Proalcool program, Brazil

When gasoline-powered automobiles are modified to burn a fuel such as ethanol alone, they are known as dedicated ethanol vehicles—risky investments for buyers who have concerns about future availability. For example, Brazil s Proalcool program promoted and heavily subsidized ethanol, and thus dedicated ethanol vehicles, from 1975 to 1988. Once the subsidies were curtailed and then eliminated (estimates of the costs of the subsidy to the government range from 7 to 10 billion), shortages resulted. Many of the owners of ethanol-dedicated vehicles either had to junk or retrofit the vehicles to run on gasoline, and the sales of ethanol-dedicated vehicles went from 50 percent of the market in 1988 to 4 percent by mid-1990. 

Starting in the city of Sao Paulo in 1977, and extending to the entire state of Sao Paulo in 1978, a gasohol incorporating 20% ethanol was mandated. Brazil s National Alcohol Program (Proalcool) set an initial goal of providing the 20% fuel mixture nationwide by 1980—1981 and a system of special tax, warranty, and price considerations were enacted to advance the aims of Proalcool. 

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