Brazil's Green Fuel Revolution

People in most parts of the world are wincing as they fill up their cars, trucks, autorickshaws, motorcycles, and scooters with gasoline. With crude oil prices hovering in the US $60-70 a barrel range, the prices at the petrol pumps already look shocking. The specter of what lies ahead in the future is scarier. Some oil industry analysts have suggested that political turmoil could push crude prices above US $200 a barrel.

One can almost imagine the distopian scenarios of marauding gangs with grenades and machine guns roaming the streets of various global urban centers, commandeering petrol pumps and fuel trucks.

There is one country, however, that is winking and smiling at all the global consternation about rising petroleum prices. That country is Brazil.

Over 80% of new cars now sold in Brazil today are equipped to use sugar cane-dervided ethanol as well as gasoline. Both fuels are available at almost all fuel pumps. Price of ethanol at the pump is about 60% cheaper than the price of gasoline. Global crude oil price would have to tumble from the prevailing levels of US $60-70 a barrel to about US $35 before gasoline in Brazil becomes compeptitive with ethanol.

In early 2006, USA president George W. Bush challenged Americans to break their addiction to petroleum, and to become free from dependence on Middle East oil. It could take a decade for USA to catch up with Brazil's "green fuel" revolution.

How did Brazil do it? Two simple policies stand out: (1) creating a dispersed system of growing, harvesting, and processing sugar cane into ethanol; and making this alternative biofuel available at fuel pumps; and (2) mandating that all new cars be equipped with engines that could run on ethanol.

Big, fast-growing economies of China and India have an important lesson to learn here. Put into place nationwide systems of producing and distributing biofuels now, or face the risks of economic activity getting paralyzed due to astronomically high petroleum prices.

Nik Dholakia, Ph.D.
University of Rhode Island
USA