South America

South America has a long tradition of biofuel use thanks mostly to the efforts of Brazil, which began an extensive program in bioethanol following the fuel crisis in the mid 1970s. In this article we'll look at biofuel production and the policies that encourage it in South America.


Brazil is the second largest producer of ethanol fuel in the world, having produced 21.1 billion liters in 2011 (5.57 billion U.S. liquid gallons). This is about 25% of the world's total ethanol used for fuel. Brazil is commonly referred to as having the world's first "sustainable biofuels economy," which is a misnomer given that the country has never relied on ethanol to supply more than about 18% of its total energy requirements, though a 50% by volume peak was reached in the mid 1990s. Remember that ethanol is much less energy dense than gasoline, so using a gallon to gallon comparison is an incorrect estimate of the percentage of energy derived from ethanol.


Brazil's remarkable progress in bioethanol production and use is a result of its tropical location, large land area, and suitable conditions for growing sugarcane. Sugarcane is roughly twice as efficient for producing ethanol as corn, yielding about 800 gallons of ethanol per acre.

Government Policy

Brazil's policy on ethanol fuel dates back to World War II, when gasoline was expensive. At that time, the mandatory ethanol blend was 50% by volume. After the war, gasoline prices dropped and so did the use of ethanol blends, which were only sporadically used. In 1975, the oil crisis precipitated by OPEC convinced the Brazilian government that reliance on foreign oil was dangerous and so they instituted The Nation Alcohol Program (Programa Nacional do Alcool).

  1. Programa Nacional do Alcool
    1. Sets mandatory blending guidelines, which fluctuate with the market price of gasoline
      1. Between 1976 and 1992, rates fluctuated between 10 and 22% by volume
      2. In 1993, the mandatory blend was set at 22% and increased to 20-25% in 2005
    2. Ensures purchases by the state-owned oil company Petrobras at a set price
    3. Provides for low-interest loans for firms to grown sugarcane for ethanol
    4. Fixes gasoline and ethanol prices at the pump
  2. LEI No 8.723
    1. Gives government the authority to set the mandatory blend based on sugarcane harvest
  3. Bioethanol for Sustainable Transport
    1. A program in the EU for promoting bioethanol that included participation by Brazil
    2. Test fleet of two type of biotheanol-powered buses (including tests in Sao Paulo)
    3. Infrastructure development
    4. Flexible-fuel vehicle promotion program



Argentina has only recently entered the biofuels arena, but has done so at a relatively rapid pace. Argentina is now the fourth largest biodiesel producer in the world with production of over 1.75 billion liters. Argentina uses B7 (7% biodiesel by volume) in its national blend, which is mandated by the government. Soybean is the primary source of oil for this process, which means Argentina is using the least efficient feedstock available for the production of biodiesel. The country is working to meet a government B10 mandate by 2012. A possible mandate for B20 could be enacted in the next several years.

Argentina has had difficulty exporting its biodiesel given its nationalization of several local branches of major international oil firms. The move toward nationalization has also restricted investment in the country given that returns on investment cannot be guaranteed.