Brazil – a country which has done more than any other nation to replace oil with ethanol – is ready to ramp up production of its sugarcane-based fuel, a sweet solution it hopes to market around the world.
Brazil has collected billions of dollars of new foreign investment and is on the cusp of a possible jettison of the long-standing trade barrier in the U.S.
Marcio Zimmerman, the Brazil Mines and Energy Minister said South America’s largest country plans to more than double its ethanol production, from 7 billion gallons annually to 17 billion gallons, by 2019.
Last August, Shell signed a $12 billion joint venture with the Brazilian sugar and ethanol maker Cosan, S.A. Earlier in the year, BP, who already holds a two-year-old stake in Brazilian ethanol, announced plans to expand their investments by $5 billion to $6 billion in the coming decade. U.S. agricultural company, Bunge Ltd., and France’s Louis Dreyfus Commodities have each expanded their presence in Brazil with acquisitions of ethanol companies last year.
The country sends 18% of its production overseas (mostly the U.S., Japan and Europe), though, the majority of Brazil’s ethanol is to be consumed domestically; actually, half of the nation’s car and light truck transport is now fueled by ethanol, a level which is bound to increase, as most cars sold in the country are flex-fuel vehicles that run entirely on ethanol.
For years, a 54-cent-per-gallon tariff has discouraged imports of ethanol at U.S. borders, even though fuel alcohol from Brazilian sugarcane is cheaper than the U.S. alternative – from corn.
(Not to mention the move to protect the heartland corn industry in the states).
In the meantime, much of the debate in the United States and Europe over sugarcane ethanol has become about whether it is even an environmentally friendly alternative, or whether its real impact on land use and the planet’s greenhouse gas burden is far worse than previously understood.