The history of ethanol fuel in Brazil dates from the 1970s and relates to Brazil's sugarcane-based ethanol fuel program, which allowed the country to become the world's second largest producer of ethanol, and the world's largest exporter. Several important political and technological developments led Brazil to become the world leader in the sustainable use of bioethanol, and a policy model for other developing countries in the tropical zone of Latin America, the Caribbean, and Africa. The author considers that ethanol can be a transport solution for Brazil, but one that only can be replicated in other tropical countries, from Africa to the Caribbean. Discussion Paper 2009-15. The authors found that for some countries in Central Africa and Latin America ethanol can represent a large industry, at least relative to current exports. The list of the relative importance of biofuels (sugarcane ethanol in particular and replicating the Brazilian production system) is headed by Suriname, Guyana, Bolivia, Paraguay, DR of Congo, and Cameroon. See pp. 5–6 See Executive Summary and Appendix A: The Brazilian Experience. Government policies and technological advances also allowed the country to achieve a landmark in ethanol consumption, when ethanol retail sales surpassed 50% market share of the gasoline-powered vehicle fleet in early 2008. This level of ethanol fuel consumption had only been reached in Brazil once before, at the peak of the Pró-Álcool Program near the end of the 1980s.
Early experiences Historical evolution of ethanol blends used in Brazil (1976–2015) Year Ethanolblend Year Ethanolblend Year Ethanolblend1931 E51989 E18-22-132004 E201976 E111992 E13 2005 E221977 E101993–98 E22 2006 E201978 E18-20-23 1999 E242007 E23-251981 E20-12-20 2000 E20 2008 E251982 E15 2001 E22 2009 E251984–86 E20 2002 E24-25 2010 pp. 3 E20-251987–88 E222003 E20-25 2011 E18-E25 2015 E27Source: J.A. Puerto Rica (2007), Table 3.8, pp. 81–82Note: The 2010 reduction from E25 to E20 was temporary and took place between February and April. The minimum blend floor was reduced to E18 in April 2011.
Sugarcane has been cultivated in Brazil since 1532. Introduced in Pernambuco that year, sugar was one of the first commodities exported to Europe by the Portuguese settlers. Ethyl alcohol or ethanol is obtained as a by-product of sugar mills producing sugar, and can be processed to produce alcoholic beverages, ethanol fuel or alcohol for industrial or antiseptic uses. The first use of sugarcane ethanol as fuel in Brazil dates back to the late twenties and early thirties of the 20th century, with the introduction of the automobile in the country. After World War I some experimenting took place in Brazil's Northeast Region, and as early as 1919, the Governor of Pernambuco mandated all official vehicles to run on ethanol. The first ethanol fuel production plant went on line in 1927, the Usina Serra Grande Alagoas (USGA), located in the Northeastern state of Alagoas, producing fuel with 75% ethanol and 25% ethyl ether. As other plants began producing ethanol fuel, two years later there were 500 cars running on this fuel in the country's Northeast Region.
A decree was issued on February 20, 1931, mandating the blend of 5% hydrated ethanol to all imports of gasoline by volume. This paper was originally presented in the XVI International Synposium on Alcohol Fuels, and augmented or slightly revised with the addition of new information in 2006–2008. The number of distilleries producing ethanol fuel went from 1 in 1933 to 54 by 1945. Fuel-grade ethanol production increased from 100,000 liters in 1933 to 51.5 million liters in 1937, representing 7% of the country's fuel consumption. Production peaked to 77 million liters during World War II, representing 9.4% of all ethanol production in the country. Due to German submarine attacks threatening oil supplies, the mandatory blend was as high as 50 percent in 1943. After the end of the war cheap oil caused gasoline to prevail, and ethanol blends were only used sporadically, mostly to take advantage of sugar surpluses, until the 1970s, when the first oil crisis resulted in gasoline shortages and awareness on the dangers of oil dependence.
The Pro-Alcohol era Ethanol-only and Flexible-fuel light vehicles manufactured in Brazil from 1979 to 2011 (Selected years)Year NeatEthanol (E100) vehicles ProducedE20/E100 Flexible fuel vehicles Produced(1) Total Light Vehicles(1) Produced (including exports)Ethanolvehicles as %Total light vehicles(2) 1979 4,614 — 1,022,083 0.51980 254,001 — 1,048,692 24.2 1983 590,915 — 854,761 69.1 1986 697,731 — 960,570 72.61988 569,189 — 978,519 58.2 1990 83,259 — 847,838 9.81993 264,651 — 1,324,665 20.0 1998 1,451 — 1,501,060 0.12000 10,106 — 1,596.882 0.62002 56,594 — 1,700,146 3.3 2003 34,919 49,264 1,721,841 4.9 2004 51,012 332,507 2,181,131 17.6 2005 51,476 857,899 2,377,453 38.2 2006 775 1,391,636 2,471,224 56.3 2007 3 1,936,931 2,803,919 69.1 2008 0 2,243,648 3,004,535 74.7 2009 0 2,541,153 3,024,755 84.0 2010 50 2,627,111 3,408,683 77.1 2011 51 2,848,071 3,425,674 83.1 Total 1979–20115,658,45014,828,22061,141,08333.5Source: ANFAVEA, 1979–2010, pp. 62–63. and Denatran/ANFAVEA 2011. Carta de ANFAVEA 308 pp. 4. Notes: (1) Flex-fuel motorcycles not included. (2) Total light vehicles include autos and light trucks built with diesel,gasoline, neat ethanol, and flexfuel engines.
As a response to the 1973 oil crisis, the Brazilian government began promoting bioethanol as a fuel. The National Alcohol Program -Pró-Álcool- (), launched in 1975, was a nationwide program financed by the government to phase out automobile fuels derived from fossil fuels, such as gasoline, in favor of ethanol produced from sugar cane. The decision to produce ethanol from sugarcane was based on the low cost of sugar at the time, the idle capacity for distillation at the sugar plants, and the country's tradition and experience with this feedstock. Other sources of fermentable carbohydrates were also explored such as manioc and other feedstocks. The first phase of the program concentrated in production of anhydrous ethanol for blending with gasoline.
After testing in government fleets with several prototypes developed by local subsidiaries of Fiat, Volkswagen, GM, and Ford, and compelled by the second oil crisis, the first 16 gasoline stations began supplying hydrous ethanol in May 1979 for a fleet of 2,000 neat ethanol adapted vehicles, and by July, the Fiat 147 was launched to the market, becoming the first modern commercial neat ethanol-powered car (E100) sold in the world. Brazilian carmakers modified gasoline engines to support hydrous ethanol characteristics. Changes included compression ratio, amount of fuel injected, replacement of materials subject to corrosion by ethanol, use of colder spark plugs suitable for dissipating heat due to higher flame temperatures, and an auxiliary cold-start system that injects gasoline from a small tank to aid cold starting. Six years later, approximately 75% of Brazilian passenger cars were manufactured with ethanol engines.
The Brazilian government also made mandatory the blend of ethanol fuel with gasoline, fluctuating from 1976 until 1992 between 10% and 22%. Ph.D. Dissertation Thesis, pp. 81–82 Due to this mandatory minimum gasoline blend, pure gasoline (E0) is no longer sold in the country. A federal law was passed in October 1993 establishing a mandatory blend of 22% anhydrous ethanol (E22) in the entire country. This law also authorized the Executive to set different percentages of ethanol within pre-established boundaries; since 2003 these limits were fixed at a maximum of 25% (E25) and a minimum of 20% (E20) by volume. See article 9º and modifications approved by Law Nº 10.696, 2003-07-02 Since then, the government has set the percentage on the ethanol blend according to the results of the sugarcane harvest and the levels of ethanol production from sugarcane, resulting in blend variations even within the same year.
Since July 2007, the mandatory blend was 25% of anhydrous ethanol and 75% gasoline or E25 blend. This decree fixed the mandatory blend at 25% starting July 1st, 2007 As a result of supply shortages and high ethanol fuel prices, in 2010 the government mandated a temporary 90-day blend reduction from E25 to E20 beginning February 1, 2010. As supply shortages took place again between the 2010–2011 harvest seasons, some ethanol was imported from the US, and in April 2011 the government reduced the minimum mandatory blend to 18 percent, leaving the mandatory blend range between E18 and E25.
By mid-March 2015, the government raised the ethanol blend in regular gasoline from 25% to 27%. The blend on premium gasoline was kept at 25% upon request by ANFAVEA, the Brazilian association of automakers, because of concerns about the effects on the higher blend on cars that were built only for E25 as the maximum blend, as opposed to flex-fuel cars. The government approved the higher blend as an economic incentive for ethanol producers, due to an existing overstock of over 1 billion liters (264 million US gallons) of ethanol. The implementation of E27 is expected to allow the consumption of the overstock before the end of 2015.
The Brazilian government provided three important initial motivators for the ethanol industry: guaranteed purchases by the state-owned oil company Petrobras, low-interest loans for agro-industrial ethanol firms, and fixed gasoline and ethanol prices where hydrous ethanol sold for 59% of the government-set gasoline price at the pump. These incentives made ethanol production competitive.Lovins. A.B. (2005). Winning the Oil Endgame, p. 105.
After reaching more than four million cars and light trucks running on pure ethanol by the late 1980s, representing 33% of the country's motor vehicle fleet, ethanol production and sales of neat ethanol cars tumbled due to several factors. First, gasoline prices fell sharply as a result of the 1980s oil glut. The inflation adjusted real 2004 dollar value of oil fell from an average of US$78.2 in 1981 to an average of US$26.8 per barrel in 1986.Oak Ridge National Lab data Also, by mid-1989, a shortage of ethanol fuel supply in the local market left thousands of vehicles in line at gas stations or out of fuel in their garages. At the time ethanol production was tightly regulated by the government, as well as pricing of both gasoline and ethanol fuel, the latter subject to fixed producer prices. As a complement, the government provided subsidies to guarantee a lower ethanol price at the pump as compared to gasoline, as consumers were promised that ethanol prices would never be higher than 65% the price of gasoline. As sugar prices sharply increased in the international market by the end of 1988 and the government did not set the sugar export quotas, production shifted heavily towards sugar production causing an ethanol supply shortage, as the real cost of ethanol was around per barrel. As ethanol production stagnated at 12 billion liters and could not keep pace with the increasing demand required by the now significant ethanol-only fleet, the Brazilian government began importing ethanol from Europe and Africa in 1991. See chapters Introduction (pp. 339-444) and Pillar I: Innovation (pp. 445-482) Simultaneously, the government began reducing ethanol subsidies, thus marking the beginning of the industry's deregulation and the slow extinction of the Pró-Álcool Program.