Jason Barton

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Archive for the ‘Brazilian Ethanol Importation’ tag

UNICA Continues Pressure on U.S. to Drop Ethanol Tariff

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To listen to UNICA, the powerful voice of Brazil’s sugarcane and ethanol industry, you’d think the U.S. tariff on imported ethanol would be gone by the end of the week. I don’t see that happening, and definitely don’t think an all-at-once elimination would be good for Brazil.

Ethanol accounts for half of their transportation fuel by volume (slightly less on an energy content basis), and if the U.S. tariff were eliminated, Brazilian producers would likely sell a huge portion of their ethanol to U.S. buyers, forcing Brazilian drivers to pay higher prices, or, more likely, revert to far more gasoline. This could jeopardize Brazil’s energy independence and would impact their balance of trade, though probably only slightly.

Additionally, just as UNICA and the studies they cite may sound certain that this tariff of US$0.54 per gallon is terrible for American drivers, its elimination would not hurt corn farmers, and so is soon to be history, U.S. corn farmers and our ethanol industry, led by Growth Energy, the U.S. counterpart to UNICA, are equally sure that government support is necessary and here to stay.

Let me be clear that I am not a fan of corn ethanol. I have become much more encouraged about cellulosic and other technologies on the near horizon, but still believe that corn is produced irresponsibly and at great harm to ecological, human, and even bovine health. I don’t blame farmers for this, as they are working within a system that rewards growing corn without taking into account the negative externalities.

All this said, the best scenario would likely be reducing the tariff on U.S. importation of Brazilian ethanol to meet the “advanced biofuels” mandates laid out in George Bush’s Renewable Fuels Standards, as allowed by the recent EPA findings in the RFS2 decision in February. This would gradually increase Brazilian ethanol’s presence in the U.S., while also encouraging the much needed move to second and third generation biofuels technologies, reducing our dependence on imported oil and increasing our energy independence and security.

Any of this, of course, must be done in concert with vastly increased efforts towards energy efficiency, driving less, more efficient vehicles, etc.

Here are a few of the pieces from UNICA…

Scholars call for phase-out of U.S. ethanol tariff at Wilson Center seminar
07/26/2010

(left to right) Joel Velasco, Alexandros Petersen, Paulo Sotero,
Robbin Johnson and C. Ford Runge

An open and globalized biofuels market is essential to promote greater efficiency and competitiveness, and phasing out the US$0,54 per gallon tariff imposed by the United States on imported ethanol would be a key step in the right direction. The recommendation came from two University of Minnesota scholars during the “Biofuels: Food, Fuel, and the Future?” panel, organized by the Woodrow Wilson Center in Washington, D.C, on Friday, July 23.

Read the entire article here.

And a second piece, citing the study from the University of Iowa:

Universidade americana vê ganhos para consumidores com fim de tarifa sobre etanol importado
26/07/2010

Em meio a um debate aquecido e ganhando cada vez mais visibilidade nos Estados Unidos, um estudo divulgado na terça-feira (20/07) por um renomado economista agrícola do meio-oeste americano está desafiando conclusões catastróficas, geralmente disseminadas por grupos de lobby do etanol de milho, sobre o que poderia acontecer se a atual tarifa de US$0,54 por galão (3,78 litros) imposta ao etanol importado expirar no final deste ano como planejado. O estudo, realizado por Bruce Babcock, chefe do Centro de Agricultura e Desenvolvimento Rural (CARD em inglês) da Universidade do Estado de Iowa, apresenta um cenário bem diferente.

Read the entire article here.

And the University of Iowa study to which they are referring:

CARD Study Shows U.S. Ethanol Production and Corn Demand Will Grow With or Without Subsidy and Tariff

Contacts:
Bruce A. Babcock ; babcock@iastate.edu
Sandy Clarke; sclarke@iastate.edu

July 20, 2010

America’s growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for “blenders” who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

Read the entire article here.

Circling the wagons, the firing squads and the arguments: ethanol wars explode in print, TV

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Among many interesting topics to be discussed here is that UNICA is targeting more progressive outlets with their ads. While it’s fairly clear why progressives may not fall in line with big business in the corn belt, it’s not clear to me that they’ll be very excited about sugarcane ethanol from Brazil, given the rather negative press it’s sometimes received. This isn’t to say that that negative press is true, I’m just curious what more folks think.

Who's on which side, now?

The US corn ethanol industry has been up against it lately. For one, the meat and dairy industries have abandoned their alliance with corn for a partnership with environmentalists,. A second front opened when Brazilian and US ethanol interests split over the ethanol tariff.

The ethanol cold war developed into a hot one this week when television and print advertising campaigns debuted both from Brazil’s UNICA and the US-based Growth Energy.

The American Enterprise Institute’s Ken Green told the New York Times that there’s no mystery in the timing. “Senator Kerry is now saying that they’re going to have an energy bill in the next three weeks. [The ethanol lobbies] want to turn up the heat on what’s in this new energy bill and how it treats ethanol.”

[…]

The UNICA ads will appear, at least through this month, in Roll Call, National Journal, Congressional Quarterly and the website Politico, and will also feature a sponsorship campaign on public radio and the debut of a new sweeteralternative.com website. Total UNICA ad buys are “less than one-tenth” of the Growth Energy budget, according to UNICA’s estimate as quoted in the Times report.

Read the entire article here.

Is There An “Oooops” In US Ethanol Policy?

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People here in Brazil in the setor sucroenergia, or sugar and energy sector, are very hopeful that the new EPA ruling discussed in the article below as well as other recent posts on this site, will open the door for reduction of the tariff of US$0.54 per gallon on imported ethanol. The U.S. is already the largest importer of Brazilian ethanol, though it makes up only a small fraction of our ethanol use, and a similarly small fraction of Brazil’s production. There is some room for growth in the domestic market here, as flex fuel vehicles account for about 90% of new car sales, increasing Brazilians’ use of sugarcane ethanol, but the vast majority of the projected 100% increase in Brazilian ethanol production in the next 10-15 years will come for the demand by importers such as Europe, China, and, possibly, the U.S.

My job is to figure out how that would be for Brazil, who would gain, and how it would impact land use. People keep asking me my responses to these questions, and, truthfully, I really don’t have one at this point, which is part of what makes the work so interesting.

03/24/2010 08:25AM

Brazil will be one of the beneficiaries of the EPA finding that greenhouse gases will be reduced by ethanol, soy-diesel, and ethanol made from sugarcane. While the decision is good for US corn and soybean producers, questions are being raised why US biofuels want both a mandate for use as well as tax credits and import tariffs. US biofuels policy is being taken to the woodshed.

Read the entire article here.

Brazil Keeps Import Tariff on Ethanol at Least Until July

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There has been some talk that poor sugarcane harvests amidst increasing demand for ethanol in Brazil would cause the country to lower its tariffs on imported ethanol, allowing the U.S. to export corn ethanol. This is quite an ironic twist since the U.S. is the leading importer of Brazilian ethanol, which is much more efficient in terms of energy ratio and land use. Almost all of the talk on international trade in biofuels, and there has been much talk, has been about trade going the other direction.

It looks like it will continue in that direction for the time being, but it will definitely be interesting to watch how this develops in the coming months.

Brazzil Mag

Trying to understand Brazil since 1989

Friday, 12 February 2010 20:48

As announced by the Brazilian minister of Agriculture, Reinhold Stephanes, the reduction of the import tariff on ethanol has been postponed until July. Upon leaving the meeting of the Foreign Trade Board (Camex), he informed that the tariff reduction has been removed from the guidelines and will only be discussed again in five months.

According to the minister, the beginning of the sugarcane crop, in March, would render an eventual reduction of the import tax ineffective. “If we were to eliminate the tariff now, nothing would change with regard to fuel prices, because the sugarcane crop is going to start and prices would drop anyway.”

[…]

Presently, ethanol pays a 20% import tariff in order to enter Brazil. According to Stephanes, the tariff’s elimination, which should occur in the second half, will have diplomatic objectives.

“We are going to scrap the tax in order to pressure the United States into not taxing our ethanol on their market,” said the minister.

Read the entire article here.

Bloomberg to air documentary about Brazilian ethanol worker labor conditions

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As I’ve investigated more and more of the Brazilian cane and ethanol industries, I’ve become increasingly dubious about the validity of these negative claims. Certainly there are cases of worker abuses, and even in the best circumstances, manual harvesting of sugarcane is extremely difficult work, with very low pay.

This makes the growth of mechanized harvesting a very interesting issue: it is cutting the number of jobs by more than half, but the jobs lost are the worst kind, while the newer jobs are much safer and healthier, higher paying, and require more training and education. This leads many to point out that these are the kinds of jobs upon which healthier development can be built. Others may agree, but are still understandable concerned about what thousands of cane cutters will do when they lose their jobs, and are unable to compete for these new jobs that require skills that they do not have.

Clearly there’s much more to this issue than can be discussed in this one entry, so if you have questions or comments please feel free to contact me and we can discuss it further.

According to the video above, the Bloomberg TV network will air Deadly Brew – The Human Toll of Ethanol, a documentary about the horrible labor conditions of Brazilian ethanol workers on January 24th (next Thursday). The video above includes lines like “the cars run on human blood” and the video ends with a shocking story of a man that died after cutting “45 tonnes” of sugar cane in one day (see related post here).

Many environmentalists and now even the EU have really backed off in their support for ethanol and are taking a very hard look at how it’s made. While it can be sustainable, energy positive and include good labor practices, there are horrible cases like the ones Bloomberg will report on that have many questioning if ethanol is worth it. I will post a review of the documentary after it airs.

Read the entire article here.