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Brazil Temporarily Reduces Ethanol Content in Gasoline from 25% to 20%

The Brazilian government has rolled back the anhydrous ethanol blend level in gasoline from 25% to 20% for a period of 90 days, effective 1 February. The decision to roll back the blend level was announced following a meeting attended by executives from the Brazilian Sugarcane Industry Association (UNICA).

Blend reductions are not new in Brazil, UNICA said; the last reduction occurred in March of 2006, when the percentage fell from 25% to 20%. The blend level was raised to 23% in November of that year, and fully reinstated at 25% in July of 2007.

Under Brazilian federal law, the anhydrous ethanol content of all gasoline sold in the country must be between 20% and 25%. The blend range is set by an interagency board (Conselho Interministerial de Acucar e do Alcool, or CIMA). The 5% reduction in the blend is expected to result in an additional 100 million liters (26.4 million gallons) of hydrous ethanol available per month, or around 7% of the current monthly demand.

Hydrous ethanol is pure ethanol (E100) used in flex-fuel vehicles, which run on any mix of ethanol and gasoline. The blend reduction involves anhydrous ethanol, which is the type of ethanol that is mixed with gasoline. While hydrous ethanol contains about 5% water content, anhydrous ethanol is virtually water-free. Hydrous ethanol is the more popular fuel in Brazil.

The government’s reasons for the temporary reduction are understandable, but the move must be limited to the 90-day period only. Because of high prices, consumers who own flex-fuel vehicles are already shifting from hydrous ethanol back to gasoline, so there is no risk of pumps going dry.

Dropping the blend requirement is unlikely to change the dynamics of the cane industry, which will continue to produce more ethanol and more sugar year after year. All that changed this year was the pace of that increase because of unseasonable rains that affected the harvest.

—UNICA’s Technical Director, Antonio de Padua Rodrigues

Padua noted that the government should be praised for its open dialogue with the industry and for setting a timeframe for the measure, with reinstatement of the 25% blend happening as the sugarcane industry launches what will be the largest sugarcane harvest in Brazil’s history.

The Brazilian Sugarcane Industry Association (UNICA) represents the top producers of sugar and ethanol in the country’s South-Central region, especially the state of Sao Paulo, which accounts for about 50% of the country’s sugarcane harvest and 60% of total ethanol production. In 2008, Brazil produced an estimated 565 million metric tons of sugarcane, which yielded 31.3 million tons of sugar and 25.7 billion liters (6.8 billion gallons) of ethanol.

Comments

SJC

Brazil's move to ethanol in the 70s was made out of necessity. The sale of FFV cars is just plain smart. It gives them more options in a changing world. I believe we must make all new cars sold FFV. It costs so little and offers so much.

Henry Gibson

Will people ever understand that ethanol is itself a food where ever it comes from. Many people of the world use ethanol as a major part of their caloric intake. Food is a biofuel for animals and humans. Biofuels have destroyed much of the natural ecology of the world especially that to the United States. Where are the herds of millions of Bison and vast tracts of trees. Only five percent of virgin redwood forests remain in the US and all other types of forests have similar reductions. Ethanol automotive fuels might in the future be considered a crime against nature and humanity. ..HG..

stomv

SJC: Ethanol makes sense in Brazil, where (a) they grow lots of sugar cane relatively cheaply, and (b) they don't have massive tariffs on imported sugar. FFVs are an artifact of a local market.

The USA isn't in a similar circumstance where ethanol will be cheaper than gasoline anytime soon -- so requiring FFVs won't make a lick of difference. If we want to reduce our dependence on oil, we ought do it by (a) using CAFE [which we're doing], (b) raising the tax on gasoline [which we don't seem to have the stomach to do], and (c) expanding the quality and quantity of mass transit to create some redundancy in our transportation network.

CAFE is having an impact. The gas tax? What can I say. If we simply made it a requirement that all road work must be paid for with gas taxes, we'd immediately have a demand for higher gas taxes (other taxes subsidize roads). As for mass transit, it's true that some places will never be appropriate for mass transit. That's true in other countries too. If we do create great mass transit networks, then more people will find cities livable and there will be an overall migration to more areas where mass transit works. Furthremore, even if only 70% of people have access to good mass transit, that still helps reduce consumption from a massive chunk of people.

As for HGs comments -- the idea that corn is food and we shouldn't burn it is foolish. The fact is that Americans eat very little corn. We have a few corns on the cob each year, we eat tortilla chips or breads, and we eat corn flakes for breakfast. Most corn goes to two places: (1) corn syrup, which doesn't add a damn bit to American health and in fact makes us worse off, and (2) feed for cattle, where it requires many pounds of corn to create one pound of beef or chicken or turkey. If food availability ever becomes a problem, then simply eating one less pound of beef will free up 12 pounds of vegetables for people to eat... and switching from Coke to water will free up plenty more.

Making ethanol about food is nonsense because Americans don't eat corn efficiently in the first place.

SJC

FFVs can run E85, M85 or a combination. Ethanol can be made from biomass by enzymes/fermentation/distillation and methanol can be made from natural gas and biomass.

FFVs make sense whether is is Brazil or the U.S. You can argue the point, but let's talk about it in a few years and I think we will see that more FFVs will be sold in the U.S. and it will help reduce imported oil once we get production and distribution of cellulose E85 and M85.

Biodiversivist

American corn ethanol policy has hurt the poor of the world more than it hurt fat Americans. The CBO said it cost us a billion extra dollars in food costs last year but many of the poor in the world spend most of their income on food, unprocessed grains in particular.

It's myopic in this day and age to be concerned solely for America, particularly since corn ethanol can't even stand on its own. It exists only because of government fiat.

Calls for energy independence started out as a scam to get politicians elected. Voters love the idea. But, there is no way a country that consumes as much oil energy per person as America can be oil independent and as this article attests, becoming dependent on crops for fuel will add another layer of price instability thanks to the unpredictable and uncontrollable impact of mother nature.

SJC

When we work from both sides, we get PHEV FFVs that run on cellulose ethanol E85 and renewable M85 getting more than 40 mpg, we have reduced demand through efficiency and increased supply of renewable clean fuels. Energy independence is a nice slogan, but I would be satisfied with not needing middle eastern oil in the next 5 years as a good first step.

Tim Duncan

SJC:
Is right in spirit. Efficiency and source/type diversity are key to future supplies affordability and supply security. The market is the only entity unbiased and sophisticated enough to pick the winners and losers in this. Government should fund basic research. Then help the market by getting out of the way (lower regulation, permitting etc). If that is not enough (which it is not in the short run), help this market to account for complex ever shifting hidden costs. Like security (shipping lanes), balance of system (roads), ect. The efficient, unbiased way to do this is with a gas taxes. Lastly only if absolutely needed, fuel taxes to reflect very long term and unquantifiable costs like health and environmental impacts. Most of the know impacts in these later areas are taxed or regulated already.

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