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Brazil, US look for an ethanol alliance
Bush's visit will focus on a partnership promoting a fuel that's cleaner, cheaper, and more readily available than oil.
from the March 8, 2007 edition
Page 2 of 3
Ethanol was first developed here as a fuel in the 1920s and it took off 60 years later when the military government reacted to high oil prices by forcing car makers to make vehicles that run on it.
That experiment failed when sugar prices rose and producers decided their raw materials would make them more money on the dinner table than in fuel tanks. But ethanol made a resurgence at the turn of the millennium when car makers began producing cars that run on both gasoline and ethanol. These vehicles now account for two of every three new cars sold here.
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.
Goals for Bush's visit
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.
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