Against the backdrop of the world’s largest carnival celebrations in Rio last month, Clifford Sobel, the newly appointed US ambassador to Brazil, found a relentless reporter at his back. The dogged hack had only one concern: US president George W Bush’s plans for ethanol. “Are you kidding me? You want to talk about ethanol here?” Sobel snapped back undiplomatically. Yet the world and his wife, it seems, does want urgently to know about ethanol, as well as other biofuels that may help reduce dependency on troublesome oil. Take Luis Alberto Moreno, the president of the Inter-American Development Bank – the former Colombian ambassador to the US now also co-chairs the Inter-American Ethanol commission, alongside Jeb Bush, the former Texas governor and brother of the US president, and Roberto Rodrigues, a former Brazilian agriculture minister. The commission is officially a private initiative, but governments are increasingly jumping on the bandwagon. President Bush has spent a lot of time thinking about fuel recently.
Earlier this year he called for America to cut its projected petrol consumption by 20% over the next decade, largely by using more ethanol and other biofuels. He implied that most of the 35 billion gallons (130 billion litres) required would be home-grown. It’s hardly surprising that the US administration wants a strategic partnership with Brazil, which has successfully developed its own programme to fuel, for instance, all its cars on sugar cane alcohol alone. “Ethanol diplomacy” was the focus of Bush’s tour of Latin America, where he struck a deal with Brazilian president Lula da Silva to boost biofuels. He will also receive Lula in Washington at the end of the month. Such an alliance towards energy security could go some way towards helping the Bush administration undermine Venezuelan president Hugo Chavez, whose aggressive anti-US rhetoric and repeated public appearances with Iran’s President Ahmadinejad are aggravating the White House.
The Brazilian experience has been so successful that some traders, such as Roberto Giannetti da Fonseca, a former foreign trade government official, have been busy selling ethanol to oil-rich producing countries, such as Nigeria. Japan is also becoming a great market. “We are not going to manage to attend all the demand,” says Giannetti, who heads the Sao Paulo-based Ethanol Trading. Washington’s plan is to help disseminate technology throughout the American hemisphere and help meet an estimated demand of 130 billion litres by 2010. The US and Brazil, which are the two largest producers of ethanol, have a joint current annual output of less than 40 billion litres, and investment in expansion has been booming in Brazil for the past two years. Brazil’s Petrobras has already shipped 200 million litres of ethanol to Venezuela, and it has been cooperating with other countries (including Bolivia, Paraguay, Ecuador, Peru and Colombia) for the development of a regional biofuel industry. “Governments are interested, and there’s a potential for production there,” says Ildo Sauer, Petrobras energy director.
The next step is to involve Central American countries, which have greater access to the US market. Brazil has already signed a deal with Jamaica to help set up ethanol producing plants on the island, while Cargill and a Brazilian partner, Crystalselv, are already operating a unit in El Salvador. Lula reckons that a strong political gesture would be to help set up an ethanol plant in Haiti. Brazil is not the only country in Latin America that sees great promise in ethanol. Colombia now has five distilleries which produce 360 million litres a year. Two more are under construction elsewhere. Costa Rica has a similar programme, and Panama is contemplating one. The Inter-American Ethanol commission is also supporting efforts to transform ethanol into a globally-traded commodity. “There has to be a single global market for ethanol, with the same price and the same technology for all, based on what has been achieved with great success in Brazil,” says Giannetti.