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The sweet power of ethanol.

IT'S THE EVENING RUSH HOUR in Sao Paulo, the world's fourth-largest city, and frustrated commuters roll down their car windows for a bit of air as they wait out yet another traffic jam. One motorist, thinking ahead to the refreshing caipirinha, or lime-and-cachaca cocktail, that will be waiting for him when he gets home, imagines that he can even smell the sweet aroma of the rum distilled from sugarcane.

But wait--that's not his imagination. He IS smelling sugarcane alcohol, and the aroma is not coming from any cocktail shaker. It's wafting up from the tailpice ofthe Ford Escort ahead of him. The Escort and half of the other cars on congested Avenida Consolacao get their high-octane kicks from pure ethyl alcohol, distilled from the same green cane stalks that yield sugar, molasses and cachaca.

While it certainly is more pleasant for gridlock victims and city dwellers to breathe the sweet fumes from sugarcane alcohol than the noxious exhaust produced by gasoline-burning cars, pollution reduction was not the reason behind Brazil's decision in 1975 to launch the world's first successful program to substitute imported oil with alcohol fuel.

The program, officials said at the time, was a question of national survival. Brazil imported 80 percent of its oil in 1973, when the fist Mideast oil crisis hit. Planners feared that future growth in South America's most industrialized nation would be jeopardized unless Brazil slashed its oil imports to save vital foreign exchange.

Creating a progral called PROALCOOL (Pro-alcohol), the government used generous subsidies to encourage private enterprise to plant millions of acres with sugarcane, build hundreds of alcohol distilleries, and design automobile engines that run on the alternative fuel.

Today, at least 4.5 million automobiles -- more than one-third of the national fleet -- run on pure ethyl alcohol, called ethanol. Another 7.5 million cars run on gasohol containing as much as 22 percent alcohol. Until recently, nine of every ten new cars sold were alcohol-run.

The government has poured $12 billion into the program, not including an estimated $1 billion more ach year in industry subsidies and tax incentives. But Brazil has saved more than $10 billion that would have been spent on oil imports, and that means a lot to a country that holds the world's largest foreign debt of $120 billion.

Brazil produces more than 3 billion gallons a year of fuel alcohol -- equivalent to 200,000 barrels a day. The labor-intensive industry provides employment for 700,000 people, from cane-cutters to distillery workers. About 14,100 square miles of land are planted with sugarcane for alcohol, an area one-and-a-half times larger than El Salvador or almost two times the size of Massachusetts. Technicians have improved production efficiency by 3.4 percent each year through genetic selection of cane varieties and reduction of waste in industrial processing.

On the surface, it seems the Brazil has had tremendous success as the only country in the world with the audacity to launch and sustain a full-scale alternative-fuels program. But there are problems.

With international oil prices averaging about $18 a barrel and alcohol costing at least $40 a barrel to produce, critics charge that the program is economically unsound: the country, they say, is unwisely spending more than two dollars for every dollar it saves by not importing oil. That aggravates inflation, which now is running in four-digit figures. Recent belt-tightening efforts that reduced price supports and other subsidies have raised doubts about official commitment to the program, provoking alcohol shortages and consumer flight back to gasohol-powered vehicles. Finally, over the past decade Brazil has quadrupled its domestic oil production, to the point that the country could abandon alcohol altogether and use only gasoline. The country even exports 100,000 barrels a day of gasoline, which is left over from refining a half-million barrels of oil imported each day to fuel the thirsty diesel-run truck and bus fleet.

Supporters argue that oil prices could skyrocket again at any time and say the visionary program should not be sacrificed just because it looks costly now. "It would be senseless to throw away 10 years of work, technological innovation and heavy investment," says Jose Henrique Turner, president of the Sugar and Alcohol Institute.

Even critics agree the program should continue. "The alcohol program never has been economically viable, but it doesn't make sense to scrap it now," says economist Eli Roberto Pelin of the Institute of Economic Research (FIPE) at the University of Sao Paulo, who has critized PROALCOOL since its inception. "What would we say to the millions of alcohol car owners in the country? That the game is over? And what about the billions of dollars the government has invested?"

Now that protection of the environment has become an important priority even for cash-strapped developing nations, Brazilian officials have an additional, compelling reason for maintaing the alcohol program: pollution control. Ethanol-run cars emit half the carbon monoxide that gasoline cars produce. In large cities where a significant number of cars run on clean-burning alternative fuels, pollution can be controlled, and in some cases, reduced.

Sao Paulo is a case in point. The metropolitan area, home to 20 million people, is polluted by heavy industry and vehicle emissions. In 1978, before pure alcohol fuel was adopted, 1.9 million cars, buses and trucks circulated in the Sao Paulo area. By 1985, that number had risen to 2.5 million vehicles, a 76 percent increase, but the amount of carbon monoxide spewn into the air remained the same: about 1 million tons per year.

"The alcohol car fleet we have in Sao Paulo definitely helped prevent the situation from being worse than it is today. The number of cars has increased and traffic has gotten worse, but air quality has remained stable," says Alfred Szarc, a manager for PROCONVI, the National Auto Vehicle Pollution Control Program.

The use of cleaner-burning fuels could be a boon for other polluted cities around the world. In the United States, President George Bush recently called on automakers to produce more than 8 million alternative-fuel vehicles for the country's nine most-polluted cities by the year 2004.

Although there are many differences between the United States' and Brazil's motives and approaches to the issue of alternative fuels, the Brazilian experience offers some insights into how a country can utilize alternative fuels to its best advantage.

While the North Americans are chiefly interested in reducing pollution, Brazil launched its program specifically to achieve energy independence. Thus, Brazil was able to make fairly simple design changes in cars to run on alcohol -- adding protective coatings to the carburetor and the fuel tank to prevent corrosion, and regulating the motor.

"At the time Brazil didn't even have an auto emissions control program -- our only mandate was to make the car go," says Henry Joseph Jr., a Brazilianborn chemical engineer who works for Autolatina, the joint venture run by Ford Motor Company and Volkswagen in Sao Paulo.

Although the United States plans to adopt gasohol, not pure alcohol, and on a much smaller scale than Brazil, engineers must make more sophisticated engine modifications to meet stringent auto emission standards. Catalytic converters and sophisticated sensors that measure the oxygen in the exhaust and automatically adjust the engine to burn more efficiently are not easily modified. Automakers are developing "flexible fuel" vehicles capable of running on conventional gasoline as well as alternative fuels.

Fuel production processes also will be different, because above the equator, methanol or ethanol distilled from corn or from abundant supplies of wood or coal probably will be added to gasoline, while in Brazil, fast-growing sugarcane is the crop of choice. Despite the differences, mechanical and chemical engineers from both countries already have begun to share research findings to take advantage of Brazil's 15 years of experience and the United State's resources for research and development.

North American planners may find that market incentives will be the only way to convince drivers to switch to alternative-fuel cars. In Brazil, consumers didn't immediately embrace the new technology when alcohol-driven cars were introduced. The complained that alcohol corroded motor parts and made frequent tune-ups necessary. Cold-weather engine start-ups were difficult. And since ethanol provides only two-thirds the mileage that gasoline does, alcohol car sales didn't take off until the government promised that alcohol would never cost more than 65 percent as much as gasohol. As automakers perfected the new engines, consumers finally were won over by the government's offer of low sales taxes on alcohol-fueled cars.

The incentives worked: by 1980, alcohol consumption was growing nearly 70 percent a year and the program has expanded ever since, except for lulls in 1981 and more recently in 1988 when low world oil prices eroded political support for the costly alcohol program.

Many Brazilians adopted the new technology with pride, sporting car bumper stickers that read "I Am Moved by Alcohol." Others were attracted to alcohol-run cars because of the financial advantages. "There was a certain amount of patriotism mixed with fear that gas supplies could shrink again," explains Jacy Mendonca, president of the National Association of Automobile Manufacturers (ANFAVEA). Whatever the motive, by 1988, nine of every 10 new cars sold ran an alcohol.

Critics warn, however, that if the subsidies disappear, the program could collapse. Brazil's high inflation forced officials in mid-1988 to reduce subsidies that had artificially kept alcohol pump prices 35 percent lower than gasohol. Sales of ethanol vehicles immediately plummeted.

Sales plunged further when the producers predicted a 300- to 400-million-gallon shortfall of alcohol by April 1989, caused by a government reduction of price supports for sugarcane alcohol, which caused some producers to plant more lucrative crops. Now, only one of every 10 new cars sold run on alcohol.

Still, no one is predicting the end of Brazil's alcohol program. "The program's success has been impressive," says Lourival Monaco, a member of the government's National Energy Commission. "It has been hurt in recent years because of low oil prices, but it is imperative to look at a program like this as a long-term investment."

Turner, of the Sugar and Alcohol Institute, agrees. "Few countries in the world have enough land and the proper climatic conditions to grow as much sugarcane as we do to support a program of this scale. We might as well take advantage of it."

Most analysts predict that the national car fleet eventually will have a 50-50 mix of alcohol versus gasohol cars, a ratio compatible with the country's alcohol production capacity. At those levels, Brazil will be cushioned from international oil shocks. And some automotive engineers are starting to study the feasibility of producing methanol from abundant supplies of natural gas in Amazonian oil fields, to provide a backstop alternative fuel should the country's supplies of ethanol prove insufficient.

For some, Brazil's alcohol program was an expensive mistake. "If it was such a fantastic idea, why was Brazil the only country in the world to do it?" economist Pelin asks.

Others, including Turner, believe Brazil showed courage and spunk. "It's like making a manned flight to the moon. It was extremely expensive and perhaps not necessary, and only one country has done it, but the knowledge gained has been considerable."

Now perhaps some of that knowledge can be applied in other countries, where growing concern over the environment has sparked interest in renewable, non-polluting energy sources.

Contributing Editor Geri Smith, an international correspondent based in Rio de Janeiro, writers for U.S. News and World Report and major U.S. newspapers.
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Title Annotation:for Brazilian cars
Author:Smith, Geri
Publication:Americas (English Edition)
Date:Jan 1, 1990
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