Ethanol or gasoline? You've certainly heard (or said) that sentence. But what do you know about flex cars? 100% Brazilian technology celebrates two decades this year. Well, before themes such as decarbonisation or sustainable mobility took hold around the world, the Brazilian automotive market was already notable for the peculiarity of using a clean fuel, ethanol, as an energy source in its combustion engines.

The flex fuel car fell into the popular taste of Brazilians, being an indispensable item when buying a new car. The advantage of being able to choose fuel at the time of supply, and no longer at the dealership, brought more freedom to the consumer.

The history of the use of alcohol, or ethanol, as a fuel in Brazil dates back to the 1920s of the last century with the use of the USGA, developed by the centenary Usina Serra Grande, in Alagoas, and gained great proportions with the consequences of the price shocks of the oil in the 1970s, first with the intensification of the use of ethanol mixed with gasoline and, later, with the launch, in 1979, of the first hydrated alcohol vehicle in Brazil.

From the success of sales of alcohol vehicles in the first half of the 1980s, to the difficulties seen at the end of that decade and throughout the next, Brazil developed an ethanol production and distribution system that reached the four corners of the country. At the end of 2002, sales of ethanol-powered cars in Brazil represented a “trace” in the statistics, and the circulating fleet dropped every year, reaching 15%. The still consistent offer of ethanol maintained, at that time, prices very competitive, and many consumers began to mix gasoline and ethanol when filling up on their own, the so-called “rooster tail”.

The automobile industry had already been developing, since the 1980s, a technology that would allow vehicles to operate on ethanol and gasoline at the same time. In March 2003, the technology flex fuel debuted with Volkswagen presenting, during the celebration of 50 years of operation in the country and with the presence of the then President of the Republic, Luiz Inácio Lula da Silva, the Gol 1.6 Total Flex.

The Volkswagen model would be the first of a series of launches that won the market, with the new technology: the Brazilian flex, as it was baptized, capable of consuming ethanol, gasoline or any mixture between the two fuels, in order to give the final consumer, the right to choose the fuel at each supply, considering its cost, availability or any other attribute of its convenience.

The growth of the fleet capable of fueling with ethanol has returned the potential for competition with gasoline to the hydrous product. A wide window of opportunities opened up for the Brazilian sugar-energy sector, and the internal market once again became a fundamental point for the growth of the sector in Brazil. At that time, the market was supported by the obligatory mixture of anhydrous ethanol in gasoline and by a rapidly depreciating fleet of old alcohol cars.

The launch of the flex-fuel car and its success from 2003 changed, in a structural way, the sugar-energy sector and the entire fuel market in Brazil. Historical data demonstrates the wide acceptance of flex fuel by consumers, after 2 years on the market, flex-fuel vehicles already accounted for more than half of sales in the country.

The evolution of flex fuel in Brazil stems from a series of factors that helped the dynamics of the offer of new car models with this technology, the growth of ethanol production in the country and the increase in logistics structures, transport, storage and pumps at service stations of fuels.

The country experienced a vertiginous growth of its fleet in the years following the launch of the flex , which allowed its rapid renewal. Currently, of every 100 vehicles running on the country's streets and highways, 84 are flex-fuel and can be fueled with ethanol. In addition, growing environmental concerns and rising oil prices have driven up gasoline prices, giving even more room for clean, renewable fuel.

However, the most structural change that was seen was a series of public policies focused on ethanol and its competitiveness based on the creation of a tax differential, both at the federal and state levels. In 2001, the Federal Government launched the Contribution for Intervention in the Economic Domain, Fuels, focusing on fossil fuels.

In December 2003, the then governor of São Paulo and current vice president of the republic, Geraldo Alckmin, sanctioned the law that reduced the tax rate on the circulation of goods and services for hydrous ethanol from 25% to 12%, making it the first state to adopt this measure. The law went into effect in 2004 and was followed by other states in subsequent years.

Currently, 14 states establish tax differentials for Tax on Circulation of Goods and Services between hydrous ethanol and gasoline. The issue is so crucial to this market that, in 2022, the National Congress decided to include in the Brazilian Constitution, in its chapter dealing with the environment, the obligation to present a tax differential between ethanol and gasoline with regard to federal taxes and state. With lower taxation and more competitive than gasoline, the consumer was encouraged, in addition to buying a flex-fuel vehicle, to also fill up with hydrous ethanol.

The 20 years of the flex car fuel arrive when the world's attention turns to alternative sources of low-emission energy, in which ethanol needs to have a great emphasis. In addition to the strong global trend towards electrification in the automotive sector. The set of market agents that make up the ethanol environment in Brazil is aware of this trend and, in an anticipatory movement, wants to turn the market threat into an opportunity to consolidate the socio-environmental role of biofuel.

Vehicle electrification is associated with battery-powered cars. But this is not the only possibility, there are alternatives, such as the flex hybrid models, already launched in Brazil, and the fuel cell. In the latter, ethanol is a source of hydrogen that feeds the system in the form of energy.

Brazil is a pioneer market in the combination of ethanol and electrification, in search of solutions to reduce the environmental impact. The hybrid car and the hydrogen-powered car are different possibilities within the Brazilian market, which already have the support of the automobile industry and different automakers. For a country that has created its own route over the last 50 years to overcome crises and further encourage its internal vocations, it does not seem difficult to us to think that, in the future of sustainable mobility, ethanol will continue to play a leading role, even beyond Brazilian borders.