As Brazil Becomes Energy Independent and Global Exporter, US Protects Expensive Domestic Ethanol Producers

In an Associated Press article published in Forbes, President Silva of Brazil, planning to host US President George W. Bush later this week, commented the strangeness of the US tariff on ethanol, part of the developing US energy strategy, and long a staple fuel for Brazilian drivers.

President Silva pointed out that US ethanol production, currently at record levels, diverts corn from food production, raising the cost to feed families. Brazilian ethanol, on the other hand, is produced, less expensively according to the San Jose Mercury News, from sugar cane. The US tariff, at 51 cents per gallon, adds half again to the production cost of a gallon of Brazilian ethanol. Brazil is currently in talks with the US and other countries in Geneva to revive the Doha trade talks, and President Silva was also quoted by the AP speaking of what he viewed as the US support of free trade while "they like to protect their own products."

While National Geographic writes about the perils of the large-scale farming and threats to the Amazon rainforest from ethanol production, the Mercury News discusses proposed Japanese investment in Brazil's ethanol industry to ensure their access to a large portion of the country's production. An article on Yaleglobal Online mentions that other countries either with high energy bills, such as India and China, or Kyoto protocol emissions obligations to fulfill, such as Japan and Sweden, are looking to the less expensive and less polluting ethanol from Brazil.

In Brazil, a country which has been developing "flexible fuels" technology since the 1970's, drivers are used to being able to use whichever fuel meets their needs, in cars that have been converted to run on gasoline or ethanol. The country is predicted to become energy independent in the next year, admittedly also due to significant oil reserves as well.

USA Today reports that Brazil's success, after decades of efforts, to chart their own energy path is blossoming into a global industry for the country. The paper suggests that US trade protections and use of more expensive and less effective corn to develop domestic ethanol will block the US path towards reducing its Middle East oil imports.

While the US continues to make a token effort at ethanol use, with about 600 stations offering a mix of 15% ethanol, Brazil has 29,000 stations that offer ethanol as a fuel, a car industry that produces cars that make the fuel attractive, and is fast pushing to develop a world market for their product, from standards and commodities market trading, to developed infrastructure which can adjust production of sugar or ethanol according to market prices and needs in a short time, and pipelines to handle larger volumes more efficiently. International customers, especially in Asia, are showing increasing demand, and the Brazilian economy has also benefited by removing the chokehold that oil-dependences has had in the past.

http://www.forbes.com/feeds/ap/2007/03/05/ap3486192.html

http://www.mercurynews.com/mld/mercurynews/business/16828148.htm

http://yaleglobal.yale.edu/display.article?id=6817

http://www.usatoday.com/money/world/2006-03-28-brazil-ethanol-cover_x.htm

http://www.usatoday.com/news/world/2007-03-01-us-brazil-ethanol_x.htm?POE=NEWISVA

http://news.nationalgeographic.com/news/2007/02/070208-ethanol.html