Brazilian biofuels' pulling power

By Tim Hirsch

As US President George W Bush embarks on his week-long tour of Latin America, the growing global interest in biofuels, such as ethanol, is high on his agenda.

One of his first stops is due to be an ethanol processing facility in the Brazilian city of Sao Paulo. Mr Bush will be signing a new memorandum of understanding with Brazil's President Luis Inacio Lula da Silva, aimed at expanding ethanol production into Central America and the Caribbean.

Many commentators in Brazil believe this is about more than cleaning up the region's vehicle emissions. Although denied by the White House, the visit has been widely interpreted as an attempt to counteract the influence of President Hugo Chavez in oil-rich Venezuela. Helping poor countries to reduce their dependence on imported oil, it is argued, also reduces their dependence on Mr Chavez - the man who recently described Mr Bush as the devil.

Plant power

According to a former Brazilian ambassador in Washington, Rubens Barbosa, the tour is a belated attempt by Mr Bush to regain ground lost to Mr Chavez as a result of the US administration's neglect of Latin America.

In the case of Brazil, Mr Barbosa says that while co-operation between the world's two largest ethanol producers is welcome, the real benefits will come only when the US lifts its steep tariffs on imports of biofuels.

"This is a limited proposition, because as far as Brazil is concerned, what matters is the reduction of the restrictions, the protectionist attitude that the US has towards ethanol," he told BBC News.

"The duties that the US imposes on ethanol is nearly equal to the price of production, yet Brazil is so competitive that we are exporting directly to the United States, despite the duty.
"To say in advance that this issue is not on the table shows how this matter is being dealt with by the administration, only in the area that is of US interest."

The big sugarcane growers of Brazil, who already supply some 45% of vehicle fuel in the country, have welcomed the initiative to expand the ethanol market in the Americas, but also argue that the US import tariffs make no sense.

Alfred Szwarc of the Sao Paulo sugar growers' association (UNICA) says the current US trade position penalises renewable fuels while rewarding fossil fuels. It should, he said, be the other way around.

He believes that while tariffs are not on the official agenda of the presidential visit, moves are afoot in the US Congress that could eventually reduce or end the protectionist policies on biofuels.
"If the Americans are able to substitute 20% of gasoline and have ethanol as the prime option, we are talking about a market of 135bn litres per year, compared with current total global production of 50bn litres," Mr Szwarc told BBC News.
"So we have to almost triple production to be able to fulfil US market needs. I don't believe that based on conventional use of corn they will be able to do it by themselves, and this opens fantastic opportunities not just for Brazil, but for Central American countries and the Caribbean."

Environmental concerns

Amid this excitement about the prospects for biofuels, a note of caution has been sounded by the head of the UN Environment Programme, Achim Steiner, who has been in Brazil in the week leading up to the visit of President Bush. He argues that right from the start of this new energy revolution, international norms and standards should be set to ensure that biofuels really are helping the environment, and that negative impacts are minimised.

Mr Steiner said: "If global expansion of biofuels takes place without right now at the beginning looking at sustainability criteria, we may very well risk having a setback."

He argues that industry itself has an interest in sticking to strong environmental standards, to avoid a potential consumer backlash further down the line if biofuels are found to be destroying ecosystems and threatening wildlife.

Brazil is better placed than any other country to identify the potential pitfalls of biofuel production, since its experience goes back to the 1970s when governments of the day encouraged sugarcane producers to diversify into ethanol.

This programme, known as Proalcool, was motivated not by a desire to clean up vehicle emissions, but by alarm at the growing cost of relying on oil imports following a series of Middle East price shocks. One impact of this first wave of ethanol expansion was the advance of sugar plantations into many remaining remnants of the Atlantic Forest, one of the most diverse ecosystems on the planet. It now covers just 7% or so of its original extent.

Lessons learned

According to UNICA, that lesson has been learned, and the current plans for expansion are overwhelmingly on large tracts of land in Brazil that have already become degraded after decades of cattle grazing.
Alfred Szwarc denies fears expressed by some environmental groups that new areas of the Brazilian cerrado, the most biodiverse savannah in the world, will suffer more destruction as a result of increased ethanol production.
"If there will be any interference, it will be because humankind always interferes in the environment. But what we have to do is to minimise it," Mr Szwarc said.

The Brazilian sugarcane industry also claims to have ended highly-damaging practices such as the dumping of crop wastes into rivers, which causes widespread pollution.
However, it is only slowly phasing out the pre-harvest burning of cane fields, necessary to remove excess leaves to prepare the crop for hand-cutting, still practised in some 80% of plantations.

The burning has been associated in scientific studies with significant increases in hospital admissions for respiratory illnesses during the harvest period. Another vital lesson from Brazil was the virtual collapse of the ethanol industry in the late 1980s when sugar prices soared and oil prices dropped, making the fuel unviable and leaving many motorists disillusioned with the fuel.

To deal with these price fluctuations, some 80% of new Brazilian cars are now "flex fuel", able to take any combination of ethanol and conventional gasoline. This is now seen as an essential technology for the world to follow if biofuels are reach their full potential in the world market.

Source: BBC News