So far, Lula’s government is trying to support both technologies in a precarious balancing act. To appease the sugar industry, it will keep incentives for ethanol in place while simultaneously courting electric-car makers from China scouting new overseas factory sites with a compelling sales pitch: proximity to local battery-metal deposits, a growing domestic middle class and access to other Latin American markets with their own discretionary incomes to spend. It has worked, with at least two of China’s biggest carmakers — BYD Co. and Great Wall Motor Co. — planning to bring their vehicle production to the country’s shores. But even they plan to add some ethanol-fueled hybrids to their Brazilian lineups in what looks like a friendly — and savvy — gesture.
The discussion about electric cars is “very important for Brazil and for the world,” said Renan Filho, Brazil’s transport minister. But ethanol should be part of the conversation, too, he said. “Ethanol emits much less.”
The original reason for promoting ethanol as a transportation fuel was because of the high price of oil. The fact it produces fewer emissions is a modern day bonus that helps to compensate for lower efficiency. The rationale for electrification of the transportation sector depends on abundant cheap electricity. That implies investing in additional supply infrastructure and its safe to assume most of the hydroelectric opportunities have already been exploited.Click HERE to subscribe to Fuller Treacy Money Back to top