US, Brazil are seeking energy partnership on ethanol
Both discussing ways to lessen role of Venezuela
By Monte Reel, Washington Post | February 12, 2007
SAO PAULO, Brazil -- The United States and Brazil, the two largest
biofuel producers in the world, are discussing a new energy partnership
that they hope will encourage ethanol use throughout Latin America and
that US officials hope will diminish the regional influence of oil-rich
Venezuela.
US officials said they expect to sign accords within a year that would
promote technology-sharing with Brazil and encourage more Latin American
neighbors to become biofuel producers and consumers.
The United States and Brazil together produce about 70 percent of the
world's ethanol, a fuel that President Bush has called a cornerstone in
reducing US dependence on oil.
"It's clearly in our interests -- Brazil's and the United States' --
that we expand the global market for biofuels, particularly ethanol, and
that it become a global commodity of sorts," said Nicholas Burns, the US
undersecretary of state, who led discussions with Brazilian government
officials on Wednesday.
For the United States, the initiative is more than purely economic.
President Hugo Chávez of Venezuela has exploited regional frustrations
with the market-driven economic prescriptions that the United States has
promoted throughout the region for years, and he has used oil revenue to
promote several regional economic alliances.
Burns declared that biofuel is now the "symbolic centerpiece" of US
relations with Brazil, a country that US officials have long hoped could
counteract Venezuela's regional anti-American influence.
"Energy has tended to distort the power of some of the states we find to
be negative in the world -- Venezuela, Iran -- and so the more we can
diversify our energy sources and depend less on oil, the better off we
will be," Burns said at a news conference in Sao Paulo.
Brazil, the world's largest exporter of ethanol, has been a leader in
biofuel technology after its government invested heavily in the ethanol
industry in the 1970s. Its sugar cane-based ethanol is more efficient to
produce than the corn-based fuel made in the United States. Ethanol has
replaced about 40 percent of Brazil's non diesel gasoline consumption.
More than 70 percent of the vehicles sold in Brazil are flex-fuel models
that run on ethanol or gas, and the number continues to increase.
Although the United States has surpassed Brazil in the amount of ethanol
produced, its producers cannot keep up with surging demand. Last year,
the United States produced about 4.9 billion gallons and imported an
additional 1.7 billion gallons, mostly from Brazil.
US production is expected to increase sharply as new production
facilities are finished this year, but demand is expected to surge as
well. Bush has called for a 20 percent reduction in gasoline consumption
by 2017, which would require an estimated 35 billion gallons of
alternative fuels to bridge the gap.
The United States places a 54-cent-a-gallon tariff on most imported
ethanol. Brazilian producers have long labeled the tariff hypocritical,
saying it is the kind of trade barrier that US officials oppose in other
countries.
"It's not about free trade, but fair trade," said Matt Hartwig,
spokesman for the Renewable Fuels Association, a Washington-based
lobbying group that says lifting the tariff would amount to the United
States supporting Brazilian producers. "The tariff has never served as a
barrier to entry. More than 400 million gallons of ethanol came in from
Brazil alone last year -- straight from Sao Paulo to New York Harbor."
© Copyright 2007 Globe Newspaper Company.
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