The Efficiency of Producing Alcohol for Energy in Brazil

Abstract

Brazil is one of the few countries actually producing renewable fuels as a substitute for OPEC oil. There are now 150 distilleries producing five billion liters of ethanol a year from sugar cane, with another 100 distilleries in the planning and construction stages. The current stability of world oil prices, however, does not make alcohol substitution economically efficient for Brazil, and costs foreign exchange. The authors analyze the economics of alcohol production in two regions and find it to be socially unprofitable in terms of breaking even, although it does serve to dampen any impact from increasing oil prices. 5 tables. (DCK)