Genesis and consolidation of the Brazilian bioethanol: A review of policies and incentive mechanisms

This article aims to investigate the introduction, sustenance and consolidation of bioethanol in Brazil. It presents an analysis of its introductory stage, from the first decades of the 20th century until the early 1970s, when, in a second stage, additional measures allowed for its consolidation and maturity, under the widely known Proalcool. The paper presents a historical reinterpretation of the policies, mechanisms and instruments adopted in both stages, aiming to highlight the economical and political links. It is concluded that the interests of the agrarian elites, operating at the political level, and the fuel supply crisis during Second World War were basic during the first stage, to sustain a productive and logistic capacity and maintain ethanol alive as an automotive fuel. It is also concluded that the launching of Proalcool represented a transition combining the interests of the sugarcane agribusiness, burdened by the drop in sugar prices, and the need to equilibrate the balance of payments due to the oil shocks of the 1970s. Ethanol supply shocks harmed its credibility and its commercial consolidation was only possible through the introduction of flex-fuel vehicles with expectations strongly relying on climate change mitigation actions.