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Eric Ehrmann

Eric Ehrmann

Posted: April 21, 2009 05:18 PM

Brazil's Earth Day Present: A Sustainable Energy Policy

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As millions celebrate Earth Day, Brazil's national energy policy offers an example for nations seeking to do more with less. Brazil loves its Grand Prix auto racing, but biofuels and innovative public transportation systems provide the nation with energy independence.

In Curitiba, an industrial city of 3.7 million in southern Brazil, 1,100 buses run on dedicated flat roads and move 2 million commuters daily. Articulated "bustrains" carrying as many as 270 people run on a 20 percent biodiesel blend, and consume 30 percent less fuel than buses using conventional diesel. A PBS Frontline report calls Curitiba the world's most efficient public transportation system.

Plug that savings into New York's Metropolitan Transportation Authority (where 2.5 million commuters use an aging 4500 bus fleet), the CTA in Chicago, the T in Boston and transportation systems in other cities struggling for infrastructure money to weather the crisis. LA crunched the numbers and used Curitiba as the model for its new Orange Line. When shopping for a transport system to complement modernization of the El Dorado international airport, Bogota, Colombia, a 4 million metro market, also adopted the Brazilian plan.

Since Brazil doesn't need to mess with Texas or OPEC, a government mandate requires automobiles to run on 25 percent biofuel (mostly sugar and soybeans), reducing dependence on imported oil. In the US, automobiles run on just 10 percent, thanks to an apocryphal debate that tags biofuels as a leading cause of global hunger. Brazilian families consume less natural gas, electricity and water thanks to instant hot water heaters, gentle cycle washing machines and tropical and sub-tropical living that doesn't require big monthly heating bills.

Renewable solar and wind-generated power are problematic and expensive options in Brazil and South America, where grids are keyed to basic needs. Since credit to upgrade them is costly, governments in the region prefer to use it for projects with greater political urgency.

In the US, a DOE study says power outages cost US consumers $80 billion annually, close to the amount team Obama will spend to maintain energy security in Iraq this year.

Brazil's national energy policy helps mediate fuel prices but it doesn't keep cars from being expensive. With average annual family incomes at $10,000 (CIA Factbook), compacts by Fiat and Renault running on 25% biofuel start at US $16,500, not including finance charges and insurance. That's about the same price as the Fiesta subcompact Ford plans to market next year in the US, where average family incomes are $50,000.

The global game breaker that could be a big boost for emerging economies is the four-passenger family car produced in India, priced under US $3,000 and ideal for first-time car buyers. Two global auto giants, Renault-Nissan and Tata Motors (who manufacture Jaguar and Land Rover) are producing these vehicles, which run on biofuel or natural gas and get 50 mpg. These vehicles are part of a long tradition of the "people's car" that includes the VW beetle, the Citroen 2-CV, the Fiat 800 and the Honda CV series.

In the US, where the world is accustomed to looking for new thinking on sustainability, NGOs, wonks and fashion victims are going gaga over the one-passenger GM Segway PUMA two wheeler that will sell for around $13,000. If you've got entrepreneurial skills and a friend in the Mumbai hack bureau you could get a fleet of five Tata Nano taxis for that price.

President Luiz Inacio Lula da Silva, in his lame duck year, is pulling out all the stops to cushion the impact of the what he calls the "North American crisis." Brazil's constitutional arrangement of checks and balances gives him a wide berth to issue presidential decrees. Taxes on new car purchases have been lowered twice to stimulate automobile sales. When the president of Banco do Brasil balked at lowering credit card rates that can generate growth and help working families, Lula forced him to resign. While he didn't agree with Lula's methods, former neoconservative president Fernando Enrique Cardoso told a World Economic Forum meeting in Rio last week that Brazil is having a softer landing than most G7 economies.

Working Brazilians can count on a stable economy, but they're feeling some pain. Planning Ministry officials project 2009 growth to top out at one percent but estimate a rebound to 4.5 percent for the 2010 calendar year. Workers laid off at the big Caterpillar plant in Sao Paulo state are "volunteering" part time just to keep health care benefits. EMBRAER, the Boeing of Brazil, completed a 5 percent workforce reduction, sending engineers and technical staff scrambling to preserve their upscale lifestyles. The cost of basic food items and public transportation is edging up. But Lula decreed a modest minimum wage increase that will help keep food baskets of working Brazilians full.

Brazil's sustainable energy dividend is the result of generations of trust and cooperation between a strong federal government, parastatal companies and global businesses who have developed the knack of working with them. In the US, the Edelman Trust Barometer for business has fallen to 38 percent, the lowest it has been since the Enron oil scandals. One more reason for Brazil to trust 25 percent biofuel.