Net Zero Heroes
How Brazil has sidestepped hydrocarbons
Do not be misled by Brazil’s cancellation of the COP25 climate change conference last year – it remains a leading light in the charge towards environmentally powered economies.
Second only to the US, Brazil is the world's second largest ethanol producer, turning out nearly 35 billion litres annually. In 2019, its production was largely driven by using sugarcane as the feedstock, whereas the US ethanol market is reliant on corn production for its input. Brazil, compared to other energy markets has an almost uniquely diverse energy mix – a combination of fossil fuels and alternatives. Brazil is a behemoth, in respect of its natural resources endowment and its geographical footprint - its landmass alone is 35 times that of the UK.
To Brazil’s credit, with an abundance of offshore oil reserves and fossil fuel supplies, it is placed third globally in green electricity generation. That’s to say it has a significant renewable energy presence, whilst harbouring plentiful natural gas reserves, it is its hydropower and biomass eenergy production that has led to a significant reduction of Brazil co2 emissions,which are more than 54% lower than the global average within Brazil. Ethanol is the dominant contributor to fuel demand, accounting for almost half. Brazil remains a signatory to the 2015 Paris Agreement committing to a reduction in greenhouse emissions of 43% by 2030.
Long Standing Engagement
Brazil has a long history in ethanol production. Developing the industry alongside the car manufacturing industry in the early 20th century, it become a significant energy source during the shortages brought by the Second World War.
However it has been until more recent times, that is taken pole position in supplying fuel demand. The catalyst was the oil crisis of the 1970s, whereby crude’s price volatility led the government to introduce the ‘pro alcool’ program in 1975. This meant that car fuel would be mixed with a de minimis ethanol content, to allow them to fuel more cheaply capitalising on the cheaper domestic production costs of ethanol.
However, the second oil crisis in 1979 pushed the Brazilian car manufacturing industry to develop cars that ran exclusively on ethanol. The government provided incentives, including fixed price purchases by Petrobras, the national energy player. There were other incentives too, including low interest rate loans made available to developing and producing the technology.
Cleaner and Greener
As result, ethanol fuelled cars dominated the domestic fleet Today, the dominant vehicle available is referred to as a ‘flex fuel car’ which allows the consumer to vary or have control over the fuel used – switching between 100% anhydrous ethanol, or a mix of gasoline and ethanol, depending on where the respective prices of oil and ethanol are at a given point in time. Naturally, the reduction in transport emissions has helped Brazil dramatically reduces environmental impacts. Studies show ethanol made from sugar cane reduces greenhouse gas emissions by 40 to 62%, when compared with the production of gasoline.
Brazil’s installed capacity energy matrix: