Introduction

Abstract

The success of Brazil in the large-scale production and use of ethanol as fuel has been widely discussed and analyzed by other countries interested in adopting policies designed to encourage the use of biofuels. Within this context, certain questions arise. Could the Brazilian experience be replicated in other countries? What were the conditions that enabled the creation of the Brazilian Programa Nacional do Álcool (Proálcool, National Ethanol Program)? What lessons can be learned? To examine these issues, it is important to understand the functioning of the key, interconnected markets (those for sugarcane, sugar, and ethanol), which, from their inception, were the objects of extensive government intervention, such intervention continuing till 1999. In our view, two main conditions enabled the creation of Proálcool: robust production of sugarcane and sugar (tightly regulated by the government, which applied the numerous regulations then in place); and the military regime that was in place at that time, whose decision-making and enforcement powers were quite broad, facilitating the carrying out of the necessary actions, as well as making it easier to coordinate the activities of the various stakeholders and sectors involved.