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Editorial

Ethanol: can the success of Brazil be replicated?

Biofuels (2010) 1(5), 663–665

“ ...we seem to be on the road of converting biofuels into

a worldwide commodity.
”
José Goldemberg†1 & Patricia Guardabassi1

Brazil is the second largest producer of ethanol in
the world, with a production of 26.7 billion liters in
2008/2009, using sugarcane as the raw agricultural
material over an area of 5.05 million hectares [1] . The
cost of production, without any subsidies, has been
falling steadily since 1980, and since 2004 has become
competitive with gasoline at international prices  [2] .
Today, ethanol replaces one half of the gasoline that
would otherwise be used in the country.
The use of ethanol as a replacement for gasoline has
significant environmental advantages; even if used in
smaller percentages, it eliminates the need for octane
enhancers such as methyl tert-butyl ether. In addition,
it not only reduces emission of SO2 and particulates,
but also, over a life-cycle, emits considerably less c­arbon
dioxide than gasoline, considering the direct use of ­fossil
fuels in its preparation [3] . With the introduction of
‘flex-fuel’ motors, any blend of ethanol and gasoline
can be used in automobiles with Otto-cycle engines [4] .
Even considering indirect effects such as the impact
of land use changes involved in the growing of sugar-
cane, ethanol from sugarcane in Brazil has a carbon
footprint at least 61% smaller than gasoline, as recog-
nized recently by the US Environmental Protection
Agency [101] .
In contrast, ethanol from corn produced in the USA,
the largest world producer with 34 billion liters in 2008,
has a carbon footprint almost as big as ­gasoline and its
production requires substantial subsidies.
“ ...ethanol from sugarcane in Brazil has
a carbon footprint at least 61% smaller than
gasoline, as recognized recently by the
US Environmental Protection Agency.
”
For this reason, the question is frequently asked, ‘why
is the good example of Brazil not replicated and used in
the same scale in other countries?’
The reasons are well known; the main ones are
as follows:
ƒƒ The international trade of ethanol is small because
there are few countries producing it;
ƒƒ Most of the commercial transactions with ethanol are
‘spot’ and long-term contracts are almost inexistent;
ƒƒ Tariffs and trade-distorting measures abound. The
best known is the tariff imposed by the USA on eth-
anol imports from Brazil of US$ 0.54 per gallon, the
purpose of which is to protect local producers.

1
University of São Paulo, Av. Prof. Luciano Gualberto, 1289, 05508-010 São Paulo, Brazil
Author for correspondence: Tel.: + 55 11 3091 5053; Fax: + 55 11 3091 5056; E-mail: goldemb@iee.usp.br
†

future science group 10.4155/BFS.10.45 © 2010 Future Science Ltd ISSN 1759-7269 663
 Editorial  Goldemberg & Guardabassi
Similar tariffs exist in Europe where ethanol is
­produced mainly from sugar beets and wheat;
ƒƒ A number of countries in Africa that could produce
ethanol from sugarcane prefer to produce sugar and
export to Europe. Under the Everything But Arms
(EBA) agreement [102] , they can sell their product at
the price of sugar produced in Europe, which is much
higher than the cost of production in Africa;
ƒƒ The proliferation of sustainability criteria, particularly
in Europe [5] .
Some of these criteria might, in reality, hide protec-
tionist measures to favor local producers. The adop-
tion of simple universal standards should of course be
adopted to guarantee the quality of the fuel but other
criteria regarding the social and environmental impact
of ethanol production are controversial.
“Ethanol production from sugarcane is attractive
because the agricultural activity generates more jobs
than industrial activities.
”
However, it is unlikely that these impediments will
last very long since a very large number of countries,
and states inside countries (28 in the last count),
adopted biofuels blending mandates (for ethanol and
biodiesel) ranging from 2 to 24%. In addition, the EU
as a whole has adopted significant biofuels mandates
for 2020.
Total ethanol production in 2008 was 67.3 billion
liters, of which 34 billion was in the USA, 26.7 bil-
lion in Brazil, 2.3 billion in the EU and the rest from
another ten countries [6] . Worldwide it represented
7.1% of gasoline consumption in that year. If the man-
dates adopted so far are fully implemented, ethanol
demand will reach 209.75 billion liters by 2022 due
to the US mandate, which includes, after 2015, a large
production of ethanol based on second-generation
technologies. Ethanol will then represent 19.1% of the
world’s gasoline consumption, which is estimated to be
1100 ­billion liters in 2020.
If such technologies do not deliver what is mandated,
the production of ethanol from sugarcane will have to
be increased in Brazil and other countries to meet that
demand. The pressure to ease off trade barriers will then
become very strong.
On the basis of the present average productivity of eth-
anol in Brazil of 6580 liters per hectare, the area needed to
meet the blending mandates with sugarcane ethanol will
be 35 million hectares. Furthermore, to replace all the
gasoline currently used in the world, 150 million hect-
ares would be necessary. However, if the productivity
increases, smaller extensions of land would be needed.
664 Biofuels (2010) 1(5)
The availability of land for such expansion is a con-
troversial issue because of the possible influence on food
production and deforestation [7] . In our view such con-
cerns have been grossly exaggerated considering the rather
modest land requirements for the expected expansion of
ethanol production. In reality, the expansion in Brazil is
taking place primarily on degraded pastures of which a
vast area is available in the country [8] .
The world’s total arable area is approximately 1.5 bil-
lion hectares [103] . Such expansion, which would require
4% of the world’s arable area in the next 10 years or so,
offers a guarantee of supply while second-generation
technologies based on the use of cellulosic materials
reach an industrial scale.
An indication that this is a likely trend is given by
the fact that global companies from a wide range of
sectors are investing in the production of ethanol.
Examples include the investment of British Petroleum
(BP) of approximately US$1 billion in Brazil, and Shell
investing almost ten-times that amount in association
with local enterprises. BP entered into a joint venture
with a 50% share with Santaelisa, the second largest
sugar ethanol group in Brazil and now part of Dreyfus
Commodities (25%) and Maeda (25%). BP’s financial
contribution is approximately US$1 million.
Shell and Cosan – the largest Brazilian group in the
ethanol area – signed a memorandum of understanding
to create a US$12 billion joint venture for the produc-
tion of ethanol sugar and distribution of biofuels. Shell’s
initial investment is US$1.625 billion in 2 years.
There is also a growing interest in investments in
Africa and the Caribbean, among the many sugar-pro-
ducing countries from Africa and Latin America, such
as Colombia, Zimbabwe, Angola, Mozambique and
others. Ethanol production from sugarcane is attrac-
tive because the agricultural activity generates more jobs
than industrial activities [9] .
Thus, we seem to be on the road of converting bio-
fuels into a worldwide commodity. As more countries
enter into the business of producing them and become
potential exporters to the USA and Europe, competi-
tion will begin to be felt and more enterprising compa-
nies will abandon the present strategy of ‘spot’ sales and
sign contracts for long-term supply, which is one of the
basic characteristics of commodities.
Financial & competing interests disclosure
The authors have no relevant affiliations or financial involvement
with any organization or entity with a financial interest in or finan-
cial conflict with the subject matter or materials discussed in the
manuscript. This includes employment, consultancies, honoraria,
stock ownership or options, expert t­estimony, grants or patents
received or pending, or royalties. No writing assistance was utilized
in the production of this manuscript.
future science group

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