Ethanol and the Quest for Energy Independence

Recently, the United States has pushed for new energy sources to fuel our transportation sector and the overall economy. Ever since the oil crisis of the 1970s, the country’s dependence on foreign petroleum has been evident. Since then, a growing portion of our energy sector has come from corn ethanol. This growth has mostly been due to policies the US government has implemented over the past 10 years in order to achieve energy independence in a way that is sustainable and environmentally friendly. While the US has only recently started implementing these policies, Brazil has already achieved energy independence through their use of sugar cane ethanol.

With the passage of the Energy Policy Act in 2005, all gasoline retailers were mandated to blend 7.5 billion gallons of ethanol made from corn annually by 2012. This was called the Renewable Fuel Standard. Its main purpose was to reduce greenhouse gas emissions, decrease reliance on foreign oil supplies, and create jobs (mostly in the agricultural sector). Two years later, the Energy Independence and Security Act of 2007 was passed which ratcheted up the ethanol mandate to blending 13.2 billion gallons of corn-based ethanol by 2012 and rising to 36 billion gallons by the year 2022.

Congress sensed the challenge this mandate would pose and proposed the Domestic Alternative Fuels Act in January 2012 which had bipartisan support. This act would allow sources other than corn to be used in ethanol production. This bill received a huge amount of backlash from corn farmers, agribusiness and its stakeholders because the legislation would loosen their foothold in the biofuel industry.

Brazil has come a long way on its journey to energy independence, however it can be seen as somewhat of an anomaly. The US has had some success in using ethanol and biofuels but hasn’t achieved the level of independence Brazil has. This can be attributed to more favorable conditions in Brazil such as vast amounts of fertile land, government policies, and heavy investment in infrastructure.

The main push for Brazil’s energy independence came back in the 1970s when oil prices increased at an unprecedented rate and countries realized how susceptible they were to the swings in the global oil market. Following the crisis, the Brazilian government looked towards other solutions to help the country be less susceptible to the unpredictability of the global oil market. The answer came in the form of a crop that they had already been producing and exporting for decades: sugarcane. In 1975, ProAlcool (Programa Nacional do Álcool) was created by presidential decree. The purpose of this program was to utilize Brazil’s robust sugarcane industry to produce ethanol for the purpose of fueling automobiles.

The first part of this strategy was a mandate that by the year 1980, 3.5 billion liters of ethanol be produced annually. Along with this mandate came a large amount of subsidies to aid farmers in adding ethanol distilleries. This strategy would increase the ethanol supply so it would be widely available across the country. The second piece of their strategy was to forge an agreement with automakers in 1979 to start producing more cars that ran on ethanol. The government in turn launched a robust media campaign to inform the public on the benefits of these new flex-fuel cars.

While the US set some policies in reaction to the global oil crisis, the problem seemed to fade once oil prices stabilized and the American public turned their attention elsewhere. Brazil on the other hand maintained its resolve and implemented policies long after oil prices dropped. From what critics saw as just a short-term boost to Brazil’s sugarcane industry, emerged a comprehensive plan to reach the country’s energy independence goal.

Many parallels can be drawn between the US and Brazil on their quests to achieve energy independence. Even though these two countries are different on many economic, social, and geographical levels, we might be able to gain some insight from their policies and implementation methods in order to reach our goal here in the US.

Sources:

1. http://www.economist.com/node/21542431
2. http://www.nytimes.com/2004/12/18/business/worldbusiness/18iht-menergy_ed3_.html?_r=0
3. http://www.afdc.energy.gov/fuels/ethanol_fuel_basics.html
4. http://www.theecologist.org/News/news_analysis/1077685/our_sugarcane_is_greener_than_your_corn_brazil_takes_on_us_biofuel_industry.html
5. http://www.ibtimes.com/how-brazil-turned-ethanol-unique-success-1064308

Pictures:

1. http://www.planetforward.ca
2. http://www.usda.gov
3. Agence France-Presse – Getty Images

Food for thought. Or is it food for fuel?

The US and Brazil are the leading producers of ethanol fuel in the world.  In 2006, Brazil produced 52% of the world’s ethanol.   Both countries use their surplus food supply as fuel, however where the US relies on corn, Brazil relies in sugar cane.  Sugar cane is a much more efficient producer of ethanol than corn, and the left over cellulosic material can be also used to create power.  This makes it sustainable for them to continue to produce ethanol without drastically affecting the environment.

Brazil uses renewable fuels for 46% of their transportation needs.  Also, 90% of Brazil’s electricity comes from renewable sources (mainly hydroelectricity).  So, how were they able to do it and the US is lagging far behind on renewable production?  In 1975 during the energy crisis, Brazil was importing 80% of their fuel from foreign sources.  This caused the government to pass the National Alcohol Program which (1) required petrobras to purchase a required amount of ethanol, (2) provided $5 billion of low-interest loans to stimulate ethanol production, (3) provides subsidies that ensured ethanol price was 41% less than the price of gasoline, (4) required that all fuels must be E22 or higher.  In the 1980’s, when petroleum prices decreased, the Brazilian government still kept up with the ethanol project.  So now, over 30 years later, 70% of the new cars purchased are either flex fuel or pure ethanol prices.  Also, in 2006, Brazil became net energy independent.

However, this fuel may not be the end all answer.  It is still coming from a food source.  In the US, the increased production of ethanol based fuels has increased corn food prices.  Similarly, sugar prices have reached a 29 year high in 2009.  Since Brazil exports 41% of the world’s sugar needs, this price increase is likely based on a shortage of sugar supplies caused by increased ethanol production.   Also, is Brazil using slave labor to keep their rates low?  In 2007 the Brazilian government stepped in to save over 1000 slave laborers from a sugarcane plantation in the Amazon.   Finally, the increased production of sugar could have a negative impact on local ecosystems.

Overall, I’m not saying that ethanol is worse for the environment than gasoline, but it definitely has its drawbacks.  Brazil should be a role model to the US in terms of renewable energy, but they may also be the first to show the world the negative effects of farming fuel.

Sources:

http://news.bbc.co.uk/2/hi/science/nature/7420770.stm

http://www.ren21.net/globalstatusreport/gsr4d.asp

http://www.agmrc.org/renewable_energy/agmrc_renewable_energy_newsletter.cfm/brazils_ethanol_industry__part_two?show=article&articleID=19

http://www.ers.usda.gov/Briefing/Sugar/sugarpdf/EthanolDemandSSS249.pdf