The alcohol program

The rational for the launching of the Alcohol Program from sugarcane in Brazil in the mid-1970's is described as an answer to the first oil crisis as well as a solution to the problem of the fluctuating sugar prices in the international market. The technical characteristics of ethanol as a fuel are given as well as a discussion of the evolution of the cost of production, environmental and social consequences. Regarding costs, ethanol production was close to 100 dollars a barrel in the initial stages of the Program in 1980 falling rapidly due to economies of scale and technological progress to half that value in 1990, followed by a slower decline in recent years. Considering the hard currency saved by avoiding oil importation through the significant displacement of gasoline by ethanol and the decrease in the amount of external debt that the displaced oil importation was able to provide it is possible to demonstrate that the Alcohol Program has been an efficient way of exchanging dollar debt by national currency subsidies which are paid by the liquid fossil fuel users. Even with this economic gains for society, the continuity of the Program is difficult to maintain. Two solutions to this problem are discussed: internal expansion of the use of ethanol and exports to industrialized countries where it could be used as an octane enhancer. The main attractiveness of the Program - the reduction of CO2 emissions as compared to fossil fuels - is stressed, mainly as a solution for industrialized countries to fulfill their commitments with the United Nations Framework Climate Change Convention.