Brazil's Economy
Sugarcane Ethanol and Flex-Fuel Cars
How Brazil's Proálcool programme after the 1970s oil shocks built a sugarcane ethanol industry, and how flex-fuel cars let drivers choose fuel by price.
Brazil built the world’s most developed ethanol economy.
Proálcool
- Launched in 1975 after the oil shock to reduce oil imports.
- Promoted sugarcane ethanol as fuel.
- By the mid-1980s, most new cars sold ran on pure ethanol.
Setbacks
When oil prices fell and sugar prices rose in the late 1980s, ethanol shortages hurt drivers and confidence.
Flex-fuel cars
- Introduced in 2003, flex-fuel cars can run on any mix of petrol and ethanol.
- Drivers choose based on price at the pump.
- Flex-fuel cars became the vast majority of new cars.
Blending
Brazil’s petrol contains around 27 to 30 percent ethanol by law.
Economics
- Ethanol prices are linked to sugar prices, since mills choose between making sugar and ethanol.
- Drivers switch fuels when ethanol costs less than about 70 percent of petrol, reflecting its lower energy content.
India’s interest
India studied Brazil’s model for its own ethanol programme and flex-fuel vehicles.
The pump choice
A driver in São Paulo compares prices: ethanol is cheaper than 70 percent of petrol's price, so she fills her flex-fuel car with ethanol.
Thinking ethanol cars are new
Brazil promoted ethanol cars from 1975.
Key takeaways
- Proálcool (1975) built Brazil's ethanol industry.
- Flex-fuel cars from 2003 let drivers choose by price.
- Petrol contains about 27 to 30 percent ethanol.
- India studied Brazil's model.
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