Brazil’s Sugar Rush

About this programme by Peter Day

Many people have been puzzled by "B" in BRICs; they have wondered why Brazil was included with Russia, India and China in the BRICs club of nations which the investment bank Goldman Sachs thinks will thrust their way to the global economic top table over the next few decades.

After all Brazil has been an up and coming country for the past 100 years and yet something always seems to stop it from actually getting to the top.

As I explained in a recent Global Business there are signs that this time the predictions may come true; there's certainly an extraordinary spirit of optimism abroad in Brazil at the moment.

One of the things that may have happened is that decades of Brazilian economic isolationism have actually paid off.

For years importing foreign goods was regulated and taxed, to the extent that Brazil built up a manufacturing industries to supply its own (considerable) home market because bringing things inform abroad was impossible ... even for the huge international automobile companies, for example.

And that's one of the reason why Brazil is now well ahead in the alternative energy stakes. Figures from BP show that last year one third of Brazil's energy was produced renewably... hydropower, wind power and ethanol largely produced from sugar cane.

Homegrown

This is a remarkable record when you compare Brazil with the other developed countries included in the club of 30 nations in the Organisation for Economic Cooperation and Development. Totalled up, OECD energy production is still only five percent renewable ... 95percent non renewable. If this is a race to sustainability, Brazil is very much in the lead.

In fact sugar cane has been used to create alcohol for fuel in Brazil for some 90 years. But the use of ethanol took off in the 1970's when the Arab oil producers in OPEC flexed their muscles and the world oil price jumped.

Brazil had its own homegrown fuel. The two 1970's oil shocks encouraged Brazilian sugar growers to expand their acreage, refiners to build ethanol plants and those domesticated car manufacturers to producer engines which could burn both alcohol and gasoline.

When I first went to Brazil 20 years ago the distinctive smell of ethanol exhaust hung around the streets, but that now seems to have been overcome. So (I'm told) has the tendency for alcohol to induce rust in auto engines, a problem in the past.

Brazil's car makers seem to have mastered the art of making flex fuel cars that can adapt to what they are being filled up with, and they are getting a lot of experience of a technology that may have global potential eventually.

Ethanol is obviously attractive from the diversity point of view, but some big questions remain. In a hungry world is it right to use food for fuel, or food growing land for fuel?

Reserves

What is the carbon footprint of ethanol production when you factor in things such as fertiliser, and transportation? There are plans for ethanol pipelines across the country from the main production areas in the state of Sao Paulo, but most ethanol at the moment is moved in trucks which still guzzle carbon fuel.

And (though this is comprehensively denied by Brazilian agriculturalists I've met) conservation campaigners in other parts of the world have big fears that the remaining Amazon forest is being devoured by demand for new land for crops such as sugar cane. Renewables are not necessarily a completely benign idea.

Meanwhile this year the Brazil energy picture has got very complicated indeed. Exploration companies have just discovered absolutely huge new reserves of oil in the Atlantic off the Brazilian coast.

And Brazil's green campaigners are fearful that the effort of exploiting the new tricky-to-extract oil deposits will divert resources and attention from renewables such as ethanol, and then tempt governments into courting popularity with subsidised fossil fuel from the giant new oilfields.

This could be the familiar "oil curse" with a renewable twist to it. Just thinking about these things takes, well, a lot of energy.