Analysis: Brazil, U.S. forge ethanol ties

By CARMEN J. GENTILE The United States and Brazil are working to create a partnership for expanding ethanol and other biofuel use in the hemisphere.

In months to come, U.S. lawmakers are hoping to lay the foundation for such an agreement in hopes of reducing dependency on foreign oil, particularly from the Middle East and Venezuela, generate more jobs throughout the region and create greater integration with Latin America, The Miami Herald reported citing Bush administration officials.

International lenders like the Inter-American Development Bank and the Organization of American States are also expected to play a role in the agreement.

The United States and Brazil are the world's two largest biofuels producers so cooperation is natural, said Eric Watnik, a U.S. State Department spokesman on Latin American affairs. Out goal is to advance global energy security by helping countries diversify their supply.Brazil and the United States are world leaders in ethanol production, though Brazil produces sugar-based ethanol while the United States backs corn-based variety. In terms of fuel efficiency and emissions cleanliness, sugar ethanol is considered superior.

In an effort to thrash out the specifics of their proposed alliance, U.S. Undersecretary of State Nicolas Burns will reportedly travel to Brazil next week to discuss the details of the plan with his counterpart in the Foreign Ministry and Brazil's energy officials.

Brazil has been a world leader in alternative fuels since the mid 1970s when Brazil's Pro-Ethanol Program subsidized sugar mills to produce extra product specifically for the production of the biofuel in the wake of the oil price spike experienced worldwide.

Now, Brazil is producing enough ethanol to meet its growing domestic needs and with the help of some foreign investment could one day make the leap to becoming a major international vendor of alternative fuel, a bandwagon the Bush administration would like to join considering the president's recent pledge to reduce U.S. dependence on foreign oil in the coming years.

Brazil's ethanol industry and success with combining bio and fossil fuel for vehicles has already caught the attention of European nations, which in 2006 expressed interest in promoting the production of ethanol in Africa using Brazilian technology.

So far, Britain and the Netherlands are among the countries looking to partner with Brazil to grow sugarcane for ethanol in places like South Africa and Mozambique, both of which have climates ideally suited to growing the warm-weather crop.

While the prospect for partnership resonates well in both Brasilia and Washington, the greater integration of their countries' respective ethanol industries will not be without its share of hiccups.

On the environmental front, activists warn that increasing sugar production in Brazil will mean more deforestation of the Amazon.

Brazilian officials, however, maintain that the country was capable of tripling its production in the coming years without knocking down a single tree, said Brazil ' s Minister of Agriculture Luis Carlos Guedes Pinto in December. Protection of the country's rainforest against logging and expanding agricultural interests has become a hot-button issue in Brazil over the last two decades. Last year, Brazilian authorities pledged to protect some 37 million acres of Brazilian from loggers in the northern Amazon.

Analysts also warn of the potential political fallout form the U.S.-Brazil alternative energy alliance.

Cuba is interested in reviving its own sugar sector, once a world leader with the help of Soviet subsidies.

Coupled with the growing role oil-rich Venezuela plays in world energy, forging an alliance could prove politically troublesome for both President Bush and his Brazilian counterpart, Luiz Inacio Lula da Silva.

Lula is walking a very tricky road here because his reputation comes from being a populist leader who distinctively distrusts multinational corporations, at least before he became president, Larry Birns, director of the Council on Hemispheric Affairs, told UPI. There can be constraints with becoming too chummy with the United States." (Comments to energy@upi.com)

MIAMI, Feb. 6

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