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Brazil fuel-alcohol program

 

1.      Ethanol derived from sugarcane has been used as an engine fuel in Brazil since 1903. In 1931, a federal decree mandated that alcohol be added to gasoline to the extent of 5 per cent (by volume) and established guidelines for its commercialization.

 

2.      Ethanol fuel is available in two formulations: anhydrous ethanol blended with gasoline (a mixture called gasohol that contains 20 per cent ethanol) and hydrous ethanol for combustion by alcohol engines.

 

3.   The world oil crisis of 1973 (Brazil was then importing over 80 per cent of its oil requirements) led Brazilian government to think of an energy conservation policy and to reduce its dependence on outside oil supplies. In 1975, Brazil launched its  National Alcohol Programme, PROALCOOL. The main objective of Proalcool Programme was to encourage use of ethanol as a fuel substitute for gasoline and to increase ethanol production for industrial uses.

 

4.   As a result of govt’s “Proalcool” programme, fuel-alcohol production expanded from practically zero in 1975 to 3 million cubic meters of anhydrous alcohol (used as a gasoline additive) and 9.6 million cubic meters of hydrous alcohol (used unmixed as a fuel) in 1995-96. In 1997-98, Brazil produced 5.7 million cubic meters of anhydrous alcohol and 9.7 million cubic meters of hydrous alcohol. The anhydrous alcohol production has increased because of the requirement that gasoline is mixed with a minimum of 20 % of this alcohol.  In 1999-2000, the total alcohol production in Brazil was 12.8 million cubic meters; 6.14 million cubic meters anhydrous ethanol and 6.70 million cubic meters of  hydrous ethanol.

 

5.   In 1979, Brazil introduced the large-scale production of alcohol driven cars and light vehicles.  The production of these vehicles reached a peak in mid 80s with production averaging around 6 lacs units a year. In 1985, 96 per cent of the automobiles sold in Brazil consumed fuel alcohol.

 

6.   The discovery and exploitation of large oil deposits in Brazil, and the fall in international oil prices reduced the value of fuel alcohol as a substitute for gasoline. Thus, PROALCOOL lost some importance and the alcohol industry was largely liberalized. The decree establishing PROALCOOL and related regulation was revoked in 1991. Sales of alcohol driven cars declined sharply to 1,120 units. In recent years the programme has been justified on the basis of the benefits derived from the production and use of a fuel that is clean and renewable, and the importance of preserving jobs in the alcohol industry. The govt has also enacted a Law in 1998, which provides for the substitution, over five years, of gasoline powered vehicles owned by the public sector by vehicles fuelled by hydrous alcohol. The production of alcohol driven vehicles has also registered a marginal increase to 10,497 vehicles in 1999. The programme of gasoline blended with 20 per cent anhydrous ethanol continues successfully and is mandatory for all vehicles in Brazil. All vehicles manufactured in Brazil are suitably reinforced for using this blend because alcohol is corrosive. Non-modified cars can also run on this blend without any difficulty.   

 

7.   In 1999-2000, total sugar cane production in Brazil was 315 million tons. Total area under sugar cane cultivation is 4.8 million hectares. Almost two-third of the sugar cane is used for the production of ethanol in Brazil. The main sugar cane/alcohol producing regions are Sao Paulo, Parana, Minas Gerais, Alagoas, Mato Grosso do Sul and Pernambuco. Brazil has over 300 distilleries and more than 225 sugar factories. The total sugar production in 1999-2000 was 20 million tons. The alcohol market consists of six large distribution companies (Agip, Esso, Shell, TEXACO, and the local companies PETROBRAS and Ipiranga), which buy alcohol from more than 300 domestic production plants. Those plants, in turn, purchase sugar cane from more than 70,000 producers.

 

8.   The Sugar and Alcohol Inter-Ministerial Council (CIMA) under the Ministry of Agriculture and Supply is responsible for policy formulation in the sugar-alcohol industry. The Sugar and Alcohol Department (DAA) in the Ministry of Agriculture and Supply is responsible for implementing, supervising, and evaluating sugar-alcohol policy. The DAA also elaborates annual plans to guarantee the domestic supply of sugar and alcohol, and monitors their implementation.

 

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