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Homegrown Fuel Supply Helps Brazil Breathe Easy

June 15, 2005|Marla Dickerson | Times Staff Writer

SAO PAULO, Brazil — While Americans fume at high gasoline prices, Carolina Rossini is the essence of Brazilian cool at the pump.

Like tens of thousands of her countrymen, she is running her zippy red Fiat on pure ethanol extracted from Brazilian sugar cane. On a recent morning in Brazil's largest city, the clear liquid was selling for less than half the price of gasoline, a sweet deal for the 26-year-old lawyer.

"You save money and you don't pollute as much," said Rossini, who paid about $18 to fill her nearly empty tank. "And it's a good thing that the product is made here."

Three decades after the first oil shock rocked its economy, Brazil has nearly shaken its dependence on foreign oil. More vulnerable than even the United States when the 1973 Middle East oil embargo sent gas prices soaring, Brazil vowed to kick its import habit. Now the country that once relied on outsiders to supply 80% of its crude is projected to be self-sufficient within a few years.

Developing its own oil reserves was crucial to Brazil's long-term strategy. Its domestic petroleum production has increased sevenfold since 1980. But the Western Hemisphere's second-largest economy also has embraced renewable energy with a vengeance.

Today about 40% of all the fuel that Brazilians pump into their vehicles is ethanol, known here as alcohol, compared with about 3% in the United States. No other nation is using ethanol on such a vast scale. The change wasn't easy or cheap. But 30 years later, Brazil is reaping the return on its investment in energy security while the U.S. writes checks for $50-a-barrel foreign oil.

"Brazil showed it can be done, but it takes commitment and leadership," said Roland Hwang, vehicles policy director for the Natural Resources Defense Council in San Francisco. In the U.S. "we're paying the highest prices at the pump since 1981, and we are sending over $100 billion overseas a year to import oil instead of keeping that money in the United States.... Clearly Brazil has something to teach us."

Much of Brazil's ethanol usage stems from a government mandate requiring all gasoline to contain 25% alcohol. Vehicles that ran solely on ethanol fell out of favor here in the 1990s because of an alcohol shortage that pushed drivers back to gas-powered cars. But thanks to a new generation of vehicles that can run on gasoline, ethanol or any combination of those two fuels, more motorists like Rossini are filling up with 100% alcohol again to beat high gas prices.

The exploding popularity of these so-called flex-fuel vehicles is reverberating across Brazil's farming sector. Private investors are channeling billions of dollars into sugar and alcohol production, creating much-needed jobs in the countryside. Environmentalists support the expansion of this clean, renewable fuel that has helped improve air quality in Brazil's cities. Consumers are tickled to have a choice at the filling station.

Officials from other nations are flocking to Brazil to examine its methods. Most will find Brazil's sugar-fuel strategy impossible to replicate. Few countries possess the acreage and climate needed to produce sugar cane in gargantuan quantities, much less the infrastructure to get it to the pump.

Still, some Brazilians said their government's commitment to ditching imports and to jump-starting homegrown energy industries were the real keys to Brazil's success.

"It's a combination of strong public policy and the free market," said Mauricio Tolmasquim, president of a federal energy research agency based in Rio de Janeiro. "That's the Brazilian secret."

Brazil's fortunes have been tied to sugar since the Portuguese conquerors found that their tropical colony boasted ideal conditions for cultivating the tall, grassy plant. Brazilians produce and eat more cane sugar than any people on the planet, so the notion of using it to power their vehicles was a natural. After all, Henry Ford once viewed ethanol, which can be made from corn, barley and other crops, as a strong contender to fuel the Model T.

But the discovery of cheap, abundant petroleum changed everything. Like much of the rest of the world, Brazil guzzled imported crude until the 1970s oil shocks put its economy over a barrel. So totally reliant was Brazil on foreign oil that surging prices wreaked havoc on its balance of trade. That led to massive borrowing, huge deficits and, eventually, hyperinflation and a devaluation of its currency.

Thus the Brazilian government, then a military dictatorship, launched efforts in the mid-1970s to wean the nation off imports. Those efforts included its National Alcohol Program, known as Proalcool.

"To become less dependent was a matter of life and death," said Jose Goldemberg, secretary of the environment for the state of Sao Paulo.

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