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Brazil and US to boost regional ethanol industry

Friday, February 9th 2007 - 20:00 UTC
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Brazil is the worlds lowest-cost producer of sugar and ethanol. Brazil is the worlds lowest-cost producer of sugar and ethanol.

Ahead of US President George Bush's visit, Brazil announced plans to invest almost 5 billion US dollars over the next 10 years into biotechnology research involving renewable energy, agriculture and rain forest pharmaceuticals.

"Brazil has 20 percent of the world's biodiversity and immense forests. The goal is to activate that potential," said President Luiz Inácio Lula da Silva. More than half Brazil's territory is covered by the Amazon rain forest. Governments have long talked of tapping its potential as a source of pharmaceutical discoveries, but bureaucracy and lack of investment have slowed progress. The funding should come from public and private investment. The government will contribute 60 percent, including funds from the Brazilian Development Bank (BNDES), and the private sector will provide the rest, Development Minister Luiz Furlan said. However Furlan did not explain if the private funding was already guaranteed. Lula said he would promote research into rain forest plants, while continuing to fight deforestation. He cited Brazil's ethanol programme as proof the country can profit from biotechnology. The aim was for Brazil to become a global leader in biotechnology in the next 10 to 15 years, he said. Brazil is a powerhouse agriculture exporter that became a global biofuels leader by investing in sugar cane ethanol over the last three decades. United States and Brazil are expected to sign an ethanol development alliance to foster bio-fuel production when President George Bush visits the country early next March. Brazil and the U.S. together produce 70% of the world's ethanol supplies. On Wednesday, U.S. Undersecretary of State for Political Affairs Nicholas Burns visited Brasilia to talk with top Brazilian ministers about moving forward on fixing common ethanol standards and boosting joint ethanol initiatives across Latin America. One of the proposals that both sides discussed was jointly constructing a pilot ethanol plant in the Caribbean. Local analysts and traders said that if the two countries had the political will to forge ahead with such an ethanol alliance in coming years, then it would be a win-win situation for both sides - and Latin America as a whole. Brazil, the world's No. 1 ethanol exporter, and the only country in the world with significant agricultural area left to ramp up expansion, would benefit from having additional markets for its product. At the same time, the U.S., which almost certainly will face a supply shortage if its alternative fuels target of 35 billion gallons by 2017 is made law, would gain from having a larger market of producers in the region. Finally, regional countries - from the Caribbean to Chile and Argentina - could reduce their dependence on costly imported petroleum if local ethanol industries were fostered, generating both jobs and revenues for domestic workers. However Adriano Pires, Director of the Brazilian Centre for Infrastructure cautions that "the only reason that ethanol will take off, and stay economical, is if petroleum prices don't go lower". "Brazil is the Saudi Arabia of ethanol," said Walder de Goes, the president of the Brazilian Institute for Political Studies in Brasilia. "I think this is fantastic news." Brazil is the world's lowest-cost producer of sugar and ethanol. Both Brazil and the U.S. jointly produced roughly 38 billion litres of ethanol in 2006, according to data from Brazil's main cane association, the Union of Sugarcane Industries

Categories: Investments, Brazil.

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