The long shadow of Brazilian ethanol fell over North American ethanol producers when Brazil announced a $10 million campaign to promote exports of its sugarcane-based renewable fuel in February. Meanwhile rumblings continue over the future of the U.S. ethanol tariff.
 
 Notwithstanding the trade conflict, officials observed some progress at a March meeting in Washington, D.C., between Brazilian and U.S. officials trying to extend cooperation between the world's two largest ethanol producers.
 
 Joel Velasco, chief representative in the United States for Unica, Brazil's sugarcane trade association, told EPM that ethanol producers around the globe now have "near consensus" on global standards for ethanol as a result of cooperation among Brazil, the United States, the European Union, China, India and South Africa.
 
 U.S. and Brazilian producers also share the challenge of countering "the myths and misperceptions regarding biofuels, whether they are produced in Iowa or São Paulo," Velasco said. Ethanol from sugarcane grown on just 1 percent of Brazil's arable land displaces 50 percent of the nation's gasoline consumption, reduces greenhouse-gas emissions by 90 percent and costs half as much as gasoline, he added.
 

 Brazil's criticism of the 54-cent-per-gallon U.S. tariff on imported ethanol remains pointed, however. Unica contends that the tariff keeps ethanol prices artificially high, encourages fossil-fuel consumption and "sends the wrong message to the rest of the world," Velasco said. With the United States fighting terrorists who threaten Mideastern oil fields, "it seems the height of hypocrisy to tax our friends and allies that are providing an alternative," he added. Brazilian producers have paid more than $400 million in U.S. duties since the current war in Iraq began, Velasco said.
 
 Room for compromise?
 U.S. ethanol supporters counter that removing the tariff would be the equivalent of U.S. taxpayers subsidizing foreign production. The Renewable Fuels Association said the tariff offsets the 51-cent-per-gallon tax incentive that U.S. petroleum refiners receive for the ethanol they blend, "regardless of whether it is made in Iowa or Brazil," said RFA spokesman Matt Hartwig. Without the tariff, he added, American taxpayers would in effect pay Brazilian ethanol producers 51 cents for each gallon of ethanol that the United States imports from Brazil. "Admirably, Brazil has built a strong, robust ethanol industry of its own through a wide variety of government supports," Hartwig said. "We simply believe American taxpayers ought not to have to further subsidize Brazil's or any other nation's ethanol industry when we are trying to build one in this nation. The tariff is there to protect the taxpayer, not the ethanol producer."
 
 There may be room for compromise. RFA President Bob Dinneen said his organization might be open to a cut in the import tariff if a similar reduction was made to the blenders' tax credit. "Should the tax credit be altered, he would support harmonizing the two," Hartwig confirmed. "He is not advocating for either."
 
 In any case, North American producers knew that competition would eventually arrive, said Rahul Iyer, executive vice president at Primafuel Inc. in Long Beach, Calif., "though some in the industry believed that the competition would be confined within U.S. borders."

Brazil export plan prods United States

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North American SAF Conference & Expo

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Brazil export plan prods United States