Brazil is the world’s largest producer of ethanol, a biofuel used mainly in automobiles as an additive or alternative to gasoline. In the mid-1970s the country undertook a major program to produce ethanol, and since then the industry has had both successes and failures. Although Brazil’s program was criticized as being uneconomic during periods of low oil prices, the ethanol industry today is recognized as an efficient sector that brings substantial benefits to the Brazilian economy… For countries that wish to improve their energy security while promoting rural development, Brazil’s experience offers some relevant policy lessons. Among the policies most important to Brazil’s success were the following: requiring the auto industry to produce cars using neat or blended biofuels; subsidizing biofuels during market development until economy of scale allowed fair competition with oil products; allowing renewable energy-based independent power producers to compete with traditional utilities in the large electricity market; supporting private ownership of sugar mills, which helps guarantee efficient operations; and stimulating rural activities based on biomass energy to increase employment in rural areas.
bioenergy and agriculture -- promises and challenges
International Food Policy Research Institute (IFPRI)