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Brazil bucks trend for EVs by turning to biofuels

Electric vehicles are leading the charge to decarbonize the global auto industry, but Brazil is making a strong case for bioethanol. And some of the biggest names in the business are jumping on board.

"I refueled with ethanol," says a driver we spoke to at a gas station in Sao Paulo in early October. "I like it because it's plant-derived, environmentally friendly and easy on the wallet."

The fuel he's raving about comes from sugarcane — and in Brazil, there are fields of the stuff everywhere.

What's more, this raw material appears to boast excellent green credentials. Cars that run on bioethanol emit carbon dioxide, which is then absorbed by the sugarcane from which it derives.


A lot cheaper than gas

As of October 5, a liter of gasoline in Brazil costs about 6.3 real, or about 1.25 US dollars. But bioethanol, at a little over 75 cents, goes for about 40 percent less.

Brazil formed its first bonds with bioethanol during the oil crisis of the 1970s. The country largely relied on imported fuel, and buckled under the weight of soaring prices.

By the middle of the decade, the government launched a "pro-alcohol" campaign aimed at boosting production of domestic energy sources. But things changed in the late 90s, when a wealth of oil fields was discovered off the country's coast.

Bioethanol had seemingly had its day, but a resurgence began in 2003 with the launch of so-called flex cars. These vehicles can run on both gasoline and bioethanol, or a mixture of the two.

Demand has since skyrocketed. Currently, gasoline-only vehicles account for only two percent of the Brazilian market. The share for flex cars is a whopping 77 percent.


Auto giants pour into the market

Those figures are not lost on some of the world's biggest automakers.

In March 2023, European giant Stellantis, which owns marques such as Fiat and Peugeot, announced plans for a bioethanol strategy in Brazil.


In July, Germany's Volkswagen followed suit with a plan to invest about one billion dollars through 2026 into the development of new flex models for the South American market.

Japan's big hitters are keen, too.

Honda Motor currently produces three flex-cars in Brazil. The company first introduced biofuel technology to its Civic and Fit models in the country back in 2006.


And since 2019, Japan's Toyota Motor has produced a "flex hybrid" vehicle at a plant near Sao Paulo. Sales have increased fivefold in the four years since the car's launch, and the firm plans to add another model next year.


"We introduced a hybrid system that improves fuel efficiency by 30 to 40 percent, and Brazilian customers embraced it beyond expectation," says Inoue Masahiro, General Manager of Toyota's Latin American division.

Japanese maker Nissan is also developing a fuel cell vehicle that generates electricity from ethanol. Officials say the cruising range is on par with gasoline powered cars.

Ricardo Abe, Nissan's head of technology in Brazil, is optimistic about the prospects for expansion. "Every gas station here has ethanol," he says. "The United States, Thailand and India are also major producers, so this technology has great global potential."


Environmentalists express concern

But some environmental groups are raising questions about sustainability. They point out that bioethanol production consumes large amounts of water and leaches excessive amounts of fertilizer into the ground and ocean.

They also fear expanded production could lead to a decrease in areas for farming corn and other crops, and cause food prices to soar.

Brazilian government officials want to dispel those concerns. They say sugarcane cultivation takes up less than one percent of Brazil's vast amounts of land. And they have also introduced zoning restrictions, including a ban in the Amazon rainforest.

Brazil is an outlier of sorts in the global switch to electric vehicles, and some experts say this is because of the country's sheer size. In short, installing enough EV charging stations would cost a fortune — and that only increases the appeal of bioethanol.

"Biofuels for Brazil are like oil for Saudi Arabia," says Erwin Franieck, the head of nonprofit mobility industry organization SAE4Mobility. "We can triple or quadruple production in a few years, not only for the domestic market, but for exports."

To that end, the seeds are already being sown. At the G20 summit in September, Brazil, the United States, and India announced a major biofuel alliance comprising 19 nations. The group aims to promote sustainable production in the years to come.

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