Brazil can't find world market for its ethanol

A worker cuts sugar cane in a field belonging to the Moema sugar mill in Orindiuva, which produces ethanol, as well as sugar, as part of Brazil's sugar cane boom.
A worker cuts sugar cane in a field belonging to the Moema sugar mill in Orindiuva, which produces ethanol, as well as sugar, as part of Brazil's sugar cane boom. Douglas Engle / MCT

ORINDIUVA, Brazil — The ethanol giants of southeastern Brazil have transformed how 185 million residents of this South American nation power their cars and trucks. Now, they say they're ready to start the same ethanol revolution in the rest of the world, if only the world will let them.

That, however, is where Brazil's ethanol leaders are hitting problems. They already churn out what many consider to be the world's cheapest and most efficient mass-produced biofuel and say they can export billions of gallons more.

Yet the rest of the world doesn't seem to want what the Brazilians have. In the United States, a 54 cent-per-gallon tax blocks most Brazilian ethanol from reaching U.S. consumers. Similar tariffs also block access to Europe, China and other major energy markets.

Getting rid of such tariffs, Brazilian producers argue, would give the world what it needs — cheap, clean and environmentally friendly alternative fuel. Ending the trade barriers also would ignite Brazil's ethanol industry and turn the country into a major biofuel exporter, said Jose Goldemberg, one of the founders of Brazil's national ethanol program.

Instead, the United States continues to block Brazilian ethanol while boosting production of ethanol made from corn, which produces much less ethanol per acre than sugar does, cuts into food supplies and does little to reduce greenhouse-gas emissions. Other countries also have avoided Brazilian ethanol, instead experimenting with wheat, rapeseed and other crops that also produce less biofuel per acre.

"It doesn't make much sense to produce ethanol from corn," Goldemberg said. "What the United States needs to do if it wants to solve its energy problems is very simple. It needs to import ethanol from Brazil."

The message doesn't seem to be getting through. As world alarm grows over rising food prices and shortages, many are blaming expanding biofuel production for hogging farmland that used to produce food, and Brazilian leaders have found themselves on the defensive about their celebrated biofuel.

The Brazilians have hit back by pointing out that sugar cane-based ethanol and the U.S., corn-based variety are worlds apart, and the problem is corn, not sugar.

Science is on their side. Because producers can use the entire stalk of the sugar plant to make biofuel, instead of just the kernels of the corn plant, an acre of sugar cane in Brazil produces about 800 gallons of ethanol, while an acre of corn produces 328 gallons.

The starch from corn also must be converted into sugar before it can be turned into ethanol, an extra step that requires a bigger investment in energy. As a result, sugar-cane ethanol produces 8 units of energy for every 1 unit of fossil fuels invested in its production, while the ratio for corn ethanol is 1.3 to 1.

Not only is producing sugar cane-based ethanol more efficient, Brazilian officials say, very little of the country's farmland is used to produce it. Sugar is grown only on 2 percent of Brazil's arable land, industry figures show.

That means sugar isn't kicking out food crops in Brazil and hasn't contributed to rising food prices, said Ricardo Dornelles, a renewable fuels director for Brazil's mines and energy ministry.

"We want to give the world confidence in our product," Dornelles said. "Whoever buys the product has the right to name the conditions of its production. But this can't mean imposing something that doesn't match reality."

U.S. critics have made the most noise about the possible effects of ethanol production on Brazil's fragile rainforests and other ecosystems, criticisms that Brazilian producers call absurd.

The reasoning goes that growing more sugar cane would replace other crops such as soybeans, which would force farmers to cultivate those other crops in freshly cleared forest or savannah, said Timothy Searchinger, a U.S. scientist who headed an influential study on land-use changes sparked by ethanol production.

Cutting down forest for biofuels would release tons of carbon into the atmosphere and erase any greenhouse-gas benefits of using the biofuel over fossil fuels, Searchinger said.

"People have thought ethanol was a win-win-win situation," he said. "And Brazil has the potential to be really quite good, but today, producing more ethanol there would still push the expansion of farmlands."

Brazilian officials scoff at such criticisms, saying sugar producers don't knock down forests but instead expand into degraded pastures. They say the country's beef industry, which on average grazes one head of cattle for every 2.5 acres, could double that rate and free up to about 260 million acres for other uses, including sugar production.

"Sugar is not growing in the forest," said Marcos Jank, president of the country's biggest sugar industry group UNICA. "You don't destroy forest to grow sugar. You actually produce a carbon credit and not a carbon deficit."

Despite the recent bumps in the road, Brazil has traveled a long way to become what it is today — the world leader in alternative energy.

Already, pumps selling ethanol are common sights throughout this continent-sized country, and this year, Brazilian drivers will consume as much ethanol as gasoline. With the help of aggressive offshore oil exploration, Brazilians also enjoy something Americans can only dream about — energy independence, meaning the country produces all the fuel — fossil or alternative — it needs.

The secret to the Brazilian miracle is endless rows of sugar cane, which has turned Brazil into the world's second biggest ethanol producer, only behind the United States. Brazil churned out nearly 6 billion gallons of sugar-cane ethanol last year, about 85 percent of it used domestically.

What's more, Brazilian producers say they could easily double ethanol production within a decade, and given the right international conditions, eventually supply a tenth of the world's vehicle fuel needs.

Even with the U.S. tariffs, Brazil will export about 500 million gallons of ethanol this year to the United States, with the majority entering through a special Caribbean basin trade initiative allowing a limited amount of duty-free imports.

The Brazilian model, however, hasn't been easy to achieve, having sprouted from more than three decades of trial and error.


ethanol program began with the international energy crises of the 1970s, when the country's military government tried to protect Brazil from price shocks by subsidizing sugar-cane ethanol production and requiring that all gas stations offer the biofuel. Brazilians responded by snatching up millions of cars that ran only on ethanol.

The boom ended in the 1980s when world gasoline prices dropped, and suddenly Brazilians were stuck with cars that ran only on the more expensive biofuel.

Ethanol made its comeback only recently with the return of high gasoline prices and the development of "flex-fuel" cars that can run on any combination of ethanol and gasoline. Such cars now make up nearly all new models sold in Brazil.

Ethanol, in fact, has become so popular in Brazil that it threatens government hopes of turning Brazil into a major biofuels exporter. The vast majority of Brazilian ethanol goes into Brazilian cars, and that'll remain the case even when the country produces some 17.3 billion gallons of ethanol a year in 2020, government and industry estimates show. Brazil will have about 4 billion gallons of ethanol left over to export then.

Reducing trade barriers, however, would upend that estimate and stimulate ethanol production in Brazil as well as in some 100 countries that grow sugar cane, Jank said. Over the next decade, Brazilian producers are planning to add 150 ethanol mills to the 320 already in operation.

Out amid the endless acres of cane in interior Sao Paulo state, the heart of Brazilian sugar country, it's easy to believe the boasts. The country's ethanol machine never stops, working day and night as thousands of people cut and crush tons of sugar cane to produce biofuel.

"The only barrier we face to growth are the export tariffs of other countries," said Renato Junqueira Santos Pereira, whose family owns a mill that covers more than 170,000 acres. "If you get rid of the tariff, production will jump."

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