The Rise of Brazil’s Sugarcane Cars

Brazil today is home to the world’s largest fleet of cars that use ethanol derived from sugarcane as an alternative fuel to fossil fuel based petroleum. Twenty-seven million cars, 73 per cent of the total, can use a mix of ethanol and gasoline. What is more extraordinary than the scale of the transition to ethanol fuel in Brazil is the speed at which it occurred. In only 6 years from when the Brazilian Government introduced the National Alcohol Programme, “Proálcool”, in 1975, 90 per cent of all new vehicles sold in the country could run on ethanol.

This extraordinary rapid transition involved cooperation between sugarcane farmers, ethanol distillers, national and international automobile manufacturers and environmental groups, spurred to action by radical public policy that was initially a response to the oil price shocks of the 1970s, but was extended and expanded for the environmental benefits of transitioning away from petroleum. The Brazilian government succeeded in establishing a greener, cheaper and more reliable fuel for its vehicles. In 2008, a litre of ethanol in Brazil cost half the price of a litre of gasoline.

Proálcool initially promoted the use of neat-ethanol vehicles, which remained popular so long as oil prices were high and ethanol was comparatively cheap. However, in the decades since the Proálcool programme, fluctuations in both oil and ethanol prices at different points led to a rethink in the government strategy. Consumers turned away from ethanol cars in the 1990s when oil prices were low, which led the government to respond from the early 2000s with the

active promotion of “flex-fuel vehicles” (FFVs); cars which are capable of running on both ethanol and gasoline – allowing consumers to switch their fuel choice depending on price and convenience. The FFVs have proven incredibly popular since their introduction in 2004, just five years later they made up 90 per cent of new cars bought in Brazil.

Ethanol derived from sugarcane is a comparatively sustainable fuel, with direct emissions up to 90 per cent lower than those of gasoline or diesel. This rapid transition to the widespread use of a more sustainable fuel option in Brazil has interesting lessons across a number of fronts.

As ethanol production was tied to the sugar industry, producers could respond to fluctuating market prices by switching back and forth temporarily between the sugar and ethanol. Having the back-up of sugar production made the risks associated with producing ethanol short-lived and reversible. Flexibility for consumers was also key to the success of the transition. In the 1990s, falling oil prices resulted in consumers favouring gasoline run cars. From 2004, the promotion of flex-fuel vehicles that could run on both ethanol and gasoline provided consumers with the option to switch between the fuels. This innovation boosted the market once again.

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