Brazil Is World's Ethanol Superpower

Tanks with ethanol are seen at Sao Tome's distillery, Parana state, Brazil, Tuesday, March 7, 2006. The sugar cane harvested only hours earlier is transformed into ethanol, the alcohol fuel substitute for gasoline now promoted by U.S. President George Bush to end what he calls America's addiction to imported oil.
In an agroindustrial complex ringed by fields of 12-foot-high sugar cane, a giant mechanical claw dumps stalks by the tons into an even larger crushing machine. Here's where the renewable fuel used to power seven of every 10 new Brazilian cars gets its start.

Sugary slurry flows into a row of gleaming stainless steel distilling tanks, transforming cane harvested only hours earlier by machete-wielding farm laborers into ethanol, the alternative fuel now promoted by President Bush to end what he calls America's addiction to imported oil.

While Mr. Bush set 2025 as the target date for replacing three-fourths of the oil imported from the Middle East with American ethanol, Brazil already satisfies nearly half of its domestic passenger vehicle fuel demand with ethanol.

After decades of government intervention and subsidies, the industry here is a thriving free market business, complete with ethanol pumps at every filling station in Latin America's largest country. Millions of cars run on either ethanol, gas or any combination of the two. And there's plenty more land available for sugar cane cultivation as the planet's biggest sugar producer gears up to become its undisputed long-term ethanol supplier.

Brazilian ethanol producers and international energy experts agree that the United States will probably never come close to reaching Brazil's potential as an ethanol superpower. But they say Brazil offers clear lessons on how to boost domestic ethanol use.

What the United States needs most, they say, are more cars that run on the fuel — and filling stations that offer it.

"Petroleum is almost history," warned Celso dos Santos, commercial director of the Cocamar farmers cooperative that owns the Sao Tome distillery. "People stopped using wood for fuel and replaced it with coal. Then came petroleum, but we're getting to the end of the petroleum era."

With the sickly scent of pure alcohol wafting through the air around the Cocamar plant, a thousand workers toil around the clock during the March to November cane harvest season, distilling 92,500 gallons of ethanol daily that is trucked away for immediate sale at the pumps.

Sugarcane waste is burned to generate steam for the turbines, meeting all the plant's electricity needs. Excess power will soon light up half the homes in Sao Tome, a southern Brazilian town of 6,000 people.

The technology isn't even cutting edge, but the industry is making profits like never before and has a bright future thanks to a 1970s decision by Brazil's former military dictators to subsidize ethanol production and require distribution at every gas station.

A 1980s Brazilian fad with cars that ran only on ethanol petered out when oil prices fell in the early 1990s. But the fuel came back into vogue in 2003, when automakers started rolling out cars that run on gasoline, ethanol or any combination of the two. With international oil prices reaching record highs, Brazilian drivers turned to "flex-fuel" cars, buying ethanol at half the price of gas until late last year.

Some experts predict flex-fuel car sales will reach 90 percent of Brazil's new car market within several years, while others say recent ethanol price hikes could keep penetration at the current level.

Getting a fraction of that acceptance in the United States could take decades, analysts say, even with new incentives and regulations.