Sugarcane ethanol: Strategies to a successful program in Brazil

Abstract

Presently, ethanol from sugarcane replaces approximately 50% of the gasoline that would be used in Brazil if such an option did not exist. In some aspects, ethanol may represent a better fuel than gasoline and to a great extent a renewable fuel contributing little to greenhouse gas emissions in contrast with fossil-derived fuels. Production of ethanol increase from 0.6 billion liters in 1975/1976 to 27.6 billion liter in 2009/2010. Although production costs in 1975/1976 were three times higher than gasoline prices in the international market, such costs declined dramatically thanks to technological advances and economics of scale becoming full competitive (without subsidies) with gasoline after 2004. This was achieved through appropriate policies of the Brazilian government. These policies and the rationale for them as a strategy to reduce oil imports are discussed here with the possibilities of replication in other countries.