The world is presently mired in an energy crisis that challenges our ability to maintain standards of living in the North and raise them in the South. With accelerating demand for fossil fuels and relatively stagnant supplies, the fundamental bases of our transportation. energy, and agricultural systems are being questioned. Biofuels provide a more feasible technology than other renewables that could serve immediately to substitute for petroleum products in transportation. However, biofuels have been much reviled as leading to increased food prices and being environmental unfriendly. This article examines the case of Brazil. As a pioneer of biofuel use, Brazil is a key case for studying the possibilities, trade-offs, costs and benefits, of ethanol as an alternative to petroleum. Brazil has had an active program for over 30 years and is the world leader both in terms of technology and usage of ethanol. With relatively low economies of scale, a number of developing countries could successfully adopt the Brazilian system, reducing their dear dependence on petroleum. The evolution of the Brazilian ethanol system and its parameters are therefore of paramount interest to those interested in energy policy around the world. (C) 2009 Elsevier Ltd. All rights reserved.