Energy Security

Lean, green and not mean (The Economist)

By Diogo Shimizu Lima ⋅ June 30, 2008 ⋅  Print This Post ⋅ Post a comment

Pedro Doria today drew my attention to an interesting article that outlines a few pros and cons of Brazilian ethanol. I already left a comment there but I also decided to write here. Cutting to the chase:

1. The petrol prices in Brazil haven’t seen a raise for the past three years. A side effect is that the ethanol industry in Brazil has to keep being competitive facing oil prices of three years ago, although the demand is growing in Brazil. Estimates from Jan ‘03 point to a production cost of BRL 0,52 per ethanol litre in Brazil, against BRL 0,78 per gasoline litre. (Conversion made using the average exchange rate of BRL 3,3734 for Jan ‘03 and a USD 24 oil barrel. Although old, these are the easiest/latest numbers I have handy.)
2. Regarding Brazil and exports, the biggest problem we face is infrastructure. There are no roads to transport the sugarcane from the fieds to the nearby plants; no pipelines to transport the ethanol from the plants to the ports; and no ports to export ethanol from Brazil to overseas.
3. I believe the Wilson Center study mentioned is this one. Already printed but not yet read.
4. Regarding ambiental issues, I have already written about it.

The social issues, in fact, are the biggest challenge for Brazil. There are two big issues: social rights to the rural, poor workers and the huge unemployment that is about to come from implementing new machinery on sugar cane fields.

Tags: The Economist

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