Thanks to Ethanol, Gas Is Turning into Alternative Fuel in Brazil

Brazilian ethanol side by side with gas In Brazil, gasoline is rapidly becoming the country's alternative fuel as ethanol consumption zooms according to the latest reports from the Brazilian Ministry of Agriculture. The tendency is strongly supported by consumers' demand and Brazil's auto industry.

In the first half of 2008, Brazil consumed 2.4 billion gallons of gasoline and 2.38 billion gallons of ethanol. But the race is quickly tilting in ethanol's favor, as ethanol consumption has been trumping gasoline for the last five months, says Brazil's National Petroleum Agency (ANP).

Most of that is due to the fact that ethanol's cheaper: gasoline goes for around US$ 1.31 a liter, compared with about 57 US cents for a liter of ethanol, of which Brazil is one of the world's leaders in production and technology.

By 2011, around 13.5 million gasoline-only cars should be parading down Brazilian roads, with 11.7 million flex-fuel cars following on their bumpers.

"Given the growth of new cars on the road by around 4.5% annually, and the fact that 92% of all new car sales are flex-fuel, ethanol-powered cars will dominate the future car fleet," the report said. The 92% figure is based on sales data from the Brazilian Motor Vehicles Manufacturers Association.

Gasoline-powered cars will still have the edge on ethanol vehicles, with 50.9% of the market in 2011, because older cars will still be on the road. After that, ethanol-powered vehicles will dominate, the report says.

Brazil's ethanol demand roughly equates production, 6.5 billion gallons. However the country is trying by all means to ensure a foothold on the US market.

The Sugarcane Industry Association, Unica, has tried relentlessly to convince Washington to dump its $0.54 per gallon tariff on Brazilian ethanol.

Unica argues Brazil could produce even more, to meet local demand and the export market, if only the tariff were abolished. That would spur more new investment, Unica argues.

But Brazil's ethanol market doesn't depend on the whims of Washington – in Brazil, ethanol hype is for real. Even with the tariff, the country still exports record-breaking volumes in the midst of record-breaking domestic consumption.

As much as Brazil would like to sell more to the US, it has the local market as a reliable fallback.

Mercopress

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