanol, It Weans Off Energy Imports]. sugar_cane_brazil.jpg

What I enjoyed most from reading the article is the progressive story of one country’s vision, dogged determination, strict enforcement, and controlled cost-guarantee (more on a short-term basis) to encourage a new scientific development and eventual mass acceptance. The good thing that the military ruler Gen. Ernesto Geisel achieved was a stringent adherence to the policy of mixing more ethanol to gasoline. Over time, this adherence paid off as the % of ethanol in gas rose to more than 25%.

One other thing I loved about the development is the production of cars that are capable of running both on ethanol and gasoline, and some totally on ethanol. The government forced Petrobas to provide outlets for ethanol at gas stations. This effort had an initial effect of visibility in spite of an investment that didn’t promise a ROI right away. But this push allowed car companies to come up with ethanol based models due to the infrastructural availability to support the promise. I talked about a similar case of infrastructural support for hydrogen fuel in the US in a previous article [First hydrogen cell bus in Texas – infrastructural impediment to economy of scale]. With a continuous support from the government through tax breaks and other investment incentives, soon other car companies started launching ‘flexible fuel‘ cars. Hence, availability of the fuel, vehicles manufactured to run on it, and a solid state mandate and support resulted in a mass scale acceptance of a new form of energy. — A great story!

Picture Courtesy Washington Post: Sugar cane arrives at a plant belonging to Cosan SA Industria e Comercio, the largest sugar and ethanol producer in Brazil. Most of Brazil’s ethanol comes from sugar cane.

Photo Credit: JC Franca, Bloomberg News

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