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For the Brazilian energy sector, this year is an iconic year. The Brazilian government predicts that this country will achieve energy balance for the first time in history this year, that is, the import and export of fuel will offset. All this is because this year, Brazil's ethanol production from sugar cane will record a record.
In addition, while ethanol has eased Brazil’s oil dependency and replaced 40% of the country’s gasoline consumption, Brazil’s proven oil reserves have also increased significantly in recent years.
The new car will be 100% flexible. In Brazil, with a population of 185 million people, you will find that most gas stations offer three types of options: ethanol, gasoline and high-grade gasoline. Moreover, gasoline is mixed with 20% ethanol. Ethanol is significantly cheaper than gasoline - $0.53 per litre, while Sao Paulo's gas price was $0.99 per litre last week.
As Brazil imports and produces flex-fuel vehicles (cars that can use ethanol, gasoline, and other fuels) into their third year, several major carmakers in the country anticipate that by the end of the year they will 100% of the new cars produced will be flexible fuel types. “I only bought gas when no other fuel was available,†said 28-year-old São Paulo taxi driver Alexei Rigueira, who opened a Chevrolet car, with the exception of gasoline and ethanol. Natural gas can also be used, and Brazil also has many natural gas filling stations.
President Bush stressed this year that ethanol is a possible choice to solve the United States’ extreme dependence on oil. Therefore, US lawmakers and venture capitalists came to Brazil to see the future of the US energy landscape in Brazil.
“In recent months, Americans have become more interested in our experience,†said Edeldo Cavajo, chairman of the São Paulo Sugar Cane Producers’ Federation. “We have received US politicians and were invited to the US Senate’s Foreign Relations Committee. He also spoke with senior officials of some investment funds."
Ethanol consumption has been extremely frustrating. In fact, Brazil's experience in developing ethanol fuel is the result of 30 years of painful evolution. This requires both sufficient vision and countless setbacks. Its development is inseparable from Brazil’s unique political and economic environment.
In 1975, when the Brazilian military government came to power, the military government launched a nationwide ethanol development plan. At that time, 90% of Brazil’s oil consumption was dependent on imports. The military government gave subsidies to sugarcane farmers and also ordered that gas stations must install ethanol fuel pumps in towns with a population of more than 1,500 people. In the early 1980s, nearly 100% of new cars produced in Brazil were fueled with ethanol.
In the following decade or so, Brazil has undergone a major change and the military government has been replaced by a democratically elected government. At the same time, the oil price plummeted and the government also cancelled subsidies for sugarcane farmers. The sugar processing factory changed from producing ethanol to producing sugar mainly. The supply of ethanol at gas stations was in short supply, and the automobile factory almost completely stopped the production of ethanol fuel vehicles.
"At that time, we went from one extreme to the other," said Henry Joseph Jr., head of engineering at Volkswagen (Brazil). "Ethanol-fueled cars quickly fell from 90% of national vehicle production to less than 1%."
However, the sugar technology center in Brazil's state of Sao Paulo, founded in the 1970s, continued to carry out projects to increase the efficiency of ethanol production, including the study of various sugar cane genes and extraction technologies.
The Sugar Technology Center is located in a large cane field in the State of São Paulo, which has nearly 300 scientists. Its head of research and development, Jaim Fingulut, said: "We did not have much investment at that time, but after arduous efforts, we finally created a better living environment."
The rise in oil prices has once again favored ethanol. At the beginning of this century, when international oil prices started to rise gradually, Brazilian ethanol producers had reduced the production cost of ethanol from US$0.6 per litre to US$0.2. Since most of the gas stations in Brazil can also supply ethanol to the country's remaining ethanol-fueled cars, the re-supply of ethanol in the country suddenly became economically viable.
In 2003, Volkswagen (Brazil) introduced the country's first flexible fuel model that can use fuels such as ethanol and gasoline. Other automakers including General Motors and Ford are also doing the same in Brazil.
Little Henry Joseph said: “We are in a stage of transition from an internal combustion engine to an electric engine. How to make a successful transition is difficult for any country to grasp. A flexible fuel type car is one of the options. It's easy because it uses existing fuel sales channels, and if you run into supply shortages, you can quickly move from one type of fuel to another."
In Brazil, many drivers have developed outstanding mathematical skills due to the use of various fuels such as ethanol and gasoline. They are very clear that the combustion efficiency of ethanol is about 70% of gasoline. Therefore, they know that the price of ethanol is at least 30% cheaper than gasoline.
The soaring price of oil this year seems to have dimmed the world's energy supply prospects, but it is an exception in Brazil.