Brazil’s Not A U.S. Model

Energy analysts who see Brazil as a potential model for energy independence because of its high consumption of renewable fuel in lieu of foreign oil may need to do a little digging beneath the surface, according to a recent white paper by the National Center for Policy Analysis.

Brazil consumes 4 billion gallons of ethanol a year, or 20 percent of its annual fuel consumption of 20 billion gallons, but for the United States to get 20 percent of its fuel from ethanol would require 36 billion gallons of the renewable fuel, NCPA says, noting that with an annual fuel consumption level of 182 billion gallons in the United States, the Brazil model simply isn’t viable here. Thirty-six billion gallons is nearly three times the world’s total production of ethanol in 2006.

And there are issues in addition to production levels. Another recent study notes increased ethanol production would only exacerbate the problem of rising food costs. The study’s author, Thomas Elam, president of FarmEcon LLC, blames federal ethanol subsidies:

“The biofuels policy that is driving higher the prices of corn, other grains, and soybeans will cost the U.S. economy more than $100 billion from 2006 to 2009. It is inevitable that these costs will be passed along to consumers.”

NCPA also points to the extensive subsidies necessary for U.S. ethanol to compete:

“The United States currently subsidizes corn ethanol production twice, through crop subsidies and a 51 cent per gallon tax credit. Without the tax credits, estimates based on EIA [Energy Information Administration] data show that the average wholesale price of U.S. ethanol from 2003 to 2006 would have been 35 cents per gallon higher than gasoline.”

Moreover, Brazilian ethanol is more efficient than American corn-based ethanol in just about every way, NCPA notes:

“Brazil has a major comparative advantage over the United States in producing ethanol. Its climate is suited to growing sugarcane, which requires half as much land as corn per gallon of ethanol produced. Also, Brazil’s sugarcane-based ethanol provides eight times the energy of the fossil fuel used to make it, while America’s corn-derived ethanol provides only 1.3 times as much energy.”

Posted on 04/09 at 06:00 PM

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