Bush Visits Brazil Looking To Tap Ethanol Partnership

In 2006 Brazil exported 925 million gallons of ethanol, more than half of that to the U.S.

It's not every day a Texas oil man visits Brazil to talk alternative fuels, but President George W. Bush wants to diversify U.S. energy sources and Brazil is a world leader at substituting gasoline with ethanol. Partnering in biofuels production and trade will be key March 9 when Bush meets Brazilian President Luiz Inacio Lula da Silva here. Their two countries produce 70% of the world's plant-based ethanol. Last year Brazil exported 3.5 billion liters (925 million gallons) of ethanol, more than half of that to the U.S., which subsidizes ethanol made from corn.

For Washington, the driving force is cutting U.S. dependence on the Middle East and other external suppliers of oil and natural gas. For Brazil, the leading exporter of sugar cane-based fuel, the aim is to create a "global ethanol market," said Foreign Minister Celso Amorim. To that end, according to the Brazilian ethanol industry, step one is for the U.S to cut its $0.54 -per-gallon (3.8 liters) duty on Brazil's ethanol."For ethanol to become a commodity, the U.S. tariff must be lower," said Fernando Moreira Ribeiro, head of the cane industry association, Unica.

For Amorim, cooperation means setting ethanol standards, developing second-generation fuels from vegetative waste and encouraging ethanol production in other countries. "We will have to produce ethanol in Central American countries and in the Caribbean to satisfy U.S. demand," said Frederique Rosa Abreu, a biofuels official in the Ministry of Agriculture.

Brazil's system works because more than 80% of its vehicles can run on ethanol -- mixed with gasoline or pure.

Builders say the market for flex-fuel cars is exploding, and they should number 15 million in 2013, swallowing some 28.7 billion liters (7.6 billion gallons) of bio-alcohol. Brazil's state oil giant Petrobras says ethanol production can be expanded 15 times over five years, without further destruction of the Amazon or harming food production. But some peasant organizations oppose growth that could mean "full tanks at the cost of empty bellies."

Investment in biofuels production is soaring, with the sugar cane industry plowing money into distilleries. Foreigners are jumping on the bandwagon as well. The French commodity group Louis Dreyfus has just bought up five plants, while U.S. and Japanese investors are looking for opportunities in the business to lock in stable supplies.

Copyright Agence France-Presse, 2007

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