Jason Barton

Professional Information and Energy News

Brazil opens its ethanol market to U.S. imports

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Well this just keeps on getting more and more interesting.

I’m here in Brazil talking with people in the cane and ethanol industry, as well as other stakeholders, asking them what they think about the possibility of increased U.S. importation of Brazilian ethanol. Until recently, that was the most likely possibility, and with a recent decision by the U.S. E.P.A, it became an even more likely reality.

But with the strength of the Brazilian currency (real) and a couple of poor harvests, the price of domestic ethanol has been rising, hence the recent discussions of importing ethanol from the U.S. to meet domestic demand, which is significant given the fact that most cars here are flex-fuel vehicles, capable of operating on any mix of gasoline and/or ethanol. But the drop in the Brazilian tariff does correspond with the start of the harvest season here, which has revitalized cane and ethanol production in the last few weeks, causing a significant drop in prices.

So, it’s convenient for Brazil to drop the tariff now, when domestic ethanol prices are falling.

The motivation, it’s clear, is to pressure the U.S. to drop our tariff, thus, combined with the recent EPA decision, opening the door to imports of Brazilian ethanol.

We’ll see…

Biofuels Journal

Date Posted: April 6, 2010

Sao Paulo—The announcement April 5 that the Brazilian government has unilaterally eliminated its tariff on imported ethanol is a major step forward in building a global biofuels marketplace, according to the Brazilian Sugarcane Industry Association (UNICA).

“UNICA believes that free trade is a two way street and Brazil, as the largest producer of cane ethanol and largest exporter of ethanol in the world, with 60% of the global market, will lead by example and eliminate barriers to renewable, clean fuels.

“We hope this move will encourage other countries around the world to develop open, free markets for clean, efficient renewable fuels such as ethanol,” said UNICA President & CEO Marcos Jank.

Read the entire article here.