NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

With skyrocketing gas prices and dwindling supplies of oil, many energy experts have turned their attention to Brazil and its thirty year initiative to develop alternative sources of energy. Now former President Bill Clinton has joined the rank of those who see Brazil as a pioneer in this nascent industry. At yesterday’s IDB conference, ?Building Opportunity for the Majority,? the former President discussed the growing importance of Brazil and its experiment with ethanol and bio fuel.? These two green fuels, which are produced from a variety of fermented products grown in Brazil, including soy beans, castor beans, and sugar cane, have, in recent years, become an integral part of this country’s energy infrastructure. But more than just being a substitute for petroleum, ethanol and bio fuel, if produced responsibly, could be an important economic catalyst with significant benefits for the BOP.

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The biggest champion of bio fuel is the Brazilian government, which sees bio fuel’s reliance on domestically grown crops as a vehicle for bringing rural segments of the population out of crippling poverty. In Brazil’s north-eastern Sert?o, bio fuel’s increased demand for castor beans, a staple of the local economy, is expected to create thousands of jobs. The national government has also stepped up its efforts in the region by providing tax breaks to families that cultivate the raw materials used in bio fuel.

In a collaborative effort, the Brazilian automobile industry has produced a new fleet of flex-fuel cars, which run on both ethanol and gasoline. According to the most recent data, these hybrid vehicles account for 70% of car sales in Brazil. In Rio de Janeiro, low income consumers who can?t afford their own flex fuel cars, can get a piece of the action by riding in this city’s public buses, many of which are being converted to run on bio fuel.

From an environmental standpoint, ethanol is also a welcome change because it burns much cleaner than gasoline. For auto clogged Brazilian cities like S?o Paulo and Rio de Janeiro, cars powered by ethanol translate into bluer skies, cleaner air, and ultimately healthier lungs.

As industrialized nations and emerging economies vie for the world’s diminishing supply of oil, Brazil may find itself at the forefront of an energy movement with a promising future. If Brazil is able to harness bio fuel while enfranchising small farmers and other players at the BOP, it will certainly become a model worth replicating throughout the developing world. In the Caribbean, a stagnating region suffering from the collapse of sugar prices, there is hope of transforming the export oriented economy into one that is actually self-sustaining. “After declining for years,” The Miami Herald reports, “the Caribbean sugar industry is suddenly looking sweet again as a source of ethanol.” By learning from the Brazilian experience, and making responsible investments in bio fuel, Caribbean countries could see their economies rebound in the not so distant future.