Brazil's Biofuel Strategy Pays Off

Brazil is a leader in the use of biofuels for transportation. About a third of the fuel Brazilians use in their vehicles is ethanol, known in Brazil as "alcohol." That compares with 3 percent in the United States. All gasoline sold in Brazil contains at least 26 percent ethanol, but motorists driving flexible-fuel cars have the option of filling up with pure ethanol, or E100, which currently is selling for about half the price of the blend.

Use of pure ethanol will rise sharply as carmakers in Brazil such as General Motors and Volkswagen make more flexible-fuel cars. Half the new vehicles sold this year will be able to use either pure ethanol or the blend, according to the Sao Paulo Sugar Cane Industry Union.

In the United States, the sugar-cane industry has had little incentive to diversify into ethanol production because import quotas support U.S. sugar prices far above world levels. Expansion of sugar cane acreage beyond Hawaii, Florida and the Gulf Coast is limited by the need for a long, frost-free growing season. The House-passed energy bill would authorize a three-year demonstration program for producing ethanol from sugar cane.

Most U.S.-produced ethanol is now made from ground corn in a process that has been faulted as inefficient. Corn yields less sugar per acre than sugar cane, and the refining uses substantial amounts of energy. To keep ethanol competitive with gasoline, major refiners such as Archer Daniels Midland Co. have relied since the 1970s on a tax subsidy, now 51 cents a gallon.

U.S. refiners sell a gasoline blend containing 10 percent ethanol in many parts of the Midwest, but they have been in no hurry to use more. Only a few hundred gasoline stations, mostly in the Midwest, offer a near-pure blend known as E85. Adapting cars to pure ethanol can be done relatively inexpensively by adding a fuel sensor and corrosion-resistant hoses, but there are only about 4 million flexible-fuel cars on U.S. roads out of more than 200 million.

:: Washington Post article via Triple Pundit