Brazil, US look for an ethanol alliance

The success of the Flex cars and the realization that older cars can run on a mix of the both gas and ethanol – all gas sold in Brazil is a mix of 77 percent gasoline and 23 percent ethanol – has led Brazil to invest heavily in ethanol production.

Brazil will spend $14.6 billion dollars on adding around 90 distilleries to the 300 or so existing ones, according to Antonio Simoes, the minister in charge of energy issues at Brazil's Foreign Ministry. The country produced 4.5 billion gallons of ethanol a year in 2006 and the planned investment should help it almost double that amount to 9.4 billion gallons by 2013, according to ABID figures.

One of the main goals facing Presidents Luiz Inácio Lula da Silva and Bush during their two days of meetings is to standardize the definition of ethanol, a move that would enable it to be bought and sold as a commodity like oil.

Brazil will also use the presidential summit to pressure the US into reducing its $0.54-a-gallon tariff on Brazilian ethanol, a toll that Brazilian producers said contradicts America's claims that it wants clean fuel and free trade.

"The high tariff that the United States imposes on ethanol makes no sense," Lula said in his weekly radio address Monday. "We are asking the United States to remove the subsidies.... They talk a lot about free trade but they like to protect their own products."

US officials have said Bush will not even discuss changing the tariff.

That annoys Brazilians, but they stress that they want to use their influential role not just to make hay while the sun shines. Officials repeatedly said Brazil wants to export its expertise to help other – especially poorer nations – develop their own agriculture and ethanol industries.

"I'll give you the example of Jamaica, we helped them build two distilleries," Mr. Simoes said in a telephone interview. "They import $1 billion of oil. It's a small country and that's a huge figure. Starting this year, they will mix ethanol 10 percent with gasoline and they will save 100 million dollars. Can you imagine what 100 millions dollars is to Jamaica to resolve social problems? They are also exporting this ethanol to the United States so they are not only saving money, they are also receiving an income. This is something very important, imagine the multiplication effect for other countries."

Out here in the fields, the Pilon cousins agree. The family firm will boost ethanol production 20 percent this year in anticipation of increased demand.

They have seen sudden spurts of interest before. But this time they are confident that the time is ripe for Brazil to take its biofuel to the world.

"A lot can go wrong," says Otavio Pilon. "But when the Americans get involved, things take off. Everyone is unanimous. The time is right."

Page: 1 | 2