World ethanol leaders meet in Brazil to discuss the industry's future

By Hope Deutscher | June 03, 2009
Report posted June 5, 2009, at 3:41 p.m. CST

Ethanol industry leaders discussed the present and future of biofuels in So Paulo, Brazil, on June 1-3. Specialists, researchers, leading business executives and government officials from around the world participated in the Ethanol Summit, which has been held annually since 2007. The summit provides a platform for in-depth discussions on the present and future of biofuels in Brazil and the world, with special focus on the most widely used biofuel of all, ethanol.

Brazil, which is the world's largest exporter of ethanol and the second-biggest producer after the U.S., has been lobbying for greater access to the U.S. and European Union markets.

The biofuels conference is organized by the Brazilian sugarcane growers' association UNICA. Around 130 delegates from various countries attended the three day summit, which included speeches from Brazil President Lula da Silva, former U.S. President Bill Clinton and U.S. Renewable Fuels President Bob Dinneen. Others speakers included representatives from BP and Japan's Honda, the European Union and United States, Brazilian ministers, Brazilian and U.S. ethanol producers, as well as academics and consultants.

"Organizing a conference of this magnitude is strategic for the global biofuels sector because it fuels debate on productivity, regulatory, economic, trade and environmental questions relating to bioenergy use, at a time when a growing number of national governments is revising plans for future energy production and use," said Marcos Jank, president of the Brazilian Sugarcane Industry Association (UNICA), in an Ethanol Summit 2009 statement. Jank said it's critical to certify ethanol and its expanding presence in the energy matrix of various countries. "Brazil's experience as the world's largest producer of sugarcane, sugar and ethanol from cane is itself a potential energy solution for many of the more than 100 countries that already harvest sugarcane around the world."

In his address to summit attendees, Dinneen said challenges facing America's ethanol industry are the exact same as those faced by ethanol across the globe.

"Never before has there been so great a need for clean-burning alternatives to petroleum products," Dinneen said. "Never before has the worldwide ethanol industry been so strongly positioned to make the most of our opportunities, for the benefit of our nations' economies, the global environment, and our children's future. And never before have we needed to challenge so many misstatements, so many ill-conceived policy proposals, and so many outright lies."

In 2008, the ethanol industry around the world produced a record 17.3 billion gallons of ethanol. According to Dinneen, the industry is poised to produce 20.4 billion gallons this year - replacing 1.9 million barrels of crude oil per day.

Using incentives such as tax advantages, tariffs, export enhancement, debt forgiveness, infrastructure development and subsidies, Dinneen said renewable fuels have only taken hold in countries like the U.S. and Brazil, which have created and sustained programs to encourage its production.

"It is important that countries be allowed to create similar programs, and grow their own biofuels industries, using whatever indigenous raw materials are available to them. No country should be hampered in developing its own industry by having to subsidize the ethanol production from somewhere else in the world," Dinneen said during his speech, reminding attendees that the U.S. ethanol program is founded on a market-based tax incentive for refiners that blend ethanol, whether that ethanol is imported or produced at home. Without the secondary tariff to offset that tax incentive, U.S. taxpayers would be subsidizing ethanol produced elsewhere in the world that may have been produced as a consequence of that country's incentive program. The secondary tariff is only intended to offset that tax benefit.

The U.S. Congress restructured the tax incentive, reducing it slightly, but did not address the tariff. "Your erstwhile president Marcos Jank and his very capable lobbyist in Washington, Joel Velasco, both of whom I consider friends, have made a compelling case to members of Congress to equalize the tax incentive to the tariff again, and I have stated publically on many occasions that this would be a logical step," Dinneen said. "But I can say with some measure of certainty that as long as there is a tax incentive available to refiners for their ethanol use, there will be an offsetting tariff. Our efforts in Congress have been to build the market for ethanol in the U.S., such that all can benefit from a growing demand base. Brazilian ethanol will benefit from the 36 billion gallon requirement in the United States. Indeed, over the past several years, almost a half a billion gallons of ethanol has been imported to the U.S., paying the tariff, receiving the tax incentive, and competing quite effectively. The tariff has most certainly not been a barrier to entry."

Dinneen said the real challenge is for both the U.S. and Brazil to build ethanol demand and not cannibalize each other's market. "Let's work together to create new markets in the U.S., in Latin America, in Europe and Africa and Asia and everywhere across the globe. That's the challenge we face as a global biofuels industry. And that's the challenge we face as inhabitants of a planet that is suffering from unchecked petroleum use the world over," Dinneen said.