Worldwide, transportation accounts for roughly a quarter of the total final energy demand and a similar share of energy-based carbon dioxide emissions (IEA, 2016f). The transport sector has the most homogenous of fuel mixes, with petroleum-based products accounting for roughly 95% of the overall final share (Kahn Ribeiro et al., 2012). Biofuels and other options, like electric vehicles, have the potential to displace a notable portion of petroleum and CO2 emissions in the transport sector. Global use of ethanol, the most widely used among biofuels, has grown significantly in recent years. Between 2000 and 2010 alone, ethanol utilization increased 350% worldwide, with trade increasing by a factor of 5 and usage equaling 74 billion liters in 2010 (Valdes, 2011). This chapter examines the underlying roots of the biofuels transition in Brazil. Two micro-shifts—one that is government- led and a second that is industry-led—are evaluated, demonstrating how a new, energy market and industry can develop at a national scale through the retooling of existing industries and infrastructure. Insights on policy inflections, market longevity, and dual-use technology are also covered. Brazil is the historical leader in biofuels and the only country to substantially alter its automotive fuel mix with ethanol, shifting from 1% in 1970 to 34% in 2014 (see the section entitled “Modern Transition” later in this chapter). Ranked sixth globally for its population of roughly 206 million people and eighth for its economy of $3.1 trillion in mid-2016 (CIA, n.d.), Brazil has been a leading pioneer in the production and export of ethanol, its principal biofuel. In 2015, Brazilian ethanol equaled 28% of the global supply (Renewable Fuel Association [RFA], 2016). The country is known for having the lowest production costs of ethanol (Goldemberg, 2008; Shapouri, and Salassi, 2006; Valor International, 2014). Brazil also has a unique distribution network of more than 35,000 fuel stations supplying the renewable fuel (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis, 2008).
Analysis of Global Policy and Impact on Automobile Industry under Carbon Neutrality