There Is No Ethanol Revolution in Brazil

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Most ethanol
apologists like to use the example of Brazil. Unfortunately, I live
in Brazil and I see no ethanol revolution here. In fact, the
heavily subsidized ethanol program (Pro-Alcool) used to be an ecological
and social disaster. From 1975 to 1989, the Brazilian government
spent nine billion dollars in subsidies for ethanol production
(and that’s not counting special loans, that were never paid, from
state-owned banks): Nine billion dollars in a country like Brazil
(where one can buy a can of soda for less than fifty cents of a
dollar) is a pornographic amount of money.

Large areas
of land were wasted for monoculture (some people complain one of
the most fertile lands of the country, in the Ribeirão Preto
region, is being degraded by sugar cane monoculture), semi-slave
(and child) labor were heavily used. Nasty environmental problems
were only surpassed in the 1990’s, like the pollution of rivers
by vinhoto (produced in ethanol refining) and crop burning (until
the mechanization of the crops, that technique were used to cut
sugarcane). C’mon, greens and progressives: that’s not such a good
thing to defend.

I don’t remember
anyone that owned an ethanol-fueled car besides my father. And he
used to complain a lot about it. He complained that he had difficulties
to ignite the car in cold days (and a cold day in Brazil is warmer
than a summer day in most cities of the United States). Only when
there were created flexible-fuel vehicles (allowing people to run
cars both on gasoline and ethanol) that the Brazilian consumer began
to see ethanol as a compelling alternative. In 1997, only 1,117
cars running on ethanol were produced in the whole country, in 2000
almost zero! No one wants to rely only on ethanol.

The so-called
“Brazilian energy independence” should be explained. Brazilian hydrography
allows the construction of heavy dams, so the country doesn’t have
to burn coal or fuel to produce most of its electricity (but, some
years ago, the country faced a heavy electricity shortage. And no
one guarantees that we are free from that). Brazil has also good
reserves of oil. The oil and gasoline production in the country
is monopolized by Petrobras, the local version of Pemex and PDVSA,
the state-owned company that is hated by Brazilian conservatives
and free-market proponents. It’s because of a federal law that Brazilian
gasoline has 20 to 25% of ethanol. And gasoline in Brazil is very
expensive (neighboring Argentina has a more affordable gasoline
price – some
Brazilian car owners even drives twenty miles to fuel there
!),
especially considering that there are no heavy taxes to maintain
highways (like most Europeans countries do). And natural gas also
does a good job (especially because we don’t need natural gas for
home heating).

Even if ethanol
were really successful in Brazil, that’s not the best example. First,
Brazilian consumption of energy is far smaller than in the US. Few
Brazilians uses air conditioning (and most of them use that only
in some rooms of their homes), even fewer use home heating (and
that’s among the middle and higher class). Some tourist guides even
recommend Brazilians to take care to take blouses due to air conditioning
in Florida. Brazilians also have a smaller dependence on cars: most
poor people don’t drive, and even rich people don’t use it in the
way that Americans are accustomed to (no one drives everyday fifty
miles to work). Second, conditions are much more favorable for agriculture
in Brazil than in the United States (as orange producers in Florida
are tired to know). The minimum wage of Brazil is something like
one hundred dollars (and most farmers do not pay that to their workers),
there are not such cold winters like most of the US has, the soil
is more fertile, there is more land available. And the American
ethanol program is even worse than the Brazilian one, since corn
ethanol is far more ineffective than the sugar cane one.

Earlier this
year, Brazil faced a heavy problem: since there were rising sugar
prices in the international market, most producers decided to produce
sugar instead of ethanol. Without federal government intervention,
we could have faced shortage of the product. Most of the ethanol
apologists like Mark Steyn and Thomas Friedman like to point out
the solution to simply import ethanol from Brazil, but if the Americans
begin to do that, then ethanol would have unaffordable prices compared
to gasoline. Or, sure, I would find no sugar to put in my coffee.
Maybe that could be the perfect solution for all these people complaining
about obesity, eh?

Some Brazilians
tends to mix in national pride when they talk about ethanol. It’s
the same thing than trying to discuss the rationale of American
military interventions with an American. It’s easier to discuss
soccer with Brazilians than to discuss ethanol. An interesting and
cheap solution that I see in Brazil is natural gas, not ethanol,
to fuel cars. But we don’t have to spend natural gas in home heating.

Ethanol apologists
shouldn’t be talking about “Brazilian ethanol success” because there
is no such success. And learn that these kinds of decisions should
be made by the market, no by the government.

August
9, 2006

André
Kenji de Sousa [send him mail]
writes from São Paulo, Brazil. Photographs, drawings and
further information can be found at his
website
.

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