Abstract
Hydrous ethanol was not competitive with gasoline on strictly economic terms, because, at the time of the creation of the Programa Nacional do Álcool (Proálcool, National Ethanol Program), in 1979, the cost of its production was higher than that of gasoline. Until October 1999, there was a price support mechanism in place, designed to make the use of hydrous ethanol more feasible, that subsidized producer prices. The resources for that support came from the collection of an add-on to the price of petroleum-based fuels (including diesel, which was important, because diesel-powered vehicles move most of the freight in the country and almost all urban public transport is also diesel-powered). Since 1999 there is no more price support for ethanol in Brazil.
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Notes
- 1.
The price support for hydrous ethanol was R$ 0.127/L until January of 1999, when it was reduced to R$ 0.045/L, where it remained until it was discontinued in October 1999.
- 2.
Serodio, E. (Director of the Department of Ethanol and Sugar of the Ministry of Development, Industry, and Trade). Personal Communication, April, 1999.
- 3.
This was never put into practice but serves as an example of the price support logic.
- 4.
Serodio, E. (Director of the Department of Ethanol and Sugar of the Ministry of Development, Industry, and Trade). Personal Communication, April, 1999.
- 5.
To monitor and evaluate the implementation of the program to equalize sugarcane production costs, the CIMA Resolution no. 7, issued in October 1998, established an Inter-Ministerial Group, composed of representatives of the SUDENE, the MICT, the Ministry of Finance, and the ANP.
- 6.
The amount of time deemed necessary for investments in sugarcane cultivation to be recouped.
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Ferraz Dias de Moraes, M., Zilberman, D. (2014). Price Supports for Fuel Ethanol, Sugarcane, and Freight Charges: Alterations Stemming from Deregulation. In: Production of Ethanol from Sugarcane in Brazil. Natural Resource Management and Policy, vol 43. Springer, Cham. https://doi.org/10.1007/978-3-319-03140-8_6
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DOI: https://doi.org/10.1007/978-3-319-03140-8_6
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