This year we are completing 50 years of the first oil shock. The world was different from today, and the power of the Organization of Petroleum Exporting Countries cartel was much greater. The shock was immense and shook the world economy, and Brazil, at the time with its primary production structure, lacking foreign exchange, in the midst of a decade of high government investments, became extremely vulnerable.

The result couldn't be worse. We imported a good part of the oil we refined, and gasoline was the only fuel for vehicles in the country. Without many alternatives, we reacted and, in 1976, Proálcool was created. A program designed to encourage the creation of distilleries attached to existing sugar mills, to produce fuel ethanol and reduce our dependence on imported oil.

The program took off and, in the beginning, we only produced anhydrous ethanol for blending with gasoline, helping to reduce dependence on foreign fuels. When, in 1979, we experienced the second oil shock, once again the world economy was held hostage by the powerful Organization of Petroleum Exporting Countries.

Brazil's reaction was even more creative compared to the first shock. This new obstacle to our growth forced us to develop something even more innovative in terms of fuel replacement, and thus we created the “alcohol” car. Powered by a combustion engine that could run exclusively on hydrated ethanol.

In less than a year, in 1980, we launched the first commercial vehicle powered by vegetable fuel. Only eight years have passed, and more than 80% of new vehicles sold were fueled by alcohol. The fleet changed quickly, and problems arose. At the end of the 1980s, with the shortage of the product at fuel stations, the sale of new vehicles, powered by alcohol, was reduced to practically zero, and hydrated ethanol quickly lost the preference of consumers.

That decade provoked a silent revolution, which consistently leveraged the sugar and alcohol sector, but the business model had an enormous dependence on the state: in rules, production and sales quotas and, mainly, prices. Affected by the reduced demand for hydrous ethanol, the industry faced a huge idle capacity, having no alternative but to opt for the production of sugar for export.

We found a space for our production, and along with it came investments in infrastructure for railroads, terminals and warehouses, necessary for the movement of sugar to be exported, and hydrated ethanol was abandoned to its own fate, as a secondary product, a as consumers returned to purchase gasoline-powered vehicles.

At the end of the 1990s, the sugar and alcohol industry saw its collapse with low sugar prices that did not remunerate the mills, and there was no ethanol market to absorb the surplus sugar that the world no longer needed. Hydrated ethanol, in turn, embarked on an even greater decline. Low prices began to attract owners of gasoline vehicles to fill up with a mixture of ethanol and gasoline, popularly known as “rooster tail”.

The demand for hydrous ethanol starts to react, driven by the economic advantage of the mixture, until, in 2003, Volkswagen makes the “rooster’s tail” official with the launch of the first flex-fuel vehicle fuel from the country. The success was huge, and in a short time we reached the mark of more than 80% of new vehicles in the flex model . Automakers that did not have this option simply did not sell.

The idea of choosing fuel at the gas station and not at the dealership won over Brazilians, becoming an example for the world. Today, approximately 80% of the fleet of light commercial vehicles circulating in the country is flex-fuel, providing us with a very significant potential demand.

The entire fiscal framework, levels of mixing anhydrous ethanol with gasoline necessary for hydrous ethanol to be competitive, was the result of great work and effort by many in the sector, which culminated in the approval of Constitutional Amendment 123, ensuring, for 20 years, the competitiveness of ethanol compared to gasoline, associated with the consolidation of the RenovaBio program.

The villain of the 1970s is, today, an important piece in the balance of the fuel market, gasoline being one of its derivatives and, particularly in Brazil, produced by a state model, with a price policy that is not always transparent and subject to to political influences, as we have seen recently, which have caused an imbalance between fossil fuels and renewables.

It is essential to shield the pillars that support this competitiveness, so that we can meet the goals clearly described in the RenovaBio program and achieve the emission reduction commitments signed by the country, in the Paris agreement. The challenges are immense, and, as if all the political obstacles and other interests were not enough, the climatic and financial factors of recent years have delayed the recovery of growth in the supply of raw materials.

The setting is both fascinating and challenging. As Brazil is an important player in the world sugar market, the growth in world demand in the coming years will require a greater supply of the product. Sharing the same raw material for the production of ethanol, price arbitration between them, for the next few years, will be very fierce.

It is up to the sector to seek balance so that we can serve both markets consistently and safely, fueling the sustainable growth of the entire sugar and alcohol chain, in search of increased productivity and innovation. We have strong competition with grains, equally important drivers of agribusiness growth, which compete with the same transport infrastructure, warehouses and terminals.

Oil price scenarios are still unclear, as a result of recent world turbulence, which affected the world economy in an unprecedented way. The gradual reduction of inflation and, consequently, of interest rates, should bring growth to the world economy and a repositioning of oil prices.

Unlike previous decades, we now have a very strong driver, which is the inevitable threat of climate change, which will not be resolved by indiscriminately burning fossil fuels, however attractive and accessible they may seem. Humanity's clock cannot wait, and biofuels are the immediate transition available to mitigate the damage already done. Any delay in adopting a consistent policy could be irreversible.

Biofuels are a reality, and Brazil is very well positioned. This condition favors the attraction of large investments, as we have the climatic, geographic, human, technical and competence conditions to assume this leading role on the world stage. This history, which began fifty years ago as an external factor, is now consolidated, and not for that reason is immune to attacks aimed at destabilizing it. With the resistance of all agents, we see strong potential in this relevant sector to write a new chapter in the coming years.