In Brazil, Biofuels Dream Is Already Reality

By Luciana Pereira Franco
Post-Wilson Fellow
Wednesday, October 29, 2008; 12:00 AM

The Iowa farm Chuck Grassley calls home sits on 800 acres bursting with corn and soybeans. Though he bought it in the 1960s, his rural roots stretch back to his childhood, when his father set up a family agribusiness after World War II. But it would not be as a farmer that Grassley would leave his biggest mark on American agriculture. That would come after Grassley -- now a U.S. senator from Iowa -- turned to politics, becoming one of the nation's leading advocates of biofuels.

He championed ethanol as early as the 1980s, before most Americans even knew what it was. In the 1990s, he worked hard to increase ethanol production and consumption in the United States. As chairman of the Senate Finance Committee, he created tax credits for ethanol, which years later were extended to other biofuels. His stated goal: for Americans to derive 25 percent of their power from renewable sources by 2025.

But Grassley realizes there is one big obstacle to reaching that goal on the back of ethanol: American public opinion. Blamed for higher food prices and criticized for overstating ethanol's environmental benefits, the U.S. biofuel industry faces a serious image problem.

"Three decades ago people asked for a renewable fuel," said Grassley, a Republican. "Today there is such an industry, responsible for about 5 percent of America's fuel consumption, and now we are considered villains."

The problems confronting the U.S. industry stand in sharp contrast to the experience of the world's other major ethanol producer -- Brazil. Together, Brazil and the United States lead a rising market, poised to produce a record 16 billion gallons this year. Yet biofuels have gained the kind of mainstream acceptance in Brazil that Grassley can still only hope for in the United States.

That is partly because the Brazilians have come far closer to achieving the ultimate promise of biofuels -- the generation of a greener, cheaper alternative to gasoline. Production methods in Brazil are considered the world's most efficient, helping make ethanol commercially viable for the masses. From the Amazon region to their country's deep south, Brazilians now consume more ethanol than gas at the pumps.

Yet Brazil's success may be hard for the United States -- or any nation in the Northern Hemisphere -- to emulate. Brazil's tropical climate has made it possible to manufacture ethanol almost entirely with sugar cane, a building block with natural advantages over the corn-based biofuel industry in the United States.

According to a report released in June by the Organization for Economic Cooperation and Development, ethanol from sugar cane is the cleanest fuel in the world, with its production and consumption reducing emissions of greenhouse gases by up to 90 percent compared with gasoline. The process of transforming sugar cane into ethanol requires eight times less energy than corn.

Unlike corn, which accounts for the bulk of U.S. ethanol, sugar cane is also grown in areas where it is less likely to compete with grains such as wheat or other varieties of maize that are vital to global food supplies. Sugar-based ethanol's negligible impact on world food supplies is one of the major reasons it has been embraced without controversy in Brazil, even as critics in the United States have assailed their domestic corn-based industry for driving up global grain prices.

Sugar ethanol is also more efficient. The cost of producing ethanol from corn is three times the cost of ethanol from sugar cane. An acre of sugar cane can also yield more than twice as much ethanol as an acre of corn.

"It is possible to grow food basically anywhere in the world, but the biofuel production is only really competitive in the range between the Cancer and Capricorn tropics -- an area that covers parts of Latin America, Africa and Asia -- since it requires sunlight action and heat over the plant," said Roberto Rodrigues, director of the GetĂșlio Vargas Foundation's Agribusiness Studies Center in Rio de Janeiro. As agriculture minister from 2003 to 2006, one of Rodrigues's most publicized actions was the creation of the Brazilian Agroenergy Plan, whose goal is to ensure sustainability and competitiveness for the sector in the domestic market.

Brazil's exploration of ethanol production dates to the 1920s, although commercial production did not begin until the 1970s. But domestic demand has soared recently. Today, 90 percent of new cars sold in Brazil are hybrids, which make up 25 percent of the cars on the country's roads. Brazil produces two types of sugar-based ethanol. The first is used as fuel for hybrids; the other is mixed with gasoline. The number of hybrids is set to jump from 3 million now to an estimated 15 million -- or half the country's fleet of light vehicles -- by 2012.

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