India and Brazil - Comparing Environmental Policies in 16 Countries - page 182

countries feared loss of sovereignty, and the nature groups feared that
over the years the agreements would be repudiated.
When the first oil crisis occurred in 1973, Brazil depended on imports
for 80 percent of its fuel. Ethanol from sugarcane seemed like a good sub-
stitute. The country produced a lot of sugar, and a sharp slump in prices
due to declining export demand had generated a temporary surplus.
The National Alcohol Program decreed ethanol would be blended with
gasoline at 24% by volume. The program was administered by Petrobras,
the government-owned oil company. Taxis and government vehicles
were powered 100% by ethanol. Taxi owners got tax rebates. New cars
were subsidized. From 1983 to 1989, ethanol-fueled autos accounted for
90% of those sold. Sugar refineries got big subsidies. Unfortunately for
the Alcohol Program, world oil prices decreased greatly in 1986, and at
the same time, world sugar prices increased greatly. During the 1990s, the
new economic policies of stabilization and privatization were incompat-
ible with the Alcohol Program. Nevertheless, the government continued
to require gasoline to contain 20% ethanol. The official rational is that
this is good for the environment and that it helps the economy because
the sugar is grown locally. Since 2002 manufacturers have offered flexible
vehicles that can burn either gasoline or ethanol.
Petrobras has been the government-owned oil company with a monop-
oly on exploration, production, and refining since it was founded in 1953.
Its environmental record was bad. In 2001 two explosions destroyed the
P-36 oil platform in the ocean, killing 11 workers. Costing $350 million,
it was the world's largest floating rig. Three hundred thousand gallons of
crude oil leaked into the ocean. A year earlier 350,000 gallons had leaked
into Guanabara Bay near Rio de Janeiro. The same year an even bigger
leak occurred at a refinery near Curitiba, where a million gallons of oil
poured into two rivers.
The Itaipú dam, on the border between Brazil and Paraguay on the
Parana River, constructed between 1975 and 1991, was the largest in the
world at the time. Its electricity makes up 20% of the supply for Brazil
and 94% for Paraguay. Indeed, in its early years, it generated more than
could be used. The dam is close to Iguacu Falls, considered one of the most
spectacular waterfalls in the world, and often ranked with Niagara and
Victoria falls. The dam required cooperation between the neighboring
countries, which took many years to negotiate. A further diplomatic issue
was that Argentina, only a few miles downstream, feared that in the event
of a military conflict Brazil would open the gates to cause a flood. A treaty