Thursday, June 23, 2011
The following was written by Alan Anderson, a freelance writer focusing on green renewable alternative fuels such as sugar based ethanol and biodiesel. He has written for many online publications including Newsvine.com and EnergyBoom.com.
At the end of 2010, the country was a net exporter of crude oil. That's right: A net exporter. What do they know that we don't?
Both Brazilians and Americans were hit by the same "Arab Oil Embargo" in the early 1970s, but the outcomes look much different almost 30 years later. In the U.S., gas prices skyrocketed from 25 cents per gallon to over one dollar within just a few weeks of the embargo. The American Automobile Association recorded that up to 20 percent of the country's gas stations had no fuel for at least one week during the crisis, creating long lines and lots of distress.
To ease the pain, the Nixon administration launched a series of conservation measures — lowered speed limits, pushed for alternative energy sources, and created the Energy Department, just to name a few of many initiatives.
President Jimmy Carter would later call the oil situation in the 70s "the moral equivalent of war" and it was certainly one of the defining issues of his presidency.
But as oil prices eventually began to ease, American interest in energy self-sufficiency waned and the perception of a "crisis" fell by the wayside. Despite steady growth in alternative energy sources, renewable fuel made up less than five percent of the U.S. energy supply.
Perhaps the crisis just seemed that much more severe south of the border. Brazil's government was already burdened by huge debts to the International Monetary Fund and higher oil prices further complicated recovery efforts. Although the military-ruled government controlled domestic oil production through state oil giant Petrobras, it was unable to keep up with demand, fight inflation, and deal with growing political tensions.
In response to the oil crisis, government leaders launched Programa Nacional do Alcohol (Pro-Alcohol program) to take advantage of Brazil's massive sugarcane production while providing inexpensive fuel to Brazilians. The move toward greater self-sufficiency was a source of great national pride.
"Brazil decided as a national policy they would not be subject to imported oil and mandated that every filling station would have alcohol fuels. The government stepped in to make that happen," says Rick Tolman, CEO of the National Corn Growers Association. He said Brazil saved an estimated $53 billion because nearly 80 percent of the country's energy needs were produced domestically.
Alcohol Ups and Downs
Brazil's initial program was a big success for consumers and lowered the country's dependence on foreign oil imports. But there were a few bumps along the road to energy independence. For example, many car engines had trouble starting on the ethanol-mixed gasoline. Brazil started pouring more money into research, and began producing ethanol-only cars. By 1985, more than 90 percent of the cars produced in Brazil ran on alcohol.
However, the cost to subsidize the alcohol program added to the country's debt repayment problems and put pressure on government leaders to make more changes in their energy strategy. The price of crude oil fell dramatically and stayed down, and the state-owned oil monopoly, Petrobras, wanted to sell gasoline to their own markets, rather than exporting barrels at a loss.
Alcohol shortages in 1989 and 1990 further undermined the popularity of alcohol fuels as demand for the highly popular fuels outstripped supplies. By 1995, sales of alcohol-powered cars plummeted to less than 5 percent of total vehicle sales.
Bi-fuel Cars Spur Rebirth
The successful launch of bi-fuel or "total flex" vehicles by Volkswagen and General Motors in 2003, coupled with rising global petroleum prices, is once again spurring growth in Brazil's alcohol fuels industry. The Brazilian automotive industry is manufacturing cars that can run anything from 100 percent gasoline to 100 percent alcohol, or any mix of the two — and maintaining the same level of vehicle performance.
Today, nearly 50 percent of Brazil's cars run on ethanol only, in addition to the 90 percent of new cars that have "mix-fuel" engines. And Brazil is beginning to produce and use biodiesel — diesel made out of vegetable oils — for its trucks and buses.
Brazil continues to press forward with their alternative fuels program by announcing that starting in January 2010 all the diesel fuel sold in Brazil will be B5 (diesel blended with a mixture of 5% vegetable oil). Several years ago when the B5 blend was first proposed, it wasn't scheduled to take effect until 2013, but they have managed to reach their goal three years ahead of schedule. The B5 blend has lots of advantages for Brazil. It is less polluting than traditional diesel fuel and it generates jobs in the rural areas that grow the feedstock.
Currently, soybean oil accounts for about 80% of the vegetable oil used in the blend followed by tallow and cottonseed oil. The government has set up programs encouraging the use of other oils such as palm oil, nut oil, and castor bean oil, but those programs will take years to mature. In the meantime, soybean oil is going to be the primary feedstock because it has the volume and the logistical support to make it work. As the biodiesel program continues to expand in Brazil, more and more of Brazil's soybean oil will be used domestically instead of going into the export market.
Can We Catch Up?
The World Agricultural Forum provided a great opportunity to point out that the U.S. is really an "underdeveloped country" in terms of what Brazil has done. One way the United States can catch up with Brazil is to have the Open Fuel Standard Act of 2011 enacted into law. The bill would require that starting in 2014, 50% of new passenger and light-duty automobiles sold in the US be vehicles capable of operating on another fuel in addition to, or in place of, gasoline — whether natural gas, electricity, biodiesel, hydrogen, flex fuel vehicles that can run on blends of methanol and ethanol, or others, as well as a catch-all provision for emerging or new and unknown technologies.
In 2016, this requirement goes up to 80% and in 2017 the requirement becomes 95% for every year thereafter. Manufacturers can still choose which type of vehicles or combinations they wish to produce, but if we are going to remove our dependence of foreign oil and secure our nation’s economy we cannot continue to sell vehicles powered solely by gasoline.
There is a big difference between the alternative fuel programs in the U.S. and Brazil. In Brazil, their alternative fuel program is a source of national pride. Virtually everyone agrees with the goal of being energy independent and they are committed to helping the country achieve that goal.
Last year, Brazil passed a major threshold of using more alcohol for fuel than gasoline. Now Brazilians are convinced that they can grow their fuel supply as well as supply alternative fuels to the rest of the world. In a study released in early 2009, the Brazilian sugarcane association estimated that Brazil could replace 10% of the world's gasoline if they increased their sugarcane production by two and a half times.
In Brazil there is unity of purpose when it comes to alternative fuels. I don't think you can say that about the U.S. alternative fuel program.
Together, ethanol, methanol, and biodiesel present a tremendous opportunity to diversify our supply of fuel for cars, buses, trucks, planes, ships, and heavy-duty vehicles. And with The Open Fuel Standard, we the American people can again feel that same sort of national pride Brazilians have for their dedication and hard work beating the Oil Addiction.