Wednesday, June 3, 2009

Ethanol to Comprise 75% of Brazil's Transportation Fuel by 2020

Some critics have panned Brazil's usage of sugar cane-based ethanol to fuel its vehicles. Brazil looks to beat them dead wrong if it meets this lofty 2020 goal:

Sugar cane-based ethanol fuel is expected to take over 75 percent of Brazil's light vehicle fuel market, shrinking gasoline's stake to 17 percent by 2020, the head of the state-run oil company said.

The flex-fuel engine technology, which is now included in about 90 percent of all new car sales, is the reason that Brazilians are buying more ethanol fuel, said Jose Sergio Gabrielli, chief executive of Petrobras(PETR4.SA) (PBR.N), Brazil's state-run oil company.

Gabrielli spoke late Tuesday at the three-day Ethanol Summit in Sao Paulo hosted by Brazil's Sugar Cane Industry Association, or Unica.


The biofuel retails for just over 90 centavos ($0.50) a liter, less than half the price of gasoline (around 2.20 reais/ltr), which already has 25 percent ethanol blended into it, in the main urban centers in the center-south

Currently ethanol controls just under half of the light vehicle fuel market, with gasoline taking up most of the rest.

Natural gas accounts for a small portion of the market but is largely confined to taxi drivers, who say it is no longer economical to install natural gas fuel technologies, given the recent rise in price of the fuel.

Diesel also holds a small stake and is expected to stand at 7 percent of the light vehicle fuel market in 2020, Gabrielli said.

The growth in Brazil's flex-fuel car market is unique in the world due to Brazil's capacity to produce and distribute massive quantities of ethanol on the retail fuel market at competitive prices.

The local autofleet will consume around 25 billion liters of the 28 billion that is forecast to come out of the current cane crop.

Brazil is gifted with vast areas of subtropical savanna, ideal for sugar cane production, and has amassed know-how at producing ethanol efficiently after it began producing the biofuel for the local fuel market more than 30 years ago as a way to offset its dependence on the international oil

- Brewskie

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