Jason Barton

Professional Information and Energy News

Archive for the ‘Sugarcane Ethanol’ tag

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

without comments

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

(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

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

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.

Rival Ethanol Trade Groups Campaigning to Woo Senators, Clobber Each Other

without comments

With talks well underway in the U.S. Congress for a new energy/climate bill, the U.S. EPA’s recent decision that Brazilian sugarcane ethanol meets the “advanced fuel” mandate, and now Brazil’s removal of their tariff on imported ethanol, the stage is set for some heated discussion about lowering or even eliminating our own tariff, as several senators have argued the U.S. Government should do.

The Brazilian sugarcane and ethanol industry association, UNICA, has recently launched a website and a series of ads aimed at winning over U.S. consumers.

An important note: The paper cited at the end of this article that claims larger environmental benefits from corn ethanol is not indicative of the U.S. corn ethanol production system. It focuses on fewer, newer refineries that use natural gas and have greater efficiency. If the whole U.S. corn ethanol production system were like those surveyed by Liska et al. (2009) then yes, the fuel would be cleaner. But as it stands this is not the case of the average refinery.

All of this back and forth makes my time here in Brazil that much more interesting. I’ll keep you posted.

By ANNE C. MULKERN of Greenwire
Published: April 13, 2010

Two rival trade groups seeking congressional help for the ethanol industry launched advertising yesterday to promote themselves and bash one another.

Growth Energy Inc., which represents corn and other domestic ethanol producers, seeks to maintain supremacy at home, while the Brazilian Sugarcane Industry Association, or UNICA, wants to tear down corn ethanol’s benefits in order to grab a larger share of the U.S. market.

Read the entire article here.

Bunge to spend $750 mln to expand in Brazil cane

without comments

SAO PAULO, April 9 (Reuters) – U.S. agribusiness group Bunge (BG.N) will invest $750 million to expand its three largest cane mills in Brazil, the unit’s chief executive told Valor Economico newspaper in an interview published on Friday.

Read the entire article here.

Written by Jason

April 10th, 2010 at 8:40 am

Brazil opens its ethanol market to U.S. imports

with 2 comments

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.

Sugarcane Ethanol: Sweet Solution or Bitter Issue?

without comments

Being here in Brazil as I write this post, it’s interesting to see the near-uniformity of support for cane ethanol. There are so many convincing answers to questions like those posed in this article, at times it’s difficult to remain objective. Whether or not cane and ethanol are the best way forward, I have so much love for this country, the people here, and the amazing natural resources, it’s fabulous to see the development happening here, and to learn how the U.S. might be able to play a positive role in that development, being supportive without interfering.

I’ve had the pleasure of speaking with Luiz Martinelli and like him very much, but am not sure about some of the points made in this article, though it’s difficult to know if it is from Martinelli or the reporter where the confusion stems.Where the article says, “Burning is another growing practice associated with negative long-term effects,” it’s not clear if this means, ‘practice used for growing cane,’ or, ‘a practice that is growing in use.’ In fact, burning is diminishing in its use around the country, and being phased out completely in Sao Paulo over the next several years. The reasons are somewhat complex, and the effects are not wholly positive or negative, which has made it a fascinating topic to cover over the past several years.

There is less burning in part because of air pollution issues and health hazards for cane laborers and others living near cane growing areas, such as where I sit right now. The burning is necessary for manual harvesting of cane, as clearing the cane leaves, or bagasse, makes it easier for workers to cut the cane. It also clears the field of dangerous animals such as snakes, scorpions, and spiders. That’s good, but when the workers enter soon after burning, they inhale the soot. Not good.

Then there’s the issue of manual harvesting versus mechanized. These jobs are not high paying and, as described above, can be unsafe and unhealthy, but people travel from all over the country to get these jobs since they are better than nothing. Mechanized harvest has become less expensive here for a variety of reasons, and the bagasse that is burned for manual harvest has become more valuable. With mechanized harvest, that bagasse can be burned at the ethanol refinery to generate electricity, and may be used for cellulosic ethanol in the future. Also, the jobs created for mechanized harvest, including jobs in tractor factories nearby and research jobs in Brazilian universities, this move away from burning and toward mechanized harvest looks positive. It’s a pity that the 80 jobs created by manual harvest are replaced with only about 29 or 30 for mechanized, but then again, if these jobs, though fewer, are higher paying, more highly skilled, and much safer, perhaps this is part of the development process.

The land use change issues, both direct and indirect, as well as land ownership, are also foci of my research here. I could go on and on, which is what I’m doing in the dissertation, but I’ll cut this short here.

I don’t have my mind made up, which is why I’m here now, talking with all sorts of different folks on the many sides of this fascinating issue.

Should the U.S. import more Brazilian ethanol? Not sure, but stay tuned, this PhD is only a few more months from completion (I hope). Vida boa.

Some hail ethanol as the methadone needed to wean Western countries off fossil fuels. Others deplore it as environmental sabotage. Prof. Luiz Martinelli, ecology, University of São Paulo in Brazil, presented his assessment of the controversial process on Friday.

March 3, 2010 – 2:00am
By Daina Ringus

Some hail ethanol as the methadone needed to wean Western countries off fossil fuels. Others deplore it as environmental sabotage.

The effects of Brazil’s growing sugarcane industry have prompted scientists to ask the question: are biofuels sustainable?

Read the entire article here.

Brazil Cane Output to Rise at Least 10%, Group Says

without comments

March 03, 2010, 2:40 AM EST

By Wendy Pugh

March 3 (Bloomberg) — Sugar cane production in the Center South region of Brazil, the largest exporter, will rise at least 10 percent next harvest and larger gains are forecast for raw sugar and ethanol, an industry group executive said.

“We should expect at least a 10 percent increase in sugar cane production but a higher growth rate for both sugar and ethanol due to the increase in productivity,” Unica Executive Director Eduardo Leao de Sousa said in an interview today.

Read the entire article here.

Petrobras imports gasoline on demand surge

without comments

Darn! Brazil was doing so well with their energy independence. Even with slumping ethanol supplies, demand side management looks like it could have solved this problem without the imports.

SAO PAULO, Feb 17 (Reuters) – Brazil’s state-controlled oil company Petrobras (PETR4.SA)(PBR.N) said on Wednesday it is importing gasoline to ensure supplies to the domestic market after a spike in demand for the motor fuel.

Demand for gasoline in Brazil has jumped on falling production of sugar cane ethanol, which in Brazil is often used as an alternative fuel for cars, as heavy rains cut into the sugar crop.

Read the entire article here.

Written by Jason

February 18th, 2010 at 7:47 am

Brazil Keeps Import Tariff on Ethanol at Least Until July

without comments

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.