Date: February 3, 2008

Author: Doreen Hemlock

Source: South Florida Sun-Sentinel  

Sao Paulo, Brazil-When taxi driver Jose Arruda fuels his 2007 Chevy in this city of skyscrapers and slums, he doesn't buy gas. He buys ethanol, a plant-based fuel that is cheaper, eco-friendly and better for his engine.

"With ethanol, I pocket more money for my family," Arruda said. "Why buy gas?"As drivers across the United States face soaring oil prices, they can look to Brazil as a model for alternative fuel.

Motorists like Arruda can fill up with pure ethanol at every one of the 33,000 fueling stations in this U.S.-sized country. At least eight of 10 new cars sold in Brazil today run on ethanol or gas blended with ethanol. General Motors and other carmakers can't meet Brazil's demand for the "flex-fuel" cars. No other country relies as much on ethanol to fuel vehicles: 40 percent and rising.

Gov. Charlie Crist recently visited Brazil to learn how South America's largest nation does it. How did Brazil achieve its prowess? How did it end petroleum imports for cars?

Crist, who considers himself the green governor, Thursday proposed a state budget that includes $42.5 million to promote and develop biofuels to trim harmful emissions from oil. He wants all gas sold in Florida to eventually include 10 percent ethanol, a move that would not require changing cars or fueling stations.

To understand how Brazil makes ethanol and became an ethanol leader, visit the sugar-growing area of Piracicaba in Sao Paulo state. Fields of green sugar cane stretch for miles. They provide jobs for hundreds of thousands of workers, from cane cutters to scientists.

Dozens of mills crush cane for either sugar or ethanol. They grind the cane stalks to extract the juice. Then, yeast is added and the mixture ferments. When heated, the ethanol or alcohol rises. The crushed cane stalks are burned to make electricity, further reducing the need for petroleum.

Cane-based ethanol would be too expensive for Florida. The state would do better making ethanol from other plants, perhaps from grasses, tree clippings and wood chips, analysts say.

"Brazil has a relatively small vehicle market, a huge sugar cane industry and abundant farmland. In Florida, we don't," said George Philippidis, a biofuel expert at Florida International University. "The future for ethanol in Florida is cellulosic"- made from woody plants.

But it will take years more to perfect the science to make cellulosic ethanol on a commercial scale, he said.

Engineer Paulo Neves, who works at one of the mills, explains why Brazil can excel at sugar-based ethanol. First, the country has plenty of sun, land and water, just what you need for cane farming. Brazil now ranks as the world's largest sugar producer. And costs are low because of the scale of operations, centuries of experience in sugar and alcohol production, plus relatively cheap land and labor.

Producing ethanol, said Neves, is similar to making rum or Brazil's cachaça liquor. Thus the regional joke: "We drink the best, and drive the rest."

Brazil didn't become a giant in cane-based ethanol by chance. That took government leadership over decades.

Starting in the 1970s, when oil prices soared, the government used cash and laws to develop the ethanol industry. A military regime in 1975 required blending ethanol into gas and funded research into ethanol-only cars. Later, a civilian government required the state oil company to offer ethanol at all fueling stations.

Today, the government supports ethanol research, from new strains of cane with more juice to technologies for cellulosic ethanol. And it requires that all gas contain at least 20 percent ethanol.

Business and consumers play a role in the ethanol market as well, said Edgar Beauclair, a sugar cane specialist and professor at Sao Paulo State University at Piracicaba, who has worked in the sugar industry in Clewiston.

Beauclair learned that lesson the hard way in the 1980s. Back then, when world prices surged for sugar, Brazilian mills diverted sugar cane from ethanol to make more sweetener. Most cars sold then ran only on ethanol. He recalled waiting five hours to fill his car up with ethanol, only to reach the pump and find it empty.

"I promised myself then, I will never have an ethanol car again," Beauclair said.

The government stepped in with subsidies to make ethanol more profitable. But by the 1990s, there was too much. The government ended the subsidies. So, ethanol producers joined automakers and the government to spur research into vehicles that allowed customers to choose their fuels.

Brazilian engineers developed an electronic sensor that detects whether gas or ethanol is entering an engine and adjusts the settings. Flex-fuel cars became widely available about five years ago, and demand is soaring.

"I'm planning to buy a flex-fuel car now too," said Beauclair. "I'm saving up."

At a music-filled Chevy dealership in Sao Paulo, nearly all the cars that salesman Aercio Ferreira sells are flex-fuel.

"Everyone wants flex. It's less pollution, more economical to run, and keeps its value longer," he said.

As he spoke, Julio de Oliveira checked out the latest Chevys. He hopes to switch his 2006 flex Peugeot for a newer flex model.

De Oliveira, a sales representative for a plastics packaging firm, drives an average 3,000 miles each month and wants to save on fuel. While pure ethanol gets fewer miles per gallon - about 20 percent - it still ends up cheaper per mile at today's prices. In Brazil, ethanol costs about $2.50 a gallon, compared with more than $5 a gallon for gas-ethanol blends.

"I save about 40 percent driving on ethanol. And with that money, I can pay my insurance, registration and other fees," de Oliveira said.

Even so, ethanol is no panacea.

Brazil still depends on oil for at least half its vehicle fuel. It ended oil imports for cars, not only because of ethanol but also because new oil fields and technology increased oil production.

In contrast, the United States has no prospects to boost oil production enough to end its oil imports. And if America were to embrace ethanol, it couldn't make enough at competitive prices, specialists say.

"Energy independence for the United States is a myth. It's untenable. We need energy diversity," said Brian Dean, executive director of the Inter-American Ethanol Commission, a Miami-based group.

While ethanol can't solve all woes, it holds tremendous promise.

Investors such as George Soros and farm products giant Cargill are pouring hundreds of millions of dollars into ethanol in Brazil. Many hope Washington will lift a 54-cents-a-gallon import tax on ethanol from Brazil and many other countries and make sales to the United States more competitive. Congress passed the tax to protect U.S. corn growers, who supply U.S. mills that make more expensive and less energy efficient corn-based ethanol.

Cristiane Piza left a top finance job in New York and now helps run the Bioenergy Development Fund in Sao Paulo. It is raising $350 million for ethanol projects in her native Brazil. She figures her country needs at least $15 billion over 15 years to expand ethanol production, mainly for domestic use. Even with that growth, it can't make enough to fill the needs of the United States and others.

"We don't want to become the Middle East of ethanol," said Piza over coffee at Starbucks in Sao Paulo's financial district. "We want as many countries to produce it as possible. It's a cleaner alternative to gas, and with research, it will get even cleaner."