Brazil shows gasoline is alternative fuel - UNICA

17 June 2008 19:47  [Source: ICIS news]

NASHVILLE, Tennessee (ICIS news)--Booming demand for flexible-fuel vehicles (FFVs) has transformed gasoline into an alternative fuel in Brazil, since ethanol is the fuel of choice for most drivers in South America's largest country, industry association Unica said on Tuesday.

Brazil’s ethanol consumption surpassed that of gasoline in 2008 due predominately to demand for hydrous ethanol from FFVs. Brazil also blends anhydrous ethanol in gasoline at 25% by law.

The Brazilian ethanol industry has shown it is possible to compete with crude oil, Unica official Joel Velasco said during an industry event in Nashville, Tennessee.

Demand for Brazilian ethanol in April totalled 1.56bn litres (412.7m gal), while gasoline consumption was 1.53bn litres, according to figures from the National Petroleum Association (ANP), which showed ethanol demand in April rising by 37% from one year earlier.

Brazil’s FFVs can run on 100% ethanol or gasoline or in a combination of both fuels. FFVs account for nearly 90% of Brazil’s auto sales.

Velasco said Brazilian state oil company Petrobras has kept gasoline prices unchanged, despite the surge in crude oil prices, due exclusively to competition from sugarcane-based ethanol. Fuel prices are extremely important to Petobras' earnings, since the company operates most of the country's refineries.

A top Petrobras official has even publicly acknowledged the company was keeping a lid on gasoline to avoid losing more market share to ethanol, he said.

Unica said Brazil has achieved energy independence through ethanol by using about 1% of its 354m hectares of arable land to grow feedstock sugarcane.

That area does not include rainforest lands and is nowhere even close, Velasco said, dismissing concern outside the country that Brazil is venturing into the Amazon to grow sugarcane for ethanol production.

Brazil will produce about 26bn litres of ethanol in 2008, he said. That figure represents a 20% increase from 2007, according to data from Unica.

Velasco spoke at the 2008 Fuel Ethanol Workshop & Expo.

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By: William Lemos
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