A Tropical Take on Greener Cars

After spending four months in São Paulo, I’m taking a more expansive view of feasible policy options. Car ownership is still low in Brazil, but in wealthy São Paulo it’s far higher and growing at breakneck speed. Daily paralysis of major thoroughfares has led to implementation of a ‘rodízio’ prohibiting certain license plates from circulating each day during peak periods.

In terms of energy impacts, however, Brazil’s new automobiles have an edge over those in the U.S. More than 80 percent of light-duty vehicles sold last year were flex-fuel vehicles. Ethanol consumption varies greatly with price, but it accounted for close to 40 percent of car and light truck fuel consumed in 2010. And Brazil’s sugar-cane-based ethanol is said to be substantially less carbon-intensive than the corn ethanol used here.

In addition, the average fuel economy of Brazil’s vehicle stock is about 26 miles per gallon, in energy-equivalent terms, while the U.S. value stands at 23 miles per gallon. That’s largely a reflection of engine size, not technology – over 90 percent of the vehicles sold in Brazil in 2011 have engines of 2.0 liters or less. A tax differential of 18 percentage points between a 1.0-liter and a 2.5-liter engine helps to explain this. Plus, gasoline in Brazil costs about 40 percent more than in the U.S.

Now there’s a major new vehicle tax policy in the works, and it’s tied to fuel efficiency. With substantial and rapidly growing oil production, Brazil is a net petroleum exporter.

And climate change concerns are not driving policy at this time. So who’s worried about fuel economy? The President herself, along with the Ministry of Development and Commerce: the new tax regime would replace the 30 percent tax that Brazil slapped on imported vehicles last fall. That policy has come under fire at the World Trade Organization, and there’s a sense that that approach to keeping imports at bay won’t fly in the long run. So fuel efficiency is the new competitiveness policy for the Brazilian auto industry. Sound familiar?

 

Therese Langer is Transportation Program Director of the American Council for an Energy-Efficient Economy, www.ACEEE.org