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
