SAO PAULO - Even knowing that Brazil
heavily uses ethanol in transportation doesn't
prepare one for the startling sight of roadside
vendors selling beer to motorists during a recent
rush hour traffic jam in Sao Paulo.
But
the fact remains that many of the
cerveja-swilling drivers had more ethanol
in their tanks than in their bellies. The highway
was full of vehicles required by the Brazilian
government to operate on at least 20% ethanol,
causing less pollution and likely less economic
instability than their gasoline-fueled
counterparts. Many cars were "flex-fuel" vehicles,
which can be filled with either gasoline or
ethanol at any one of 29,000 Brazilian fueling
stations (flex-fuel engines are designed to run on
arbitrary combinations of
gasoline and ethanol, provided
at least 20% ethanol is present).
Now
China appears to want a trade deal that would
allow it to sample - and perhaps help ultimately
reproduce - Brazil's success
with alcool,
as ethanol is called in Portuguese. With an
economy booming at a 10% growth rate, transforming
the world's most populated country from a nation
of peasants into one of middle-class consumers,
China's dependency on oil and gasoline is growing
untenable.
With the price of oil hovering
at record levels, China is looking seriously at
alternative fuel sources, and Brazil's experience
with ethanol is attracting serious notice in
Beijing.
"I just came back from Brazil
last Friday," said Dehua Liu, one of China's
foremost experts on ethanol, who was appointed by
the National Development and Reform Commission to
investigate its potential viability as a fuel
source. "I guided some people from the Ministry of
Science and Technology. In July, another team
including ... China ethanol producers and central
government [officials] want to visit Brazil again.
"I think in the coming trip, we will
travel to Brazil and maybe talk about the
possibility [of buying] some ethanol from Brazil
for China," said Liu, adding that it would
probably be a modest amount to start with.
Until now, China's relationship with
fuel-grade ethanol, particularly Brazilian
ethanol, hasn't developed beyond flirtation. While
China has been aware of the ethanol alternative
for some time - experimentation with ethanol was
under way in nine provinces by the end of last
year - the country has had virtually no
relationship with Brazil's ethanol industry, which
has developed into an empire over the past 30
years. That has begun to change as Chinese and
Brazilian ethanol experts appear to be on their
way to a committed trade relationship.
"Many Chinese companies and also the
central and local governments are very interested
in the Brazilian experience to use ethanol and
produce ethanol," said Liu, a professor in the
department of chemical engineering at Beijing's Tsinghua
University.
Only a couple of months
earlier, Alfred Szwarc, a consultant for Unica,
which represents Sao Paulo's enormous sugar-cane
and alcohol industries and fights to open foreign
markets to them, had been concerned that China was
ignoring Brazil's offers to establish trade in
fuel-grade ethanol.
"I think they were
more interested in developing their domestic
industry than importing [refined ethanol] from
Brazil," said Szwarc, one of his country's
foremost authorities on the bio-fuel. "We said,
okay, we don't want to compete with your farmers
or ethanol companies; however, we would like to be
considered preferential partners. We had people
going there and people coming here just on
exploratory missions ... but as far as I know we
didn't make much progress in practical terms."
Actually, Liu said, the more tepid
response was coming from the Brazilians. He said
he tried to make trade headway by contacting
Brazilian ethanol trade officials last year on
behalf of Henan Tianguan Group, one
of the biggest Chinese producers of the bio-fuel.
He said he got nowhere.
"They were waiting
for a [price] quotation," Liu said. "Then I didn't
get any response."
But whichever country
was ignoring the other in the past, it appears now
that the two are set for a collision course
resulting in a real ethanol deal. "Whenever it's
needed, Brazil could become a preferential
supplier of ethanol to China if China needs to
import," Szwarc said.
Emulating
Brazil's ethanol success Indeed, China will
need to import ethanol - at least initially - if
it plans on fueling its automotive needs with
anything other than a trickle of the bio-fuel.
From 2000-05, courtesy of about a dozen plants,
China developed a million tons per year of ethanol
production capacity, which it plans to double by
2010, Liu said. But China's gasoline consumption
already is in the tens of millions of tons
annually.
Liu estimated that by 2020,
power generation by renewable energy will make up
10% of the total, with biomass fuels such as
ethanol being only a portion of that.
"This is why China's government and many
ethanol producers are interested in the Brazilian
experience," Liu said.
And the Laotian
experience. Already, Henan Tianguan Group has
entered into a contract with the government of
Laos to lease 15 square kilometers of land for the
production of cassava-based ethanol, Liu said.
Ultimately, however, if China were to
emulate Brazil's ethanol success liter-for-liter,
it would have to develop self-sufficiency, which
takes dedicated farming space.
"My city is
a big producer of cana," or sugar cane,
said Felipe Fischer, a 23-year-old Brazilian
university student from Minas Gerais. "You need to
have this space. It's not like oil where you drill
the ground and the oil comes up. You need to
plant, so you need enormous [land] areas. But
China is a big country ..."
And it's a big
country with a variety of crops other than sugar
cane, several of which, including corn, cassava
and rice, can be used to produce ethanol. In fact,
80% of China's current ethanol production is
derived from these three crops, Liu said.
While China has some logistical advantages
in producing ethanol - and other drawbacks (such
as needing to feed the world's most populated
sovereign state, first and foremost) - the country
could be ripe to become another world bio-fuel
leader, based on historical similarities between
the two nations.
In 1975, Brazil imported
about 85% of its oil needs and was hurt badly by
that decade's oil shocks. At that time, a strong
centralized military government was in power, and
acted decisively to help develop the technology
for vehicles to run on 100% ethanol or
gasoline-ethanol blends.
"China has a
central government that defines policies in a
similar way [to what] we had back in 1975 in
Brazil," Szwarc said. "It centralized decisions in
terms of energy. China already has started an
ethanol program and is benefiting from it. The
situation is not exactly like Brazil, but to some
extent I think [Brazil's experience] could be
replicated in China."
The saying "be
careful what you wish for" may apply here. With
oil prices remaining sky-high, China's leadership
may well decide to grow its own ethanol supply or
just import the alternative fuel extensively. And
while Brazil's ethanol experience has largely been
a pleasant one, surprisingly, that isn't
particularly the case at the moment.
"Today, the price of alcool is
higher than when the flex system started," said
Renato Astur, a salesman with Caoa Ford, a car
dealership in Sao Paulo. "Now, the people who buy
[flex-fuel cars] don't see a big advantage."
Partly, this is because ethanol has a
lower energy content per liter than gasoline does.
Drivers can travel about 10 kilometers per liter
of gasoline in Brazil, compared with only 7 per
liter of ethanol, Astur said. So the price of
alcool has to be 70% of the price of
gasoline, or less, for consumers to see a
financial advantage; of late, it has been greater
than this.
And while for the most part the
environmental benefits of ethanol are clear,
including the fact that it is a minimally toxic
fuel, improves air quality where it is widely
used, and biodegrades rapidly, Fischer notes that
large-scale ethanol production can harm soil
because of the need to plant the same crops again
and again, depleting ground nutrients.
Fischer acknowledged, though, that
ultimately people aren't motivated by the
environment to invest in ethanol. It's money that
makes the world's wheels go around, and
convenience.
Astur said: "If tomorrow we
don't have gas, we can put in alcohol. If we don't
have alcohol, we can put in gas." For a man who
struggled to speak English, Astur flawlessly
described why Brazil's success with ethanol has
become the envy of nations worldwide. China's
envy, at least, is now morphing into action.
Matt Young is a Washington,
DC-based freelancer and a staff writer for
EyeWorld Magazine and EyeWorld Asia-Pacific
Magazine.
with alcool,
as ethanol is called in Portuguese. With an
economy booming at a 10% growth rate, transforming
the world's most populated country from a nation
of peasants into one of middle-class consumers,
China's dependency on oil and gasoline is growing
untenable. 
