Pacific Biofuel: [PBN] Caribbean nations grapple with biofuel issues

Source:

http://www.usatoday.com/money/industries/energy/2007-10-27-biofuelscaribbean_N.htm

By Paula Lavigne, The Des Moines Register
Omar Bros' hope for his country lies in an oily seed and a dying
sugarcane industry.

Bros, an agronomist and civil engineer in the Dominican Republic, is
betting on biofuels. And his country's effort is just part of a global
awakening to renewable energy.

The Caribbean, which includes the Dominican Republic and Central
America, offers examples of the uncertainty many regions face in the
global energy grid. If those regions have the resources, they have to
ask whether biofuels are worth the investment.

"The other question is, 'Do I want to produce ethanol for the domestic
market, or do I want to export it?' " said Sergio Trindade, director of
science and technology for International Fuel Technology in St. Louis
and former assistant secretary general for the United Nations Science
and Technology Committee. "It is a question whose answer depends on time."

In the United States, experts debate whether biofuel growth in the
tropics will cut into profits for Midwest producers. Special free-trade
agreements with those countries can make it less expensive to ship
ethanol from there to the U.S. coasts.
FIND MORE STORIES IN: Brazil | Caribbean | Dominican Republic | Central
America | Caribbean countries | Central American countries | Bros

"I don't think there is an answer right now," said Douglas Newman, who
studies ethanol for the U.S. International Trade Commission. "As far as
the Caribbean being a threat, it's been around for a long time, but it's
never amounted to much and the demand has been there."

Investors from Brazil, Europe and United States are already buying into
the biofuels industry in the Caribbean and Central American countries. A
recent pact between Brazil and the United States helps some of these
smaller countries get technology and know-how to make ethanol and biodiesel.

Growing, producing and using renewable fuels can help Caribbean
countries become less dependent on imported oil, said Johanna Mendelson
Forman, senior associate with the Center for Strategic and International
Studies in Washington, D.C.

Much of that region's oil is supplied by Venezuela, where President Hugo
Chavez is known for his animosity toward President Bush. Caribbean
countries have been supportive of U.S. policies, and the United States
doesn't want them to start siding with Chavez instead, Forman said.

"Chavez is trying to seek friends and allies. ... The Caribbean has 22
votes at the U.N. If you get some kind of dependency with a country, you
have other ways with sticks and carrots of using your dependency,"
Mendelson Forman said.

But Bros, the agronomist in the Dominican Republic, isn't working for
politics. He's working to improve incomes and lives. Bros is gathering
support for growing sweet sorghum and jatropha hedges, whose oily seeds
can be used for biodiesel. And he's hoping an ethanol plant can revive
the island's dormant sugar fields.

"We are babies in this process," Bros said. "It's going to be a long
road to make this work."

Most ethanol plants in the Caribbean and Central America don't make
ethanol. They merely take sugarcane ethanol from Brazil, suck out the
water and send it to the United States, where it's blended with
gasoline. Plants shut down when profit margins disappear and ramp up
when prices make it worth their while.

These dehydration operations exist to take advantage of a free-trade
agreement the United States has with the Caribbean and many Central
American countries.

Ethanol from those countries isn't subject to the 54-cent per-gallon
extra charge tacked on to direct exports from Brazil, the world's
second-largest ethanol producer. The extra charge, or tariff, prevents
foreign ethanol from getting the 51-cent federal subsidy that supports
U.S. producers.

However, ethanol from Brazil can be sent into the United States without
the tariff if it is exported and processed through a free-trade country
such as Jamaica or El Salvador.

Last year, when ethanol imports were at an all-time high, ethanol coming
into the United States under the Caribbean or Central America duty-free
quota peaked at 206 million gallons. That was about 75% of such imports
allowed through those countries last year. Trade rules allow
pass-through ethanol to equal no more than 7% (268 million gallons) of
U.S. ethanol consumption.

Some ethanol workers say that's an unfair loophole stealing the subsidy
advantage from U.S. producers.

"If you're importing energy through a loophole in another part of the
world, you're bypassing the intent," said James Redding is vice
president of external relations for Aventine Renewable Energy, an
ethanol producer that also sells ethanol for Iowa plants he said. "Is it
a threat? Sure, it's a threat."

Others say it's more of an annoyance.

"We do not see it as a threat," said Bob Dinneen, president of the
Renewable Fuels Association, noting that U.S. producers are sitting on
an annual capacity of 6 billion gallons.

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