Growth, Brazilian style
think: act CONTENT
2006
The world leader in Biofuels
Some issues are too important to delegate. No less a person than Brazil's President Luiz Inácio Lula da Silva recently contributed a column to the Wall Street Journal to beat the drum for the biofuel ethanol. Lula expressed hopes that this gasoline substitute would trade freely on the world's markets and said he was counting on the support of the US president. For his part, George W. Bush is currently seizing every opportunity to trumpet ethanol as "the fuel of the future" and praise Brazil as an example to follow.
Calling the South American country an example is indeed something of an understatement. On every count, Brazil is the global market leader in this field – and that by a considerable distance. While the planet as a whole meets barely 2% of its passenger car fuel needs from renewable sources, the figure in Brazil is already 40%. Whereas bio-vehicles are still regarded as distinctly exotic in other countries, eight out of ten new cars sold in Brazil now run on any mix of ethanol and gasoline. Produced from sugar cane, ethanol fuel is on sale at more than 29,000 of the country's 30,000 or so filling stations.
And that's not all. Given the low cost of production and a virtually unlimited supply of suitable farmland, experts believe Brazil could become "the Saudi Arabia of biofuels". A study by the Stanford Washington Research Group shows that Brazilian ethanol can compete with gasoline when oil costs more than USD 35 per barrel. Carlos Ghosn, CEO at Renault-Nissan, wants to build flexible fuel technology into every second car, for example. The US government is seeking to "convert" oil corporations too by dangling the carrot of generous tax breaks if they add ethanol to their gasoline mixes. Meanwhile, heavy investment is underway in Brazil. According to the Brazilian Department of Agriculture, some USD 9 billion is being pumped into construction of 89 new ethanol factories.
In light of these developments, it is understandable that President Lula is expressly inviting other countries to participate in business with biofuels. "Everyone has a lot to gain", is his simple but powerful argument. And Brazil, it seems, has more to gain than most.
