Brazilian Biofuels Programmes from the WEL Nexus Perspective

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Brazil’s biofuel programmes viewed from the WEL-nexus perspective3 Implementation and leverage mechanisms ofProalcool and PNPBProalcool and PNPB used a series of leverage mechanisms and other components that were thebasis of success. In order to facilitate the analysis of these components and to understand howthey interacted in specific contexts to produce results, we separate them this paper using theProgramme Theory approach.Programme Theory consists of two interlinked models. The first, the change model, includesgoals and outcomes, leverage mechanisms and the intervention. The change model reflects aprogramme’s planning momentum. The second, the action model, is a systematic plan forarranging institutions, resources, legal frameworks, and support mechanisms to reach a targetpopulation and deliver services (Linnér et al., 2010).This theory is used here as a tool for identifying the combination of ‘push and pull’ componentsof the two programmes, facilitating a comparison between them as well as the analysis of theinstitutional demands (network of implementing agencies) necessary for their implementation.3.1 Change modelGoalsProalcool was created in 1975 and its explicit goals were to (CNPq, 1980): Increase the net supply of foreign exchange through reducing the demand forimported fuel Reduce income disparities among regions Reduce income disparities Increase national income through the deployment of underused resources Increase the growth of the domestic capital goods sectorIn addition, there were at least two hidden goals (Hira and Oliveira, 2009; Goldemberg andMoreira, 2009). The first was that the military government perceived energy dependence as anational security concern, which Proalcool could help to address. The second was to avoid awidespread bankruptcy crisis in the sugar industry, which was at that time one of the mainnational economic activities.In the case of PNPB, all the evidence and recent studies (Pousa et al., 2007; Hall et al., 2009)lead to the conclusion that the goals were indeed those stated by the government, includingthe potential improvement in the country’s balance of trade since Brazil is a net importer ofdiesel (Rathmann et al., 2011). There is no evidence that the government intended to favour aspecific industry or had other hidden goals, at least in the initial phase. In the context of ademocracy led by the Workers’ Party (PT), PNPB was to implement in a technically andeconomically sustainable way the production and use of bio-diesel, with an emphasis on socialinclusion and regional development via generation of income and jobs. The main objectives ofPNPB were to: Implement a sustainable programme, promoting social inclusion Guarantee competitive prices, quality and supply Produce bio-diesel from different oleaginous plants in diverse regionsPNPB aimed to address these issues simultaneously, and at a global level (Rathmann et al.,2011).12
Brazil’s biofuel programmes viewed from the WEL-nexus perspectiveOutcomesAmong the immediate outcomes expected of Proalcool and PNPB were the guarantee of amarket for ethanol and bio-diesel respectively; the production and the modernisation of theexisting distilleries in the case of Proalcool, and the configuration and implementation of aproduction chain for bio-diesel involving different raw materials and different regions of Brazilin the case of PNPB. The intermediate outcomes of Proalcool consisted in R&D and theproduction of cars which could run on ethanol, involving car manufacturers, governmentresearch institutions and academia; and the ultimate outcome was to have all vehicles runningon pure ethanol. In the case of PNPB, the ultimate anticipated outcome was theimplementation of a production chain capable of producing bio-diesel at competitive prices, atthe same time ensuring social inclusion and regional development.As in most interventions, the outcomes of Proalcool and PNPB did not result from policiesalone. There was a convergence of group and national interests and values that, together,spurred the outcomes of Proalcool and the current outcomes of PNPB (which is ongoing). Thedevelopment of Brazil’s ethanol production, distribution, transportation system and use by carowners proceeded in a series of incremental, non-linear steps, including reversals and suboptimalchoices (Nardon and Aten, 2008).OutputsThe most important outputs of Proalcool were the high government subsidies for the ethanolproduction and consumption chain and the creation of a market for ethanol with the obligatoryinclusion of a percentage of ethanol in the gasoline sold in the country. There were huge publicinvestments in R&D, along with incentives to the private sector to pursue innovation and investin ethanol-related activities. To complete the chain, incentives were given to car owners toshift to ethanol-fuelled cars.In general, PNPB outputs were similar, i.e. subsidies for the production chain, creation of amarket for bio-diesel by establishing minimum bio-diesel fuel blends, research. The explicitgoal of social inclusion is included the creation of the Social Fuel Stamp (MDA, 2007).Leverage mechanismsIn both Proalcool and PNPB, the primary leverage mechanisms were efforts to create and keepa market for ethanol and bio-diesel, bearing in mind that since the 1930s ethanol had in smallproportions been added to gasoline in the domestic fuel market as a mechanism for regulatingsugar prices. Other leverage mechanisms were increasing biofuel production in Brazil andfostering technological development in the ethanol/bio-diesel sector.According to CNPq (1980), there was no official plan to shape the leverage mechanisms ofProalcool in terms of its explicit objectives. On the other hand, PNPB was widely discussedwithin the government with the participation of several ministries. As a result, the leveragemechanisms were well shaped and an action plan involving several areas of the governmentwas set.InterventionIn the case of Proalcool, the intervention was based on a set of subsidies for the agroindustrialchain for ethanol production and use, as well as the establishment of mandatoryminimum ethanol-gasoline fuel blends.The following items built the basis of the intervention in the case of Proalcool: Guarantee of lower prices for ethanol vs. gasoline at the pump by taxing highlypetroleum-based fuels, and as such creating a cross-subsidy whereby gasolineconsumers would pay for part of the costs of the programme Guarantee of minimal prices for bio-ethanol producers Creation of special credit lines for sugar mills to expand their capacity Mandatory availability of ethanol at gas stations Maintenance of strategic ethanol stocks to stabilise supply13
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Brazilian Biofuels Programmes from the WEL Nexus Perspective

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