Rio de Janeiro, November 23:

A silent revolution is taking place at the Ale Jatinho petrol station on Avenida Brasil, on the outskirts of Rio de Janeiro. “I’ll be honest with you — it doesn’t feel like a revolution,” said Flavio Soares de Oliveira, the station’s 33-year-old manager, “But nobody’s complained yet.” It is hard to see why they would. Driven by soaring oil prices, petrol already costs 70 per cent more at the pumps than ‘alcohol’, the bio-ethanol fuel derived from sugar cane that Brazilians increasingly favour for their cars.

And, according to Brazil’s president Luiz Inacio Lula da Silva, Ale Jatinho represents the front line of a new ‘revolucao energetica’ or energy revolution led by Brazil in a world where dwindling oil reserves and growth in emerging economies such as China are making high petrol prices a permanent feature.

Fuels such as biodiesel are renewable and can be made from agricultural products, like palm oil or soya beans, which can then be mixed at up to 30 per cent with petroleum-based products such as diesel. As with samba and football, it is an area in which Brazil leads.

“The truth is that nobody can compete with Brazil,” president Lula said recently, “Biodiesel production is a way of making Brazil less dependent on oil, a fuel that may eventually come to an end. This is a vital project for ensuring more independence for Brazil, as we may become a large biodiesel exporter.” But there is scepticism among European car manufacturers such as Peugeot Citroen which are pioneering clean diesel, whether the Brazilian model can be exported. “It makes no economic sense outside Brazil,” Jean-Martin Folz, Peugeot’s chief executive, said.

The South American country boasts dozens of vegetable species which can be used to make bio fuels — and even cow tallow. Bertin, the country’s largest beef exporter, is building a new plant to convert tallow into biodiesel, with an annual output of 100,000 tonnes. Brazil doesn’t just have the land mass — it also produces half the globe’s ethanol output of 21 million tonnes.

Folz insists that the sheer cost of mimicking the Brazilian model in Europe makes it prohibitive, pointing to the need to re-engineer the entire network of service stations and build far more plants to produce biofuels from products such as sugar and maize. It is the same argument that has set back by at least a decade plans to produce hydrogen fuelled cars.

Biodiesel, on sale in nearly 100 ‘bio’ stations around Brazil and powering Rio’s buses and refuse trucks, contains just two per cent of vegetable-sourced diesel. But the plan is to achieve a mixture of 20 per cent by 2020, slashing carbon emissions, and more crucia-lly, the $1.1 billion cost of importing 6 billion litres of diesel each year. Brazil has been here before. In the 80s the then military government reacted to the oil price shocks of 1973 and 1981 by offering tax advantages to run cars on ethanol — so much so that between 1983 and 1988 up to 90 per cent of vehicles were powered by the fuel. The bottom fell out of the market when oil prices collapsed — and sugar cane producers jacked up ethanol prices more than 40 per cent.

The difference now is that drivers have a much greater choice, being able to mix ethanol and petrol at will in ‘flex fuel’ engines that Volkswagen introduced in 2003 and are being built by rivals such as Peugeot, which launches a 1.4-litre version next month to go with the 1.6 engine it already produces here. It is developing a biodiesel model. As many as 80 per cent of new Brazilian-built cars are powered by ‘flex fuel’ engines, up from 17 per cent last year, and, says Serge Habib, Citroen’s managing director in the country, “it will be at 100 per cent in two years”. Like hybrids, flex-fuel cars retain a greater second-hand value, adding to their attractiveness.