First, Brazilian cars run on either E25 (gasoline blended with 25% anhydrous ethanol) or, in the case of FlexFuel cars, up to E100 (pure hydrous ethanol). E85 is only used in cold climates like the U.S.

Second, the correct percentage of new cars in Brazil that are Flex Fuel is 90% in 2008. Looking at it another way, since 2003 when the flex fuel car began to be sold in Brazil, we’ve replaced well over one third of the country’s auto fleet with flex fuel cars. All automakers now sell flex fuel cars in Brazil.

Third, when Brazil began its ethanol program in the 1970s, the country was almost 90% dependent on imports of oil. Fourth, the while the import levy is 54 cents per gallon (plus 2.5% ad valorem), the so-called blenders credit is now 45 cents per gallon (thanks to the 2008 Farm Bill). Even if one buys into the claim that the border charge is meant to offset the tax credit, one would have to recognize that that’s not what happens. Brazilian ethanol is paying about 30% tax at the border.

Finally, while it is true that dehydrating hydrous ethanol in Caribbean countries means that Brazilians can export to the US via the Caribbean without paying the 54 cents import levy, one has to remember that this process requires heavy fuel oil imports (costs about 20-30 cents per gallon to dehydrate due to high oil cost) as well as generates very few jobs in Caribbean countries. In short, if the intent of the policy is to generate jobs and economic growth in the Caribbean, that’s not the case. Unfortunately as several articles have pointed out (see http://sugarcaneblog.wordpress.com/2008/07/22/for-caribbean-rum-more-interesting-than-ethanol/) some Caribbean countries prefer to import fossil fuels and export rum.