BRAZIL-US: A Giant Shadow Over Ethanol Politics

By Mario Osava Reprint | | Print |

Analysis by Mario Osava

RIO DE JANEIRO, Apr 2 2007 (IPS) - The friendship between Presidents Luiz Inácio Lula da Silva of Brazil and George W. Bush of the United States was of little consequence while it was purely personal. But everything has changed, now that ethanol binds them together in an alliance with global effects on economics, geopolitics and the environment.

Their two meetings within one month, in Sao Paulo on Mar. 9 and at Camp David, the U.S. presidential country estate, on Saturday Mar. 31, sealed the bilateral cooperation agreement to create an international market for fuel alcohol, and act jointly on other matters.

An example of this new relationship is the agreement signed in Washington on Friday by Foreign Minister Celso Amorim and Secretary of State Condoleezza Rice, to support democracy in former Portuguese colony Guinea-Bissau by providing training for members of parliament and other political actors. Africa, the Caribbean and Central America are to be the settings for other joint actions.

Rice often points to the similarities between the United States and Brazil, in that they are both multiethnic, multicultural and multifaith countries, in order to stress their cooperation potential. Amorim acknowledged that it was ethanol that has brought them closer together.

In fact, the two governments disagree on questions that are priorities for the United States, such as the invasion of Iraq and the creation of a Free Trade Area of the Americas, which was stymied by Latin American criticism and dissension between Brazil and the U.S. Another bone of contention is the issue of climate change, due to Washington’s rejection of the Kyoto Protocol.

In Brazil, the opposition accused the leftwing Lula of implementing an anti-U.S. foreign policy, in spite of the good personal relationship he had with Bush. They accused him of being responsible for losses to the domestic economy and of political clout as a result of concentrating on links with countries of the developing South instead of with the large markets of the industrialised North.

The Brazilian-U.S. agreement aims at fomenting ethanol production in other poor tropical countries in Africa, Central America and the Caribbean. Brazil would provide technology, equipment and 30 years of experience of replacing petrol with sugarcane alcohol, a renewable, less polluting fuel that can stimulate development as it generates more jobs than the oil industry.

Presidents Fidel Castro of Cuba and Hugo Chávez of Venezuela, however, condemned the idea of greatly expanding the acreage of crops grown for fuel, which could exacerbate world hunger if they displace food crops. Social movements and environmentalists also attacked the Bush-Lula alcohol alliance.

The headlong way in which the U.S. is acting and the lack of “instruments to contain the damage done by sugarcane monoculture” in Brazil are causes for concern, energy expert Delcio Rodrigues of the NGO Vitae Civilis, which works on issues related to climate change, told IPS.

Bush announced in January that the target was to reduce U.S. petrol consumption by 20 percent in just 10 years, triggering a race against time that has already been reflected in a sharp increase in the price of maize, due to additional demand for energy purposes. Maize is the main source of ethanol in the U.S., and shortages of the grain have also raised the price of soya, its natural substitute in animal feed.

The target calls for a seven-fold increase in the present U.S. annual production of over 18 billion litres of ethanol. It is impossible to fulfil this target with present technology and raw materials, but the U.S. government does not appear to be willing to remove tariff barriers preventing the importation of Brazilian ethanol.

Brazil is the world’s second largest producer of fuel alcohol, distilling 17.8 billion litres a year, and has greater potential for expanding production.

Maize has the additional disadvantage of low efficiency, as it yields only 30 percent more energy than what is used to produce it. By contrast, Brazilian sugarcane yields 700 to 800 percent more energy than is used in its production, Rodrigues said.

The environmental and social problems created by extensive sugarcane plantations are well known in Brazil. Burning the leaves to make cutting easier pollutes the air and causes health problems, especially respiratory disorders. Sugarcane cutters are subjected to inhuman working conditions, in return for only temporary work at harvest time.

A total of 2.6 million vehicles in this country run on alcohol, and their number is rising rapidly. The rest are powered by gasohol, petrol containing 23 percent alcohol.

Ethanol production, however, has its costs, and is largely associated with heavy concentration of land ownership, deforestation, soil, air and water pollution, and the displacement of small farmers, according to a statement last week by ActionAid, an international NGO.

The sharp rise in ethanol demand in the United States, Japan and Europe, due to rising oil prices and the need to reduce greenhouse gases emitted by burning fossil fuels, are grounds for fearing that Brazil and other tropical countries may be transformed into “gigantic sugarcane fields” with undesirable consequences, like raising arable land prices and stimulating deforestation.

But replacing petrol with ethanol and biodiesel – another agricultural fuel – has its limits. Perhaps 20 percent of world oil consumption could be substituted for in this way, said researcher Suzana Kahn Ribeiro of the transport engineering programme at the Federal University of Rio de Janeiro.

Oil will continue to be an important energy source, although diversification for the sake of economy and reducing dependence on fossil fuels will occur, Ribeiro told IPS. Transport is responsible for over half the world’s oil consumption, and is the sector where biofuels will play their part in mitigating climate change and extending the life of oil reserves, she said.

Brazil “is already an energy power” with its unique fuel alcohol programme initiated in 1975, Ribeiro pointed out, but she added that China, India and South Africa are also investing heavily in biofuels, as well as the United States.

The alliance between Brazil and the United States, who together produce 72 percent of world ethanol supplies, has sparked tensions in sectors concerned with the sensitive issue of energy.

Bush’s entrance as a surprise newcomer to the politics of ethanol adds to these tensions. But it would be unrealistic to expect Brazil to turn down this opportunity, after more than a decade of trying to open up a world market for its ethanol and its pioneering know-how.