The Brazilian Alcohol Program: Foundations, Results, and Perspectives

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Abstract
The Brazilian alcohol program, Proálcool, was developed as a strategic answer to the high dependence on imported oil and sharp increases in oil prices that adversely affected the Brazilian balance of payments. The program is intended to replace part of the gasoline consumption with ethanol. The availability of resources, including fertile land and unskilled labor, made possible its implementation. As a result of these measures, there were important changes in the Brazilian energy matrix. The most important were the substitution between gasoline and fuel alcohol and also between fuel oil and electricity. Other benefits with Proálcool include environmental gains, employment creation, increase in rural area income, and technological improvements in the sugarcane sector. These have allowed an ethanol cost reduction from US$70/bbl at the beginning the program (1976) to US$45/bbl in 1989. This means a cost reduction of about 4% per year during the 1980s, which must continue in the same way during the next decade.

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