Development & Aid, Environment, Tierramerica

Car Revolution in the Making

RIO DE JANEIRO, Sep 21 2009 (IPS) - Brazil could take advantage of the electric car boom to build up the industry at home, given the threats of climate change and petroleum crisis – and the death foretold of the combustion engine.

The electric vehicle – pure or hybrid – will trigger an energy and industrial revolution worldwide in the coming decades, dealing a blow to liquid fuels. But plant-based ethanol will survive and grow, say Brazilian experts consulted for this report.

Today's automotive industry “will be buried within 15 years” if China's electric vehicle production meets its goals, says economist Gustavo dos Santos, of the government's National Economic and Social Development Bank.

As a result, the expansion of ethanol fuel (which burns cleaner than gasoline) will be smaller than planned by the Brazilian government and will stop by 2020, predicts Santos.

The private Chinese vehicle assembly company BYD (Build Your Dreams), which began as a battery manufacturer, expects to sell 700,000 electric cars in 2010 and its annual production goal will increase to reach eight million units by 2025, with half for export, Santos told this reporter.

In addition, the Chinese government aims to turn the Asian giant into an automotive superpower, and subsidizes the sale of electric or hybrid (a combination of battery and combustion engines) vehicles.

The advance of these new automobiles, which are more energy efficient than combustion engines, was blocked from the beginning by the vast political power of the oil companies, Santos pointed out. The automotive sector itself is resisting the changes because it means the loss of an entire system that has grown over the course of a century.

But now the threat of climate change is making it “inevitable” that there will be a revolution of the energy and entire automotive manufacturing sectors, with consequences in two other main industries: electronics and chemical, not to mention urban planning, said the economist.

The gases emitted by automotive transport fuelled by petroleum products like gasoline and diesel oil contribute to the greenhouse effect, which drives global climate change.

A technology race has taken off around the world, and is reflected in the numerous electric car models on exhibit at the 63rd International Motor Show in Frankfurt, Germany, Sep. 17-27. It is further evidence of trends seen at similar shows elsewhere. Nearly all major car manufacturers are now producing some type of electric vehicle.

The governments of wealthy countries generously subsidize the development and sale of these alternative cars. General Motors, saved from bankruptcy by the U.S. government's bailout, hopes a boon to its recovery will be the Volt, a rechargeable hybrid that can run 98 kilometers on one liter of gasoline, and will hit the sales floors in 2010.

China is tipping the balance of the game because “it doesn't have commitments with the petroleum industry nor with the old automotive industry,” noted Santos in an article published in the June/July edition of the journal “Costo Brasil”.

China's goal of widespread car ownership among its citizens, necessary to sustain current economic growth, is impossible if it's based on petroleum, due to the insufficient global supply, according to Santos.

Batteries, which are still large and costly, need many hours to recharge even for short distances, and remain the Achilles heel of the electric car. But bringing the batteries up to speed, as it were, is only a matter of time. Vast investments have gone into battery technology in the automotive, cellular phone and information technology industries.

Santos believes that the future of the electric car depends “more on political disputes than on technological factors.” In addition to pressures from the entire metal manufacturing chain and from the oil companies, the United States, Europe and Japan will try to prevent China from becoming an automotive superpower, he says, and does not rule out a protectionist reaction that could plunge the world into another economic recession.

The electric vehicle could drive a technological revolution that would spur investment, supporting environmentally sustainable growth by “destroying a good portion of the global productive capacity,” says the economist.

With a sharp decline in consumption, the price of oil would begin to fall in the next 10 years. In that case, Brazil has little time to make the most of its vast petroleum reserves discovered in 2007 under a layer of salt in the depths of the Atlantic Ocean, according to Santos.

Paulo Cesar Lima, an adviser to the Chamber of Deputies in Congress specialized in energy issues, agrees with Santos.

Based on the sector's forecasts, which state that 30 percent of the vehicles manufactured in 2030 will be electric, Lima warns that underwater drilling could be nonviable in four decades because of oil's predicted low prices.

Discovered at depths of 7,000 meters, Brazil's new oil would have high production costs, nearing 40 dollars per 159-liter barrel, according to energy officials.

The “determining factor,” in Lima's opinion, will be the environmental question, which will force the primacy of the electric car. In turn, the electric car “could affect the ethanol market” and its shift to the commodity market.

But the electric revolution will not impede the survival and expansion of ethanol, says Lima, because this fuel reduces emissions of greenhouse gases.

Brazil's sugarcane ethanol is recognized for its environmental benefits, unlike ethanol from maize or other crops in the United States and Europe. But it faces criticism for the harsh labor conditions its production entails – and for displacing food crops.

The replacement of liquid fuels “will be a slow process,” and for a long time to come we will see the predominance of the hybrid vehicle, which uses a combustion engine to generate electricity for propulsion, predicts Pietro Erber, president of the Brazilian Electric Vehicle Association.

For the hybrid, ethanol offers advantages over petroleum derivatives, especially diesel oil, which Brazil imports for its trucks and buses, says Erber. The advantages will be bigger if petroleum is taxed in order to discourage consumption and benefit the environment.

Oil would lose market share, but would not, because it is a “more homogeneous” fuel, which can be mixed with gasoline to improve performance and reduce emissions, according to Jayme Buarque de Hollanda, director of the non-governmental National Institute of Energy Efficiency.

And it is not just ethanol, says Buarque, but also biomass that will see booms as renewable and “clean” sources of energy. In addition to sugar and ethanol, sugarcane is also a source of electricity (using its pulp) and fertilizer (from distillation waste).

The diversified use of biomass is a special area for Brazil, which has abundant water, sun and land. Lying ahead is a broad future for research and development to replace most of the “3,000 petroleum products,” according to Fernando Siqueira, president of the engineers association of Petrobras, the mixed capital Brazilian oil giant.

For that future, Brazil should invest in fuel cells as a way to replace batteries, said Santos. The electro-chemical device converts fuel energy into electricity with greater efficiency than a battery, and would give ethanol long-term viability, despite the predicted death of the combustion engine.

In the economist's opinion, the current paradigm shift, by limiting obstacles it is creating a unique opportunity for Brazil, like China, to create a national automotive industry of electric vehicles. For that purpose, Brazil has vast energy resources and the technological capacity, affirmed Santos.