Bush and Lula talk about a partnership on ethanol

American President George W. Bush will visit Brazil, arriving on March 8th.

When Bush and Lula meet, the main topic of conversation will be a partnership to produce ethanol.
The article below was published by Brazilian newspaper O Estado de São Paulo on February 25th 2007.

USA want to partner with Brazil to create an Ethanol OPEC

The goal is to expand the production and create a conditions to guarantee an stable supply of biofuel to the Hemisphere.

The initiative that President George W. Bush will launch in Brazil is being called "ethanol hemispheric market". The idea, conceived by the Department of State, is to expand the production of ethanol in several countries across Latin America, particularly in the Caribean and Central America, to guarantee stability in the supply of biofuel. It would be a kind of OPEC of ethanol. To achieve that goal, Brazil and USA must become partners, with participation also of private corporations, and instal ethanol mills in countries of Central America.

The man behind this strategy is Greg Manuel, advisor of Condoleezza Rice for international energy affairs. Since he joined the Department of State, in October of 2006, he visited Brazil six times. Manuel bets on incubators and public-private partnerships to create the ethanol hemispheric market.

"As Alca seems to have failed, we will try Alcohol", says Brian Dean, Executive-Director of the Interamerican Ethanol Commission (IEC); Alca is the Brazilian acronym for Free Trade Area of the Americas. Brian is ex-director of Florida FTAA, a group which used to lobby in favor of Alca. Now, with Alca nearly dead, Dean manages the IEC, along with ex-Governor of Florida Jeb Bush, the President of BID Luis Alberto Moreno, and ex-Minister of Agriculture of Brazil Roberto Rodrigues.

The Commission, which has had regular talks with the Department of State, is conducting a research about the production of ethanol and sugar cane in the countries of Latin America. According to Dean, countries like Guatemala, El Salvador, Honduras, Nicaragua and Dominican Republic look very promising, to receive mills and expand ethanol production.

Manuel doesn't disclose many details about the partnership plans wich will be presented during Bush's trip to Brazil. He has only mentioned that the focus of the partnership is the expansion of production, with participation of the private sectors; he also mentioned the possibility of public-private partnerships for investments in ethanol infrastrucute in Brazil, such as alcoholducts.

"This is a big opportunity. The Western hemisphere spends 7.2% of the GNP importing oil; some countries are even more vulnerable, like Dominican Republic, which spends nearly 20% of GNP importing oil", Manuel says. "This is not sustainable; these countries must invest in domestic production". According to him, from a geopolitical stand point, "it is very important to diversify the sources of energy; it is important to have our friends as suppliers; our friends also suffer, because not always do they have petrodiplomacy on their favor."

Brazil and USA have a share of 72% of total world ethanol production. Brazil claims for the opening of the American market to the Brazilian biofuel; today, ethanol from Brazil pays a tax of US$ 0.54 per gallon. But a reduction of tariffs will not be discussed by Bush in his visit. "The tariffs are not on the negotiation table", Manuel says; "many countries see the access to the American market as a bonus, not an essential condition; even without access to the American market, there are plenty of opportunities".

The reduction of tariffs is not viable at this moment, because of the strong lobby of the American producers of corn and the weak position of Republicans in the Congress. However, in the long run, Americans want to expand the sources of ethanol, because they know that the domestic production of corn will not be enough to meet the demand, and celulosic ethanol will take at least a decade to become viable.
Bush is determined to reduce gasoline consumption by 20% until 2017, which means that there will an increase of 132 billion liters of alternative fuels; today, America produces jsut 20.4 billion liters of ethanol.

Bush and President Lula will talk also about other important matters, such as cooperation in research and development (to increase the productivy of the crops and use genetic engineering to create more productive grains) and uniformization of norms for creation of a market of energy commodities.

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