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GTAP Resource #3024

"The World Increase in Ethanol Demand and Poverty in Brazil"
by Ferreira-Filho, Joaquim Bento and Mark Horridge


Abstract
Brazil has traditionally been one of the most important sugarcane and ethanol producers. Since 1975, when the National Ethanol Program (Programa Nacional do Alcool – Proalcool) was created, the country has produced fuel ethanol on a large scale. The increase in sugar exports in the nineties, which competed with inputs to ethanol production, caused rationing in the Brazilian ethanol market and a decline in consumption, which lasted until 2003.

Since then the scenario for ethanol has again substantially changed. The development of flex-fuel engines (which can use either ethanol or gasoline) and the rise in oil prices granted new status to ethanol as a fuel in Brazil, allowing consumers to choose between both, depending on relative prices. According to a study of the Ministry of Energy and Mining (EPE, 2008a), in 2008 ethanol was already economically viable in 19 out of 26 states in Brazil. The expansion of the Brazilian economy in the last years dramatically increased the sales of new cars, most of them with flex-fuel engines. According to an EPE (2008a) study, from January to June, 2008, flex-fuel vehicles accounted for 87.4% of new sales of light vehicles in Brazil. Still according to that study, the demand for hydrated ethanol in 2017 is projected to be about 73% of total demand of liquid fuels (Otto cycle) in the country. This would represent a total demand for ethanol in 2017 of around 52.3 million liters, against the present use of 20.3 million liters in 2008.


Resource Details (Export Citation) GTAP Keywords
Category: 2009 Conference Paper
Status: Published
By/In: Presented at the 12th Annual Conference on Global Economic Analysis, Santiago, Chile
Date: 2009
Version:
Created: Ferreira-Filho, J. (4/14/2009)
Updated: Ferreira-Filho, J. (5/29/2009)
Visits: 2,111
- Domestic policy analysis
- Economic analysis of poverty
- South America


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