National Alcohol Program (PROALCOOL)

Brazil: National Alcohol Program (PROALCOOL) Decree no 76.593

Public sector subsidies and tax breaks helped get the program started: farmers planted more sugar cane, investors built distilleries to convert the crop to ethanol and automakers designed cars to run on 100 percent alcohol. The government financed a distribution network to get the fuel to gas stations and kept alcohol prices low to entice consumers. In the 1990s, the government gradually withdrew its subsidies and lifted price controls on ethanol when cheap oil prices and ethanol shortages caused consumers to switch back to gasoline. Today, the price difference between gasoline mixed with ethanol and hydrated alcohol is defined by the Government (minus 30% for hydrated alcohol). The percentage of the mixture of ethanol with gasoline is set at 25%. The policy requires close coordination among all sectors involved: the Ministry of Agriculture and sugarcane planters, the Ministry of Science and Technology and research centres, the Ministry of Industry and Commerce, the automobile industry, Ministry of Mines and Energy, PETROBRÁS, the fuel distributors, and the gas stations, the Ministries of Finance and Planning, the Ministry of Environment and automobile owners.


Date Implemented: 1974

Status: In Force; Mandatory

Milestones: By the mid-1980s, virtually all new cars sold in Brazil ran exclusively on ethanol. Today, ethanol accounts for about 40 percent of the fuel that Brazilians pump into their vehicles, compared with about 3 percent in the United States.

References:

The Embassy of Brazil in India, http://brazilembassyinindia.com/proalcool.htm;

“Fuel supply helps Brazil breathe easy,” Baltimore Sun 06/20/2005

http://www.baltimoresun.com/business/bal-ethanol0620,1,5894730.story?col...