When oil prices dropped in the mid-1980s, coupled with the discovery of new offshore oil fields, gasoline became cheaper. This was further compounded by a drought and a poor sugar harvest disrupting the supply of alcohol. Then by 1989, sugar prices started to rise dramatically and producers exported sugar rather than turn it into fuel. By 1997, alcohol capable cars represented less than 1-percent of new vehicles sold in Brazil.Brazil learned a lesson from these ups and downs. The result were flex-fuel vehicles (FFV) that could run on any fuel from pure gasoline to pure alcohol. All Brazilian gasoline is blended with at least 20- to 25-percent ethanol. Some 29,000 out of 31,000 fueling stations in Brazil also offer 100 percent ethanol for the older alcohol-only vehicles. Brazil currently has between 3-million and 4-million ethanol fueled vehicles.
Something that has negatively biased my view of ethanol in the US, was the claim that it was just a huge government subsidy with no real benefit - the prime argument as I recall, was that the energy to produce ethanol, was so great, that it just wasn't worth it in the end. Siuru sites some interesting numbers, that back this up:
Fermentation of Brazilian sugar cane produces much more ethanol as compared to corn. For each unit of energy expended to turn cane into ethanol, 8.3 times as much energy is created (1 to 8.3.) Compare that to corn which gets a maximum of 1.3 times the engery from a single unit (1 to 1.3.) Research is underway in Brazil to increase this to 1 to 10. Also, no fossil fuel is used in the process of converting sugar cane to ethanol. The residue from the stalks is used to generate the necessary electricity, and to fertilize the sugar cane fields.
So it sounds like corn is the culprit, not ethanol in general. This is an interesting read. I'm surprised Brazil isn't being sited more on models to follow, or atleast study more, given their relatively minimal use of gasoline.