Brazil fights back

Brazil has long touted its ethanol program as meriting global recognition but has become alarmed at recent attacks from critics abroad blaming the biofuel for famine, slavery and deforestation of the Amazon.

Brazil's plan to be the world's main supplier of the alternative automobile fuel may be facing its biggest diplomatic challenge, as rising food prices around the world are inciting riots and even toppling governments.

Brazil believes that it is unjustly coming under fire for problems with European and US biofuels.

President Luiz Inacio Lula da Silva has come out in defense of the ethanol industry, calling critics "veiled protectionists". The Foreign Ministry also created a new post to launch diplomatic efforts against trade challenges to Brazilian biofuels.

"The broader the debate, the better for Brazil," says Andre Aranha Correa do Lago, head of the ministry's energy department, adding that the government plans to hold an international conference on biofuels in November.

Correa do Lago and specialists in the ethanol industry acknowledged that Brazil could improve regulation and oversight of cane mills but the vast majority of them are in-line with labor and environmental laws.

"Roughly 99 percent of cane output is 2,000 kilometers from any Amazon forest," Alfred Szwarc, environmental spokesman for Brazil's Cane Industry Association (Unica), says.

But environmentalists have argued that the boom in sugar cane is pushing other less profitable farming into the Amazon, a phenomena called agricultural displacement, which Correa do Lago admits deserves further study.

The boom in cane planting has raised land prices and can indirectly force less profitable farming and ranching into sensitive areas.

But the link between cane and deforestation may be a difficult case to prove at the World Trade Organization, if Europe imposes bans based on this argument, specialists say.

Early this month, the Foreign Ministry said it will take Europe and the United States to the WTO again, if they impose trade distorting restrictions on ethanol imports.

Brazil has already won WTO challenges against US cotton and EU sugar subsidies.

Biofuel myths

One of Brazil's preeminent scientific scholars on the environment, Jose Goldemberg, says that the "current attack on biofuels is ... based on four myths".

He says it was not true that Brazilian ethanol: contributes to deforestation, causes famine, does not reduce greenhouse gas emission and is only suitable for niche markets.

Big oil companies who are worried about losing market share to biofuels, US soy producers concerned about losing farmland to corn and "ill-informed environmentalists" were the interests behind these myths, Goldemberg added.

At a time when international oil prices continue to hit daily high-water marks, Brazil is strategically positioned as the world's largest ethanol exporter but the biofuel has not fully come into its own as a world commodity yet.

Even though Brazil only exports 15 percent of what it produces, Europe and the United States say they need to limit ethanol imports to give their industries a chance to catch up to Brazil's more then 30 years of experience.

Unica in recent months opened offices in Washington D.C. and Europe to lobby US and EU legislators for a fair shake. Specialists in Brazilian ethanol say that part of the problem is Brazil's incorrect association with US corn and EU sugar beet ethanol programs, which are seen as several times less efficient than the cane-based biofuel.

"Even so, there is a lot of hasty accusation about biofuels in general," says Joao Gomes Martines, president of the foreign affairs commission at the ESALQ think tank.

"Take the claim that biofuels are causing food inflation. It's just not likely," he says. "Corn used for ethanol isn't simply transformed fully into fuel. A good part of the kernel is left as dried distillers grain used for animal feed."

He adds that the increased use of soy oil in biodiesel in Brazil was producing surpluses of soy meal, another basic food and feed ingredient. Analysts also note that the increased production of ethanol from cane in Brazil was contributing to future sugar production that would surpass world demand.

"Not enough thought is being given to the roots of food inflation in the world," Martines says.

Agencies

(China Daily 05/19/2008 page11)