Brazil eyes ethanol export
boom after Bush speech
Thursday, January 25, 2007
Thursday, January 25, 2007
By Inae Riveras and Roberto Samora
SAO PAULO - Ethanol producers in Brazil, the world`s biggest and cheapest exporter of the alternative fuel, see a fantastic business opportunity in U.S. President George W. Bush`s aim to cut his country`s gasoline use by 20 percent over a decade.
"We`ve never had such a great opportunity to substitute petroleum," said Luiz Carlos Correa Carvalho, director of Canaplan consultancy at Piracicaba in Brazil`s main sugar cane growing state of Sao Paulo.
He said Bush`s speech on Tuesday was an invitation to countries such as Brazil to participate in global efforts to cut greenhouse gas emissions and reduce global warming.
Brazil`s Sugar Cane Industry Union (Unica) said support for biofuels in the United States will help Brazil`s pioneering ethanol industry. Brazilian ethanol experts say the use of sugar cane, which can produce ethanol more efficiently than crops such as corn, gives the South American country a competitive advantage in the world`s search for new sources of energy.
Brazil started to develop ethanol production from sugar cane in the 1970s when the cost of imported oil soared, causing severe balance of payments problems.
But Brazil exports only a small portion of ethanol output due to booming domestic demand from drivers of flex fuel motorists. Satisfying a surge in export demand could strain local supplies.
"We say that other world producers are our allies...our competitor is gasoline," said Unica President Eduardo Pereira de Carvalho, seeing an expansion of the world ethanol market as other countries follow the lead of the United States.
One such country is Japan, which plans to insert ethanol into its energy matrix, but is concerned about the lack of a reliable supplier, said another ethanol analyst, who declined to be identified.
"It will potentially lead to a tremendous increase in Brazilian exports," Unica`s Carvalho said, noting that 60 percent of Brazil`s ethanol exports this year were destined for the United States.
Brazilian analysts say use of sugar cane-based ethanol is the cheapest way to reduce carbon emissions and that Brazilian technology could help develop the U.S. ethanol industry.
Unica`s Carvalho said ethanol production could rise significantly with development of new technology.
"One tonne of cane yields 85 liters of ethanol. When cellulose hydrolysis technology is developed we could get up to 160 liters...before processing cane waste and straw," he said.
Canaplan`s Carvalho said the Brazilian government needed policies to guarantee an organized expansion of the ethanol industry.
For instance, creation of stocks would reduce price volatility and widely differing taxes in Brazilian states should be standardised, he said.
Ã‚Â© Reuters 2007