In 2006, Brazil officially achieved "energy independence" -- that is, its oil exports came into line with imports and cancelled them out. No longer beholden to foreign suppliers for its energy needs, the nation theoretically has no stake in costly Middle East military adventures to secure access to oil reserves.
Sounds like a certain colossus to the north has a lot to learn from
Brazil's recent energy strategy, huh? Indeed, much of Brazil's energy
independence stems from a successful ethanol program, which has
replaced about 40 percent of gasoline use in the country. Might the
United States, with its own aggressive ethanol push, attain similar success?
Not so fast. The lessons of Brazil are not as clear-cut as they seem at first glance.
Apples and Oranges, Corn and Sugarcane
Montana chemical engineer Robert Rapier, who runs the widely read "R-Squared Energy Blog," has succinctly laid out
the fundamental differences in the U.S. and Brazilian energy landscapes
-- differences that significantly limit the applicability of the
Brazilian model to the U.S. situation.
First of all, the United States (population 300 million) has 62 percent
more people than Brazil (population 185 million) -- making any move
toward energy independence that much trickier.
Second, not only are there more people in the U.S., but each one of
them burns through much, much more oil. Americans burn through 27
barrels of oil annually per capita, six times and change more than the
Brazilians' 4.2 barrels. The U.S. produces more oil per capita, too --
11 barrels to Brazil's 3.35 barrels. And the gap between production and
consumption in the U.S. is a gaping 16 barrels per person per year,
while Brazil's gap amounts to just 0.85 barrels.
So to provide a serious challenge to crude oil, the U.S. ethanol
industry has a much steeper mountain to climb than Brazil's. Moreover,
its ethanol industry must grapple with a much heavier burden than
Brazil's as it makes that climb. Corn ethanol is thought to have a net energy balance of just 1.3 -- meaning that every gallon of it produced yields just a third of a gallon of net energy. Rapier points to a study
[PDF] that claims that the energy balance of ethanol made from
sugarcane -- Brazil's feedstock of choice -- lies somewhere between 8.3
In other words, as an ethanol feedstock, sugarcane is more efficient
than corn by a factor of nearly 8. And even if switchgrass-based cellulosic ethanol becomes a reality soon, the U.S. will still lag behind Brazil in this department. Lester Brown of the Earth Policy Institute reckons
that switchgrass-based ethanol has a net energy balance of 4, or about
half of its cane-based counterpart. "For net energy yield, ethanol from
sugarcane in Brazil is in a class all by itself," Brown concludes.
Even if the U.S. could rig up an ethanol industry as efficient as
Brazil's, its much more ravenous appetite for energy consumption would
still greatly limit ethanol's contribution to real energy independence.
Consider this comparison: Brazil produces about 4.8 billion gallons of
ethanol per year and by doing so, displaces 40 percent of petroleum
gasoline consumption. The U.S. is expected to produce 4.8 billion
gallons of ethanol in 2006 -- and that will displace about 3 percent of
None of this implies that the U.S. should abandon research on
cellulosic ethanol, or throw its hands up and keep burning a quarter of
the world's oil with just 5 percent of global population. The real
lesson from Brazil is that for homegrown alternative energy to make a
dent in petroleum consumption, consumption of petroleum needs to be
greatly reduced. As Rapier puts it, "the reason [Brazil] achieved
energy independence is primarily because of their frugal energy usage,
not because of ethanol."
Or, as Ã¼ber-biofuel-skeptic David Pimentel recently told Grist, "We're using too goddamned much fossil energy."
How They Did It
It may not be easily replicable, but Brazil's biofuel program is the
envy of the world. Critics of the present U.S. biofuel push, which
draws billions in government subsidies, should take note: Brazil didn't
replace 40 percent of its gasoline use with ethanol by letting the
market sort things out.
Indeed, the program is the result of a concerted, and sometimes rocky,
30-year government effort to promote the alternative fuel.
Following the oil shocks of the early 1970s, the government of Brazil
adopted an ambitious plan to guarantee the country's energy
independence. The ProAlcool
policy required that passenger cars be built to run on ethanol and led
to installation of a nationwide distribution network, which would
supply ethanol in all service stations. Supply was guaranteed via
strict controls on planting of sugarcane and production of both sugar
By the mid-1990s, the program was abandoned as ethanol shortages and
low gasoline prices led to widespread popular rejection of
ethanol-powered cars. Government controls on sugarcane planting, as
well as sugar and ethanol production and marketing, were also
abandoned. Nonetheless, the ProAlcool
program left a long-term legacy of a dedicated ethanol-handling
infrastructure, an ethanol-powered automotive fleet (although the share
of the fleet powered by ethanol fell steadily during the following
decade), and continued production of both gasoline- and ethanol-fueled
The current resurgence of ethanol in the fuels matrix is due to a
private-sector commitment to take advantage of ethanol's availability.
The flex-fuel car
was developed and put into production so that consumers would be able
to freely choose between gasoline and ethanol. Following the launch of
flex cars in 2003, sales rocketed to more than 70 percent of new car
sales by the end of 2005. The vehicles have proved a boon to automotive
manufacturers, as companies that previously produced two models of each
car (one for gas, another for ethanol) have been able to consolidate
production lines. For consumers, flex cars mean flexibility at the pump
and increased resale value.
According to the National Petroleum Agency, in 2005, Brazilian drivers
purchased 10.5 billion liters (four liters equals roughly one gallon)
of ethanol, 17.6 billion liters of gasoline, and 39 billion liters of
diesel. Industry sources consider these figures inaccurate for ethanol
due to significant clandestine sales intended to circumvent taxation.
While market forces drive current demand growth for ethanol, government
policy does have a significant influence on market dynamics. Policy
supports for ethanol consumption include both an ethanol-use mandate
and significant tax credits.
Brazil's first ethanol-use mandate in 1977 required a 4.5 percent
mixture of ethanol to gas. Since that time, the mix of ethanol in
gasoline has risen as high as 25 percent. Current legislation requires
an ethanol content of between 20 and 25 percent, with the executive
branch having the flexibility to adjust levels within that band. The
mixture stood at 25 percent from 2003 until March 2006, when ethanol
shortages and rising prices prompted the government to reduce the rate
to 20 percent. Mandated mixing of ethanol accounted for just over
one-half of consumption in 2005.
With the initiation of the 2006 sugar harvest, the supply situation has
eased and prices have fallen, but the ethanol mandate is expected to
remain at 20 percent. The increasing number of flex-fuel cars
guarantees a ready market for ethanol, obviating the need to support
the industry via mandated use. Indeed, some industry participants
expect that current legislation will eventually be changed to reduce
the ethanol mandate still further.
Since the introduction of flex cars, tax incentives play an especially
important role in supporting ethanol consumption. Since ethanol
delivers about a third less energy than gas per gallon, ethanol is a
better buy than gas when it's priced at 70 percent or less than the
price of gas. Therefore, in theory, all flex-car owners will opt for
gasoline if the price of ethanol rises above 70 percent of the gasoline
price, and all flex owners will buy ethanol at a lower price. In the
first quarter of 2006, increases in ethanol prices above that 70
percent level did lead to a significant decline in ethanol consumption.
With flex-fuel cars approaching 10 percent of the automotive fleet and
growing rapidly, and with sugarcane production growing more slowly, it
is likely that ethanol demand will be rationed for years to come via
seasonal and/or regional price changes. Given the sensitivity of
ethanol demand in relation to price increases, tax breaks for ethanol
consumption provide a significant support to ethanol producers and
The government also provides preferential treatment for ethanol
consumption under federal tax programs. The differential in these
assessments was estimated by industry contacts at approximately $0.51
per gallon in October 2005. And state tax regimes give ethanol
consumption an even greater boost.
It's famously said that you can't make an omelet without breaking a few
eggs. Likewise, in an energy market dominated by petroleum, it seems
nearly impossible to jumpstart a viable biofuel market without
government support. The trick, the Brazil lesson seems to show, is that
nations should operate from a realistic assessment of their resource
assets, and proceed accordingly.
Grist contributing writer Tom Philpott farms and cooks at Maverick Farms, a sustainable-agriculture nonprofit and small farm in the Blue Ridge Mountains of North Carolina.
Gordon Feller is chief executive of the Urban Age Institute and editor of Urban Age magazine.
Samba Lessons: What Brazil can Teach the U.S. About Energy and Ethanol
By Tom Philpott and Gordon Feller
Grist Magazine, Dec 14, 2006
Straight to the Source