Ministry of Agriculture, Livestock and Food Supply - Embrapa

Consequently, alcohol fueled more than 90% of new vehicles sold from 1983
to 1988.
At the same time the government created the National Alcohol Program
(Proálcool), the world's largest renewable energy program, which included
major incentives for increasing the installed capacity: sugar plantations, sugar
mills, distilleries, and storage infrastructure. The new policy brought about a
rapid increase in the sugarcane farming area and vertiginous growth of alcohol
production, but without disturbing the sugar market supply.
During the 1980-1985 period, the learning process and technological
development received an added thrust. Productivity gains in agriculture and
raw material processing enabled a noteworthy reduction of the alcohol
processing costs. There was also remarkable improvement in the efficiency
of alcohol engines, which increased the population's reliance on these
vehicles.
As petroleum prices began falling abruptly from an average value of
over US$ 27.00/barrel in 1985 to less than US$ 14.00/barrel in 1986, the
government was unable to maintain the alcohol price incentives8 .
Hydrated alcohol consumption continued to rise, but the 1989-1990 supply
crisis shook the population's trust in this fuel and, consequently, in alcohol-driven
automobiles, whose sales fell from 52.5% in 1989 to 11.55% in 1990.
After the crisis, when sales were beginning to recover (in 1992 and
1993 alcohol fueled vehicles accounted for over 25% of the fleet, on average),
new technological standards definitely placed alcohol cars at a disadvantage:
the concept of 'world car' and the new engines of up to 1,000cc piston
displacement. Since the price ratio did not favor alcohol, the automobile industry
concentrated its research on producing more economic gasoline vehicles,
which accounted for 75% of sales in 1996, while alcohol automobile sales
went down to less than 1%.
In order to prevent a collapse of the entire alcohol production structure
in the country, the government determined in 1993 that the gasoline-alcohol
mixture should contain 22% of anhydrous alcohol. Alcohol sales still continued
to rise until 1997 and by 2000 the decrease in hydrated alcohol consumption
was greater than the increase in anhydrous alcohol consumption. Total alcohol
use grew again beginning in mid 2001, when the use of anhydrous alcohol
was greater than the absolute drop in hydrated alcohol consumption.
8 A new decree increased the alcohol to gasoline price ratio to 75% in 1986. This percentage is the
closest possible to the vehicular power ratio between the two fuels.
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