Flex reflections from Brazil: India’s ethanol push faces lessons from Brazil’s Proalcool crisis

As India debates the ethanol-blending mandate, Brazil's Proalcool programme is being invoked as the holy grail of alternative energy. The narrative is seamless: a developing nation frees itself from the tyranny of global oil shocks by turning its vast sugarcane fields into a domestic fuel pipeline.

But this version of history is incomplete. Environmental historian Jennifer Eaglin's Sweet Fuel: A Political and Environmental History of Brazilian Ethanol provides clues as to why. Eaglin pulls back the curtain on the Brazilian model. In our rush to copy Brazil's homework, let's not read only the first chapter of the Proalcool textbook. It's imperative to also examine the second half: the late-1980s crisis, when Brazil's ethanol-only transport model unravelled under the pressures of falling oil prices, rising sugar prices and supply shortages.

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Tech triumphalism suggests that once you build distilleries and mandate the blending, energy security is locked in. But reports reveal the friction of tying a national transport grid to volatile agricultural cycles.

Recent kharif crop coverage data shows a drop in national maize acreage - down nearly 10% nationwide, with steep declines in key producing states like Karnataka (-34%) and UP (-37%). Because maize had emerged as a primary pillar for grain-based ethanol, this crop setback is forcing distilleries to scramble for alternatives. With sugarcane stocks tight, the industry is once again pivoting toward rice to plug the shortfall.

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Recently, GoI informed Parliament that between June 2025 and June 2026, FCI dispatched 6.35 MT of rice to ethanol distilleries at ₹2,250-2,320 a quintal - roughly 40% below its average acquisition cost of ₹3,720-3,889. To keep the ethanol pipeline flowing amid farm shortfalls, the state is absorbing fiscal losses by selling foodgrains procured at high MSP to fuel distillers at discounted rates.

Eaglin proves that such vulnerability is systemic, not accidental. By 1985, Proalcool looked like a miracle. Over 95% of all new cars sold in Brazil ran exclusively on pure ethanol. Then, the biological and economic traps snapped shut.

In the late 1980s, two shocks broke the system. First, global crude oil prices crashed, stripping ethanol of its artificial economic edge. Second, global sugar prices spiked. Brazil's agro-industrial elites diverted the harvest away from fuel pumps and toward international ports. The sugarcane barons of Sao Paulo successfully repackaged themselves from feudal landlords into 'green energy producers'.

Ethanol itself did not disappear. Blending mandates remained. But public faith in the fuel as a stand-alone transport fuel collapsed. Only with the advent of flex-fuel vehicles in the early 2000s did Brazil rebuild consumer confidence.

India's sugar lobby - anchored by powerful cooperative and private mills in Maharashtra and UP - wields systemic leverage. For years, GoI used ethanol-blended petrol (EBP) programme to bail out these mills, providing subsidised capital, and fixing high procurement prices to help them clear cane dues owed to farmer vote banks.

But when in 2023-24 erratic monsoon rains threatened domestic sugarcane yields, GoI placed restrictions on diverting sugarcane juice for ethanol. Predictably, the sugar lobby pushed back. In 2025-26 marketing year, GoI lifted those quantitative restrictions.

When India relies on agricultural fuel, its transport sector is no longer just exposed to West Asian geopolitics, but it's also tethered to vulnerabilities of the domestic crop cycle, localised droughts, groundwater depletion, and profit-maximising whims of mill owners who will always pivot toward whichever geographic market or derivative product - be it domestic ethanol, exportable sugar or potable alcohol - yields the highest price.

Sugarcane requires staggering amounts of water. Furthermore, as Eaglin highlights, the industry creates highly toxic ecological byproducts, which, in Brazil's case, plagued the countryside for decades. For every litre of ethanol produced from sugarcane molasses, Indian distilleries generate roughly 8-15 l of this highly acidic, foul-smelling liquid byproduct.

Central Pollution Control Board (CPCB) has instituted a strict legal mandate: zero liquid discharge (ZLD). To comply, mills must deploy expensive engineering fixes. This pushes smaller cooperative mills to financial limits. So, 'bypass dumping' - releasing the toxic slop into local streams - is rampant.

Across most major ethanol-producing countries - the US, Canada, Thailand, Brazil and France - governments mandate minimum blending levels, but preserve consumer choice through multiple fuel grades or flex-fuel vehicles (FFVs). India is unusual in making E20 the default petrol, while offering motorists virtually no lower-blend or ethanol-free alternative.

The takeaway from Eaglin's work is not that India should abandon biofuels, but that it must be aware of the dark second half of Proalcool. Also, that it could explore the option of less water-intensive crops like sugar beet - which, unlike sugarcane, allows harvests in four months and can be intercropped with sugarcane in the Rabi season - for ethanol production.

India must plan its energy roadmap to buffer against these biological vulnerabilities. Or it risks swapping a foreign oil trap for a domestic agricultural cage.