Ethanol Fuel in Brazil - History

History

Sugarcane has been cultivated in Brazil since 1532 as sugar was one of the first commodities exported to Europe by the Portuguese settlers. The first use of sugarcane ethanol as a fuel in Brazil dates back to the late twenties and early thirties of the twentieth century, with the introduction of the automobile in the country. Ethanol fuel production peaked during World War II and, as German submarine attacks threatened oil supplies, the mandatory blend became as high as 50% 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 seventies, when the first oil crisis resulted in gasoline shortages and awareness of the dangers of oil dependence. As a response to this crisis, the Brazilian government began promoting bioethanol as a fuel. The National Alcohol Program -Pró-Álcool- (Portuguese: 'Programa Nacional do Álcool'), launched in 1975, was a nation-wide 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 first phase of the program concentrated on production of anhydrous ethanol for blending with gasoline. The Brazilian government made mandatory the blending of ethanol fuel with gasoline, fluctuating from 1976 until 1992 between 10% to 22%. 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; and since 2003 these limits were fixed at a maximum of 25% (E25) and a minimum of 20% (E20) by volume. Since then, the government has set the percentage of 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 is 25% of anhydrous ethanol and 75% gasoline or E25 blend. However, in 2010, and as a result of supply concerns and high ethanol fuel prices, the government mandated a temporary 90-day blend reduction from E25 to E20 beginning February 1, 2010.

After testing in government fleets with several prototypes developed by the local carmakers, and compelled by the second oil crisis, the Fiat 147, the first modern commercial neat ethanol car (E100 only) was launched to the market in July 1979. The Brazilian government provided three important initial drivers 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. Subsidising ethanol production in this manner and setting an artificially low price established ethanol as an alternative to gasoline.

After reaching more than 4 million cars and light trucks running on pure ethanol by the late 1980s, representing one third of the country's motor vehicle fleet, ethanol production and sales of ethanol-only cars tumbled due to several factors. First, gasoline prices fell sharply as a result of lower gasoline prices, but mainly because of 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 by mid 1989. As supply could not keep pace with the increasing demand required by the now significant ethanol-only fleet, the Brazilian government began importing ethanol in 1991.

Confidence on ethanol-powered vehicles was restored only with the introduction in the Brazilian market of flexible-fuel vehicles. In March 2003 Volkswagen launched in the Brazilian market the Gol 1.6 Total Flex, the first commercial flexible fuel vehicle capable of running on any blend of gasoline and ethanol. By 2010 manufacturers that build flexible fuel vehicles include Chevrolet, Fiat, Ford, Peugeot, Renault, Volkswagen, Honda, Mitsubishi, Toyota, Citroën, Nissan, and Kia Motors.

Flexible fuel cars were 22% of the car sales in 2004, 73% in 2005, 87.6% in July 2008, and reached a record 94% in August 2009. The cumulative production of flex-fuel cars and light commercial vehicles reached the milestone of 10 million vehicles in March 2010, and 15.3 million units by March 2012. The rapid adoption and commercial success of "flex" vehicles, as they are popularly known, together with the mandatory blend of alcohol with gasoline as E25 fuel, have increased ethanol consumption up to the point that by February 2008 a landmark in ethanol consumption was achieved when ethanol retail sales surpassed the 50% market share of the gasoline-powered fleet. This level of ethanol fuel consumption had not been reached since the end of the 1980s, at the peak of the Pró-Álcool Program. From 1979 until December 2010, Brazil has substituted more than 18 million pure gasoline-powered vehicles with 5.7 million neat ethanol vehicles, almost 12 million flex-fuel light vehicles, and 515.7 thousand flex-fuel motorcycles. The number of neat ethanol vehicles still in use was estimated between 2 to 3 million vehicles by 2003, and 1.22 million as of December 2011.

Under the auspices of the BioEthanol for Sustainable Transport (BEST) project, the first ethanol-powered (ED95) bus began operations in São Paulo city on December 2007 as a one-year trial project. A second ED95 trial bus began operating in São Paulo city in November 2009. Based on the satisfactory results obtained during the 3-year trial operation of the two buses, in November 2010 the municipal government of São Paulo city signed an agreement with UNICA, Cosan, Scania and Viação Metropolitana", the local bus operator, to introduced a fleet of 50 ethanol-powered ED95 buses by May 2011. The local government objective is for the city's entire bus fleet, which is made of 15,000 diesel-powered buses, to use only renewable fuels by 2018. The first ethanol-powered buses were delivered in May 2011, and the 50 ethanol-powered ED95 buses are scheduled to begin regular service in São Paulo in June 2011.

Another innovation of the Brazilian flexible-fuel technology was the development of flex-fuel motorcycles. The first flex motorcycle was launched by Honda in March 2009. Produced by its Brazilian subsidiary Moto Honda da Amazônia, the CG 150 Titan Mix is sold for around US$2,700. In order to avoid cold start problems, the fuel tank must have at least 20% of gasoline at temperatures below 15 °C (59 °F). In September 2009, Honda launched a second flexible-fuel motorcycle, the on-off road NXR 150 Bros Mix. By December 2010 both Honda flexible-fuel motorcycles had reached cumulative sales of 515,726 units, representing a 18.1% market share of the Brazilian new motorcycle sales in 2010.