Higher oil prices a boon for Brazil’s ethanol industry

Global Business

When gasoline prices go up in Brazil, local drivers have an option: fill up with ethanol. The sugarcane-based fuel gets less mileage than gas.

But car owners here already learned that when ethanol is at least 30 percent cheaper – as it is now – it’s a better value.

CGTN’s Paulo Cabral reports.

“At these prices, it’s better to fuel with ethanol. For a short while, I was using gasoline, when it was cheaper. But it was not for long. Usually ethanol is better value”, said musician Antonio Carlos while filling up his car.

In Brazil, nearly all ethanol comes from sugar cane. As oil prices soared, an increased percentage of the harvest – more than 60 percent – has been diverted from sugar production to ethanol plants. But the local industry also hopes the government’s push to reduce transport carbon emissions by 10 percent through 2028 will help the sector in coming years.

“We believe there will be much investment in coming years. Not right now, in the short term, because of oil prices but because a long-term government plan. To reach the goals of reducing carbon emission, we’ll need some 20 billion more liters of ethanol. We’ll need investment in plants we have and also to build new units,” Antonio de Padua, technical director of the Union of the Sugar Cane Industry (Unica) said.

Ethanol is already popular in Brazil. Most cars in the country can run on both gasoline and ethanol or any mixture of the two fuels. And as concerns over climate change and fossil fuels grow around the world, the local industry hopes ethanol will gain popularity in more countries –increasing its export potential.

The director of a major sugar and ethanol producing company said 80 percent of the ethanol market is concentrated in Brazil and the United States – but sees encouraging signs of expansion ahead.

“Little by little, we see more countries increasing their use of ethanol. Colombia has just increased its mix of ethanol into gasoline to 10 percent, China also has a plan to mix 10% of ethanol to gasoline until 2020 and also in India there are discussions for a national ethanol plan,” the Brazil director of Tereos Group, Jacyr Costa said.

Brazil has long used ethanol as fuel – the result of a government plan that began in the 1970s. And as interest in this bio-fuel grows around the world, the country hopes to reap the benefits.