Bush seeks ethanol alliance with Brazil
deal is still being negotiated, but the two leaders are expected to sign an accord Friday to develop standards to help turn ethanol into an internationally traded commodity, and to promote sugar cane-based ethanol production in Central America and the Caribbean to meet rising international demand.
Across Latin America‘s largest nation, Brazilian media are billing the Bush-Silva meeting as a bid to create a new two-nation " OPEC of Ethanol," despite efforts by Brazilian and American officials to downplay the label amid concerns that whatever emerges would be viewed as a price-fixing cartel.
Bush seeks ethanol alliance with Brazil Staff and agencies
05 March, 2007
By ALAN CLENDENNING, AP Business Writer Sun Mar 4, 9:24 PM ET
SAO PAULO, Brazil - Just an hour‘s drive outside this traffic-choked metropolis where President Bush kicks off a Latin American tour Thursday, sugar cane fields stretch for hundreds of miles, providing the ethanol that fuels eight out of every 10 new Brazilian cars.
The deal is still being negotiated, but the two leaders are expected to sign an accord Friday to develop standards to help turn ethanol into an internationally traded commodity, and to promote sugar cane-based ethanol production in Central America and the Caribbean to meet rising international demand.
Across Latin America‘s largest nation, Brazilian media are billing the Bush-Silva meeting as a bid to create a new two-nation " OPEC of Ethanol," despite efforts by Brazilian and American officials to downplay the label amid concerns that whatever emerges would be viewed as a price-fixing cartel.
"For the Brazilians, the tariff has utmost priority," said Cristoph Berg, an ethanol analyst with Germany‘s F.O. Licht, a commodities research firm. "They will agree with developing biofuel economies around the world, but the first thing they will say is ‘We want to do away with that tariff.‘"
But the visit will help Bush and Silva join forces to promote the politically popular issue of renewable energy simply by gathering in a place where ethanol is king.
A 1980s Brazilian fad with cars that ran only on ethanol petered out when oil prices fell in the early 1990s. But the fuel came back into vogue in 2003 when automakers started rolling out cars "flex-fuel" cars that run on gasoline, ethanol or any combination of the two.
The ethanol industry is now making profits like never before amid heavy foreign investment. Just last week, Brazil‘s state-run oil firm, Japan‘s Mitsui & Co. and a Brazilian construction firm signed a memorandum of interest to study the construction of a pipeline in Brazil that would be used to help export ethanol to Japan.
And increased use of corn for ethanol is prompting international corn price increases, prompting Silva to tell reporters last week he would tell Bush, "Why make ethanol out of corn? Why don‘t we feed the corn to the chickens."
But production of ethanol from U.S. corn is expected to fall far short of meeting such an increase, and experts doubt even land-rich Brazil would be able to fill the gap along with help from Central America and the Caribbean. So Bush envisions a major speedup of research into production of "cellulosic" ethanol made from wood chips, switchgrass and other feedstocks.
And coming up with technical standards to define quality levels for ethanol is key to turn it into a commodity that could be traded like oil.
"I think its Brazilian know how and American know how, there‘s a lot of cross fertilization that can take place," said Brian Dean, executive director of the Interamerican Ethanol Commission.
The commission counts among its directors Florida Gov. Jeb Bush , the president‘s brother, as well as former Brazilian agriculture minister Roberto Rodrigues and Luiz Moreno, president of the Inter-American Development Bank.
Increasing ethanol production in the region is also expected to be a major topic in Guatemala later this month when the bank holds its annual meeting, Latin America‘s top yearly economic gathering.
"We see a marketplace in ethanol that can create an enormous amount of economic growth and prosperity in the United States and the rest of the world," Dean said.
By ALAN CLENDENNING, AP Business Writer Sun Mar 4, 9:24 PM ET
SAO PAULO, Brazil - Just an hour‘s drive outside this traffic-choked metropolis where President Bush kicks off a Latin American tour Thursday, sugar cane fields stretch for hundreds of miles, providing the ethanol that fuels eight out of every 10 new Brazilian cars.
The deal is still being negotiated, but the two leaders are expected to sign an accord Friday to develop standards to help turn ethanol into an internationally traded commodity, and to promote sugar cane-based ethanol production in Central America and the Caribbean to meet rising international demand.
Across Latin America‘s largest nation, Brazilian media are billing the Bush-Silva meeting as a bid to create a new two-nation " OPEC of Ethanol," despite efforts by Brazilian and American officials to downplay the label amid concerns that whatever emerges would be viewed as a price-fixing cartel.
"For the Brazilians, the tariff has utmost priority," said Cristoph Berg, an ethanol analyst with Germany‘s F.O. Licht, a commodities research firm. "They will agree with developing biofuel economies around the world, but the first thing they will say is ‘We want to do away with that tariff.‘"
But the visit will help Bush and Silva join forces to promote the politically popular issue of renewable energy simply by gathering in a place where ethanol is king.
A 1980s Brazilian fad with cars that ran only on ethanol petered out when oil prices fell in the early 1990s. But the fuel came back into vogue in 2003 when automakers started rolling out cars "flex-fuel" cars that run on gasoline, ethanol or any combination of the two.
The ethanol industry is now making profits like never before amid heavy foreign investment. Just last week, Brazil‘s state-run oil firm, Japan‘s Mitsui & Co. and a Brazilian construction firm signed a memorandum of interest to study the construction of a pipeline in Brazil that would be used to help export ethanol to Japan.
And increased use of corn for ethanol is prompting international corn price increases, prompting Silva to tell reporters last week he would tell Bush, "Why make ethanol out of corn? Why don‘t we feed the corn to the chickens."
But production of ethanol from U.S. corn is expected to fall far short of meeting such an increase, and experts doubt even land-rich Brazil would be able to fill the gap along with help from Central America and the Caribbean. So Bush envisions a major speedup of research into production of "cellulosic" ethanol made from wood chips, switchgrass and other feedstocks.
And coming up with technical standards to define quality levels for ethanol is key to turn it into a commodity that could be traded like oil.
"I think its Brazilian know how and American know how, there‘s a lot of cross fertilization that can take place," said Brian Dean, executive director of the Interamerican Ethanol Commission.
The commission counts among its directors Florida Gov. Jeb Bush , the president‘s brother, as well as former Brazilian agriculture minister Roberto Rodrigues and Luiz Moreno, president of the Inter-American Development Bank.
Increasing ethanol production in the region is also expected to be a major topic in Guatemala later this month when the bank holds its annual meeting, Latin America‘s top yearly economic gathering.
"We see a marketplace in ethanol that can create an enormous amount of economic growth and prosperity in the United States and the rest of the world," Dean said. |
