Clean and green: renewable fuels sugar and soy, plus hydrogen and gas, get a kick-start from economic hard times.

Brazil is turning up the heat in its search to turn ordinary foods like sugar and soybeans, even hydrogen, into fuel for a growing economy, while Argentina and Mexico are dabbling in ways to put more drivers behind the wheel of cars fueled by cleaner-burning--and cheaper--natural gas.

The Brazilian government will spend US$2.6 million in 2003 on biodiesel fuel research in a program that began last year. Biodiesel fuel is a mixture of mostly vegetable oil and a reagent, typically methanol, to get the vegetable matter to burn. A new biodiesel developed by researchers at the University of Sao Paulo (USP) in Ribeirao Preto now uses ethanol as the reagent, making it 100% renewable, as well as nun-toxic and biodegradable.

"Brazil's reason for developing biodiesel parallels the Americans' economic motive for developing it, as opposed to the European's ecological one," says Miguel Dabdoub, head of biodiesel research at USP Ribeirao Preto.

Researchers believe they could soon put their biodiesel on the market nationwide. The idea is to substitute at first a 5% biodiesel mix--95% diesel and 5% vegetable oil, likely soy--to immediately reduce greenhouse gas emissions and dependence on foreign oil. Brazil imports 15% of its refined diesel at a cost of more than $1 billion, so reducing diesel consumption by using the 5% mix would cut refined diesel imports by a third, saving $327 million annually.

Granol, Brazil's sixth-largest soy oil producer, is studying increasing its output by 30% to make biodiesel, if the government decides to replace all or some of the diesel sold at pumps here with the 5% fuel, says Juan Diego Ferres, Granol's industrial director. "We'd like to be a major player in such a market because we believe there are profits to be made," says Ferres. There are markets abroad, too. Two million European cars use biodiesel fuel.

Researchers at Unicamp, in southern Sao Paulo state, will begin work in early 2004 on the third incarnation of its Vega fuel-cell vehicle, financed by the government's Mines and Energy Ministry. The latest-version Vega will use renewable ethanol and water to make hydrogen. "We want to ... show world automakers that ethanol is a 100% renewable alternative," says Ennio Peres Silva, the head of Unicamp's Vega II and Vega III project.

Meanwhile, Argentina is hard at work on clean fuel as well. As many as 15% of cars in the country, more than a million vehicles in total, are fueled by natural gas, making Argentina the world's leading consumer of clean fuel. By comparison, in the United States only 90,000 vehicles, mostly city buses, depend on the pollution-free technology.

Frozen. Gasoline prices are pegged to dollars and have skyrocketed 35% since Argentina's 2001 devaluation; cheaper natural gas is more aligned with Argentina's new economic reality. "It's what puts food on the table," says Diego Alonso, one of the city's numerous taxi drivers using compressed natural gas, or CNG. "With passenger rates frozen, there's no other way I'd be able to make a profit."

Behind the success of CNG in Argentina is Grupo Galileo. An orphaned unit of the former Westinghouse industrial empire, the company was bought by its management in 1989 and quickly became the pioneer in natural-gas technology, developing everything from the yellow tubes needed to convert a car to CNG to the sophisticated pumps used to dispense the fuel at service stations.

In Brazil, over 300 service stations use their technology, while New Delhi recently paid Galileo $13 million to revamp the city's public bus system. Projects in South Korea, Spain, Mexico and Israel are also under way. "It's a goal of mine in the next few years to make it possible to drive from Tierra del Fuego to the northern tip of South America completely on natural gas," says Fausto Maranca, co-founder and chairman of Galileo.

In Mexico, the battle for cleaner, cheaper fuel is being fought on the pollution-choked city streets. The government signed an agreement with IMPCO, a California company that produces alternative and environment friendly fuels. The plan is to launch a propane-based fuel almost 50% cheaper than gasoline, targeted at the 120,000 public transportation vehicles.

The government will encourage drivers to switch to this fuel by cutting federal taxes on both propane fuel and on the vehicles. Mexico already has a few stations that provide alternative fuels but, with the implementation of this program, propane gas stations will be built all over the city. Mexico expects the plan to become effective by the end of 2003.

--with Maria Clara Burbano

MIKE KEPP * RIO DE JANEIRO 

JOSHUA GOODMAN * BUENOS AIRES