Insight: U.S. and Brazil – At Last, Friends on Ethanol
by Brian Winter (Reuters/Chicago Tribune) After years at each other’s throats, Brazil and the United States are working together to promote the use of ethanol in a collaboration that could revolutionize global markets and the makeup of the biofuel itself.
The breakthrough came in January when Washington allowed a three-decade-old subsidy for U.S. ethanol producers to expire and ended a steep tariff on foreign biofuels. The tariff, in particular, had poisoned diplomatic relations between the world’s top two ethanol-producing countries for years.
Since then, industry executives and government officials from both countries have seen tangible progress in efforts to boost the production and consumption of ethanol around the world, they told Reuters.
The two nations have been lobbying foreign governments to create new markets in Africa and Latin America, planning joint “road shows” to attract new investments in biofuel companies, and pushing for a uniform global standard for ethanol, which could make it easier to trade the biofuel across borders.
Results may still be years away, but officials say the collaboration might breathe some new life into an industry facing an uncertain future because of chronic production shortfalls and doubts about the environmental benefits of many biofuels.
…Homegrown ethanol holds obvious appeal for small, poor countries that import most of their energy at enormous costs. Honduras, for example, spent $2.1 billion – 12 percent of its gross domestic product – on fuel imports in 2011.
However, producers and other investors generally refuse to build ethanol mills and other infrastructure unless they have a guaranteed domestic market.
“And implementation of that framework gets to be very technical and difficult,” Unica’s Kutas said.
…Pilot ethanol programs to introduce the biofuel to consumers with blend requirements are set to begin in three countries, starting in Honduras by early 2013, another U.S. official said.
To accelerate the process, Brazil and the United States are planning presentations in coming months to attract new investors interested in biofuel projects in the three countries, officials said.
…Brazil’s growing diplomatic clout has been critical to opening doors in countries where the nation has deep strategic or cultural connections, such as Senegal, Mozambique and Haiti. And it is uniquely equipped to exert influence in Cuba. READ MORE