Although the government financed most of the initial infrastructure for ethanol, most of the research innovations came from the private sector. The main exception to this is Planalsucar, where the government funded sugar-breeding institutions. The most important sugarcane research center was Centro de Tecnologia Canvierira (CTC), where they developed new varieties of sugarcane that are more adapted to Brazilian soil and resistant to disease. The CTC, along with other research centers, increased sugarcane yields, cut costs, and increased production.
Along with private research institutions, a university network for the development of the sugar-ethanol industry, called Ridesa, was created in 1991. Ridesa took over most of Planalsucar’s sugarcane breeding research, including the Sugarcane Genetic Improvement Program. Through this program, Ridesa released 67 different varieties of sugarcane.
Since the closure of Planalsucar and the IAA in 1990, most of the funding for sugarcane R&D came from the private agencies. However, in 2006, the government launched FINEP, as part of a federal policy to fund science and technology. Through FINEP’s funding, projects for ethanol receive over R$65 million. Similar to FINEP, Fapesp is a private research program that supported many research institutions, such as the CTC and Ridesa. Fapesp also plays an important role in the funding for CanaVialis and Allelyx, two companies that are moving from the traditional model of genetic improvement through breeding to genetic improvement from biotechnology.
There were also many important technological innovations that helped cut costs and increase yields, such as improved sugar extraction and fermentation methods, along with the use of bagasse. Bagasse is a by-product from sugarcane ethanol production, and can be used to generate electricity. Using current methods, for every 10 tons of sugarcane ethanol produced, about 3 tons of bagasse is also produced. Distilleries starting using bagasse instead of gasoline to produce ethanol, reducing operation costs even more.
Andre Tosi Furtado, Mirna Ivonne Gaya Scandiffio, & Luis Augusto Barbosa Cortez. “The Brazilian Sugarcane Innovation System”. Energy Policy 39 (2011) 156-166.