This paper analyzes the possibility of producing bio-fuel in the Amazon degraded lands. The aim here is to combine environmental concerns with an improvement of local people well-being. Firstly, a historical analysis is conducted in order to figure out the major deforestation driving forces in Amazon and to help to arrive at a feasible energy choice. Secondly, the geographical area is chosen. It is the spatial boundaries of Carajas Iron Ore Program in the southeastern Amazon where most of the deforestation has taken place in the last few decades. For this specific context, palm oil is chosen as a technological energy alternative due to its social production structure, its environmental benefits and its productivity. A quantified analysis is realized in terms of income generation (2000-3000 US$/family/yr), job creation (200,000-300,000 families settled), land required and restored (2-3.2 million ha), and carbon emission from fossil fuel avoided (13.1 Mt C). Some recommendations related to institutional and economic barriers are proposed in order to encourage the technology penetration in the market. (C) 2003 Elsevier Ltd. All rights reserved.