President Rousseff, who is running for re-election on October 5, has kept fuel prices below international levels to curb above-target inflation. That policy has hurt the finances of Petrobras, which is forced to buy fuel at international prices and sell it more cheaply in the local market.

Economy ministry sources also anticipated that the government will not be able to meet its key fiscal savings target in 2014.

Last week Finance Minister Guido Mantega admitted that the government could raise fuel prices after the election and review its primary surplus target for the year.

The primary surplus, which represents the public sector’s excess revenue over expenditures before the payment of interest on debt, fell well below expectations in the first half of the year.

Many analysts believe the government could revise downward its goal of a primary surplus of 99 billion Reais (US$ 43.52 billion), which is equal to 1.9% of GDP. In the first six months of 2014, the primary surplus was equal to 1.17% of GDP.

Fuel prices and public spending are key in the government’s battle to curb inflation, which has risen less than expected recently but remains at the 6.5% ceiling of the official target.

High inflation and sluggish growth have dragged down the popularity of Rousseff and raised the probability of a second-round run-off election later in October.

Her main rivals, Aécio Neves and former governor Eduardo Campos have complained that fuel price controls have undermined Petrobras, which is considered the world’s most indebted and least profitable major oil company.

Although Brazil is virtually self sufficient in oil, and even exports, the lack of refining capacity dating back to plans of former president Luiz Inácio Lula da Silva with Venezuela’s Hugo Chavez to build a giant refinery in the northeast of the country, have conditioned Petrobras finances.

Earnings Down

Second quarter profits for Brazil’s Petrobras dropped 20% compared to the same period one year earlier, the state-run oil giant said. Petrobras recorded profits of 4.96 billion reais (about US$ 2.22 billion) in the quarter, compared to 6.2 billion Reais (nearly US$ 3 billion) for the same period in 2013.

CEO Graça Foster said that the slump in profits was due to an 800 million reais drop in revenue as well as an increase in federal taxes.

The company also imports gasoline – its local refineries cannot meet the domestic demand – and sells it at a subsidized price as set by the Brazilian government.

Income from sales, however, stood at 36.9 billion dollars, up 12% compared to the same period last year.

Only counting crude and liquefied natural gas production, Petrobras had an average production of 1,972 barrels per day in the second quarter, up from 1,931 barrels per day a year earlier.

Petrobras’ imports of oil and derivatives surged 33% in the second quarter from a year earlier to 941,000 barrels a day. The refining division’s quarterly loss ballooned to 3.88 billion Reais, up 54% from the second quarter of 2013.

The fuel subsidy, combined with a massive investment budget, has turned Petrobras into the world’s most indebted oil major. Net debt as of June 30 stood at 109.58 billion, up 16% from the end of 2013.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, fell 10% on the year to 16.26 billion reais.

Brazil aims to be among the world’s top five global oil producers by 2020, when it expects to be producing four million barrels of oil a day. Petrobras reiterated its target of increasing oil production by 7.5%, plus or minus one percentage point, in 2014.

Petrobras Chief Executive Maria das Graças Foster said in a note that the company’s own output of gasoline and diesel will rise in the second half of the year as production at existing refineries improves and the Abreu e Lima refinery, the cost of which has risen past 18 billion, comes online.

“These factors will allow us to reduce by about 30% our imports of oil and derivatives compared with the first half,” Ms. Foster

Agribusiness

Brazil’s agribusiness trade balance closed out July at a surplus of US$ 8.1 billion, resulting from earnings of US$ 9.61 billion in exports and costs of US$ 1.51 billion in imports. The figures were reported by Brazil’s Ministry of Agriculture, Livestock and Supply.

Soy (beans, meal, and oil) topped the list of exports, accounting for 41% of sales amount – it sold US$ 3.94 billion in July, 0.3% less than in the same month of 2013. Shipments amounted to 7.44 million tons, up 0.8% compared to July 2013.

The second leading export was meat, with sales of US$ 1.66 billion, 14% up from July 2013. Poultry led the group with sales of US$ 772 million, followed by beef exports which amounted to US$ 690 million. Pork exports totaled US$ 139 million.

The sugar-ethanol group was the third largest exporting sector in July with US$ 1.05 billion in sales and shipments of 2.56 million tons. Other major exports include forest products and coffee. Pulp and paper lead forest products with earnings of $652 million. In the coffee sector, exports totaled $583 million, 65.2% up from July 2013.

ABr/MP

Brazilian imports from Arab nations were close to US$ 7.4 billion from January to July, up 34% from the same period of last year according to the Brazilian Ministry of Development, Industry and Foreign Trade.

The hydrocarbon import bill stood at US$ 6.4 billion. Hydrocarbon purchases accounted for 87% of total imports and were up 43% in January to July 2012 from the same period in 2011.

According to specialists, the main reason is that Brazil’s automobile fleet has grown without a policy for increasing production and raising fuel prices.

Even though the government-owned Petrobras does not enjoy a monopoly over oil and derivatives imports, in practice it is virtually the sole importer, and owns practically all national refineries.

Besides, the company tends to follow the orders of its majority stakeholder, the government, and has been selling products domestically at prices lower than those paid on imports, which partly explains its billion-real loss in quarter two this year.

“Imports have covered virtually all of the increase in demand,” said economist Adriano Pires, director of the Brazilian Infrastructure Center (CBIE, in the Portuguese acronym) and former advisor to the National Petroleum Agency (ANP). “[Brazil’s] refining capacity is at its maximum,” he added.

Along similar lines, the director general of the Electrotechnics and Energy institute of the University of São Paulo (USP), Ildo Sauer, claimed that the government has encouraged auto manufacturing and sales by lowering taxes, ever since the 2008 international crisis set in, however it has failed to implement a policy for the fuel industry to keep up with the increase.

One example is the ethanol industry, which has grown negligibly, and now the country needs to import the product, which has been in large-scale use as fuel for over 30 years.

Sauer stresses that in order to be competitive, ethanol needs to cost less than 70% of the gasoline price to end consumers, because cars fueled with the biofuel burn fuel at a faster rate, although they perform better. It is worth noting that most autos made in the country are “flex fuel,” that is, capable of running on ethanol, gasoline, or any mixture of the two.

“The [market] imbalance can be ascertained from the fleet’s conversion into ‘flex fuel’ [which has taken place in the past few years],” said Sauer, a former Petrobras director.

He said that in the past, when ethanol prices were more competitive, a sizeable portion of drivers would fuel up with the product and the country would even export its gasoline surplus; now, the opposite holds true.

“It is an uncontrolled incentive; you get more cars congesting the cities and there is no coordination with other areas. The government has not done anything [as regards fuels], and it has dished the responsibility of solving the problem over to Petrobras. It is a chaotic system,” Sauer criticized.

Pires adds that the Brazilian agricultural output has increased sharply in the past few years, and much diesel is used up for fueling machines for planting, harvesting, and transporting the crop. The demand in this case was also catered for with imported product.

To the CBIE director, imports of oil derivatives will remain strong in the next few years, because national output will not increase fast. The next Brazilian refinery, Abreu e Lima, in the state of Pernambuco, is only due to enter into operation in 2014. “In the next four to five years, we are going to import a lot,” he said.

Arabs

The main items Brazil imports from the Arab countries, in addition to crude oil, are naphtha, aviation kerosene, liquefied natural gas (LNG) and diesel. Imports of all these products have increased significantly from January to July, both in value and volume, except for naphtha, which is used as a raw material by the petrochemical industry.

Sauer notes that the government and Petrobras have had good relations with the Middle East and North Africa countries for a long time now. “At the time of the second oil shock [in 1979], countries such as Algeria, Iraq, Iran, Libya and Saudi Arabia did not leave Brazil undersupplied,” he said. Of those, the only non-Arab nation is Iran. “There is a certain fraternity there, a mutual friendliness,” he said.

Anba

“The government has not raised prices of anything [ethanol or gasoline] for over two years. The last time Petrobras made an adjustment was over two years ago when it lowered prices,” declared the minister. “The problem is that the market freely sets its own prices.”

At the moment, the price of Brazil’s ethanol at the pump has reached a historical high and because of the so-called “energy ratio,” is simply uneconomical throughout the country.

Ethanol provides 30% less energy (or, to put it another way, 30% less mileage) than gasoline, so it has to cost 30% less than gasoline to be economical.

In the state of São Paulo, ethanol is over 83% the price of gasoline (up to 70% of the price of gasoline ethanol is economical).

Over the last month, the price of ethanol at the pump has risen 12.1%. However, because of the size of Brazil and transportation costs, the price of ethanol can vary as much as 1 real (US$ 0.62) per liter at the pump. Gasoline prices can also vary so that at the moment there are places where ethanol prices are only just above 70% the price of gasoline.

The average nationwide price of a liter of ethanol for the week of February 27 to March 5, was 1.95 reais, and a week later it had risen to 2.19 reais. But the average price is misleading due to the huge variation. For example, in Paraíba, it costs 1.89 reais per liter (a little over 70% the cost of gasoline), while in Brasília it costs 2.89 reais, almost the same as gasoline.

Price Fall

The Brazilian sugarcane harvest has begun and although it is expected that production this year will be less than it was in 2010, the price of ethanol should begin to fall soon. According to mill owners and distributors, the price of ethanol will be competitive again only in May.

Spokespersons for the Sugarcane Industrial Union (Única), have announced that total 2011 production of ethanol will reach 17.2 billion liters, that is down from over 23 billion liters in 2010.

“Ethanol will be produced and it has to be sold. The price at the pump must come down so the consumer will buy it again,” declared Antonio de Padua Rodrigues, a director at Única.

Meanwhile, the president of Única, Marcos Jank, was also positive about a drop in ethanol prices. “The price will come down, probably within 45 days,” said Jank. “And it must come down to where it is once again competitive. It should be less than 70% the price of gasoline in May when supply will catch up with demand. That is when people will once again fill up with ethanol.”

However, the executive vice president of the distributor’s union (Sindicato Nacional das Empresas Distribuidoras de Combustíveis e de Lubrificantes – Sindicom), Alísio Vaz, says that as this year’s supply of ethanol will be less than in the past, the result will be ethanol prices that are competitive for a shorter period of time in 2011. In other words, supply will barely catch up with demand – and only for a short time.

Única has also expressed concern with future supply problems (in the face of sharply rising demand as Brazil sells more and more fuel-flex cars that can run on gasoline and ethanol). Única, which represents 60% of the ethanol/sugar mills in the country, points out that the production of ethanol has become less attractive for the mills because their ethanol must compete directly with gasoline that has its price set by the government at artificially low levels.

Jank says mill owners are investing in the production of sugar rather than ethanol. At the moment, sugar prices are at historical highs. Jank adds that Única is negotiating a pact with the government for funding to expand sugarcane production and create credit lines for more investment. He says that otherwise lower ethanol production between now and 2020 is almost certain.

“Investments in our sector dried up after the 2008-2009 international financial crisis. We are currently talking to the government about a broad-based, large-scale plan to reverse the tendency toward a reduction in ethanol use,” declared Jank.

ABr

The oil company is ready to maintain fuel supplies during a walkout, refining and petrochemicals chief Paulo Roberto da Costa told reporters in Rio de Janeiro admitting, however, that "there may be a temporary drop in output because of a strike, fuel stockpiles will guarantee supply".

"There is no chance the Brazilian market will be without fuel because of the strike," da Costa said. "We have a contingency plan ready."

Brazil's oil workers confederation said this week it rejected a proposal from Petrobras on profit and revenue sharing, and workers plan to walk out starting today. Unions at refineries, offshore oil platforms and other units voted to strike for five days over bonuses and safety, union national coordinator João Moraes said on March 18.

During a July 2008 strike, output was cut in Brazil's Campos basin, the source of 85% of the country's oil, by as much as 400,000 barrels a day, or more than a fifth of the domestic crude oil production at the time.

A strike would come as Brazil seeks to boost output more than 14% this year and embarks on a US$ 174.4 billion five-year spending plan.

The Brazilian Oil Workers Federation, or FUP, said earlier Friday that workers had approved the five-day walkout in voting along the week.

"Petrobras and its service companies have reduced workers' rights, as well as declined to advance negotiations with FUP and other unions" union officials said in a statement. FUP is an umbrella union representing Petrobras operational employees across Brazil.

FUP said that the union would not accept "cuts to workers' rights in the name of a crisis in the international financial system, the burden of which companies are shifting to workers."

At the heart of the strike were complaints by FUP that Petrobras had decided to reduce profit-sharing payments after the company recorded record net profits in 2008. According to FUP, Petrobras offered profit-sharing payments lower than the previous four years, despite 2008's record profits.

The strike is the second major work action against Petrobras in nine months. In July, oil platform workers in Brazil's key Campos Basin walked off the job for five days amid a dispute over work rules. It was the first major strike at Petrobras since 2001.

Mercopress

According to information supplied by the Brazilian foreign office (Itamaraty), the semi-arid climate of Morocco is not ideal for sugarcane farming, therefore the local government wants to evaluate the possibility of using another plant to produce ethanol.

The Moroccans are seeking experience accumulated over the course of several decades by Brazil, and the minister was invited to come to the country to have a close look at the functioning of the sector.

Also in the field of energy, Amorim and Amina talked about the cooperation of Petrobras for oil exploration in the Moroccan coast, and the production of oil using bituminous schist in the Arab country. Exchange in the field of schist is already underway.

With the minister of Economy and Finance, Salaheddine Mezouar, the Brazilian chancellor discussed the trade agreement that the Mercosur started negotiating with the Arab country in the second half of 2004.

According to information supplied by the Itamaraty, the two ministers expect for the deal to progress in the upcoming rounds of negotiation. The idea is to have a fixed tariff preference agreement first, and then to establish a free trade agreement.

Mezouar, according to the Itamaraty, also showed much interest in the Bolsa Famí­lia (Family Voucher), an income transfer program of the Brazilian federal government.

Amorim also met with the Moroccan prime minister, Abbas El Fassi. They discussed international and regional political issues, especially the matter of the Western Sahara, a territory controlled by Morocco over which there is a dispute with Algeria.

They also spoke of the good economical situation of the two countries, and of the ethanol issue.

Morocco is the second stop on a tour of the Brazilian foreign minister to North Africa, which started in Algerian and will end in Tunisia. Today, he will sign eight agreements with the minister of Foreign Trade and Cooperation, Taieb Fassi Fihri, in areas such as health, environment, agricultural cooperation and animal inspection. Amorim will also participate in the meeting of the Brazil-Morocco Bilateral Mixed Commission.

US Support

The Moroccan government manifested its support to Brazil's intention of having a permanent seat at the Security Council of the United Nations. The statement was made by the Moroccan minister of Foreign Affairs and Cooperation, Taieb Fassi Fihri, during a meeting with the Brazilian foreign minister, Celso Amorim, in Rabat.

"Morocco regards as legitimate the Brazilian aspiration to be a permanent member of the UN Security Council. This will translate into strong support by Morocco to the Brazilian candidacy when the reform takes place," said Fassi Fihri, according to information supplied by the Itamaraty.

Brazil is one of the strongest advocates of the reform at the Council, which follows the same model since its inception, after World War II, with five permanent members that have power of veto (United States, Russia, France, China and Great Britain) and 10 rotating seats, with two-year-long terms and no veto power.

Advocating the reform is an important part of the foreign policy of president Luiz Inácio Lula da Silva's administration. The Brazilian diplomacy claims that the disposition of the Security Council does not reflect the current geopolitical reality.

"The more the Southern countries speak to each other, the more the Northern countries listen to us," Amorim said to Fassi Fihri, according to the Itamaraty. The two ministers underscored the importance of enhancing the so-called South-South cooperation, among developing countries.

Anba – www.anba.com.br

Steady population growth means there are about 70 million new mouths to feed every year, and increasing affluence is also spurring more people to buy more meat. Meat is grain-intensive – it takes about seven pounds of grain to produce one pound of beef.

Biofuels are another new demand on grain stocks, and a potentially insatiable one. The grain used to fill an SUV tank with ethanol could feed one person for a year.

There is more than enough grain to feed every hungry human on the planet, but the poor cannot compete with wealthier buyers of meat and biofuels. Markets are not interested in feeding hungry people – they want to make money, so from a capitalist point of view, the only solution is to increase supply in the hope that it will drive prices down.

However, on the supply side, serious limiting factors are coming into play: dwindling water supplies and increased drought exacerbated by climate change; increasingly degraded land and soils; the rising cost of energy used for everything from water pumping to transport, and the growing cost of fertilizer and other inputs.

The world wants more food – a lot more food – but the planet will not be able to provide it. For this reason alone, more food is not the answer – it cannot be the answer.

Lester Brown, president of the Earth Policy Institute and author of the book “Plan B 3.0: Mobilizing to Save Civilization,” says that while there have been food price spikes in the past, “This troubling situation is unlike any the world has faced before.”

Brown doesn’t use the term, but it is likely that we have reached “peak food,” the moment when world grain output has achieved its maximum and we will have to work very hard to keep it from declining.

One of the top reasons to believe we have reached peak food is that we have apparently reached peak oil. In his book, “Eating Fossil Fuels,” Dale Allen Pfeiffer shows how utterly dependent modern agriculture is on fossil fuels, not just for the machinery that plants and harvests, but for the energy to irrigate fields, and for fertilizers.

About 30% of farm energy goes to fertilizer, much of which is made from natural gas. Like oil, natural gas is becoming increasingly expensive as production nears peak. Without oil, we might not drive cars, but without fertilizer, we might not eat.

Food and fuel are intimately connected. Not only is fuel essential to produce food, but because food can substitute for fuel, the price of food is now locked into the price of oil – a price that is going nowhere but up.

Timely Report

Globalization has promised to lift every person out of poverty by growing the economy so large that wealth will eventually trickle down to all. But this is a false promise that ignores physical limits to planetary resources.

A groundbreaking United Nations report that presents a serious challenge to the promises of globalization and biotech was released last week at a very timely moment. The IAASTD (International Assessment of Agricultural Science and Technology for Development) is directed by Robert Watson, a former director of the IPCC (Intergovernmental Panel on Climate Change), and it shares some similar features to the UN Climate assessment reports.

Most importantly, the IAASTD report says that agricultural systems cannot go on as they have. They are failing to feed the poor, wrecking ecosystems, exacerbating global warming and are far too dependent on fossil fuels. Just as everything about the way we produce and use energy must change in order to avoid climate catastrophe, so everything about the way we produce and use food must change in order to avoid a humanitarian and ecological disaster.

Watson said, “If we do persist with business as usual, the world’s people cannot be fed over the next half-century. It will mean more environmental degradation, and the gap between the haves and have-nots will further widen. We have an opportunity now to marshal our intellectual resources to avoid that sort of future. Otherwise, we face a world no one would want to inhabit.”

As with climate change, the solution to the food crisis will not be found in some miracle new technology. On the contrary, the report identifies a need to reconsider many traditional crops and methods for maintaining soil fertility and coping with drought. These traditional technologies need to be integrated with modern ones to achieve the best of both worlds. Currently there is little support for this approach to crop science.

British economist Nicholas Stern called climate change the biggest market failure in history. The IAASTD report also indicts markets with failing to eradicate hunger and poverty. Watson said, “The incentives for science to address the issues that matter to the poor are weak … the poorest developing countries are net losers under most trade liberalization scenarios.”

Agribusiness Reacts

The IAASTD study involved more than 400 authors and took four years to produce. However, not everyone stuck with the process till the end. Representatives from the biotechnology industry walked out in protest, complaining that GM (genetically modified) crops were being unfairly overlooked in favor of organic agriculture.

The New Scientist (5 April 2008) presented a point counterpoint between participants Deborah Keith, a manager for Syngenta, one of the world’s largest biotech companies, and Janice Jiggins, a social scientist. Keith complained that the draft document was unscientific and that “too often it treated fears and prejudices against technology and business as fact …” Organic agriculture was not subjected to the same scrutiny, she said.

Jiggins’ account of the process noted that traditional farmers at the table “took deep offense at hearing technologies … building on centuries-old traditions dismissed as ‘anecdotal’ and of no value.”

At heart, the debate is over what is considered “scientific” agriculture. The discussion of biotechnology in the final report summary peels the “anecdotal” label off traditional agriculture and slaps it back on genetic engineering, saying that “assessment of modern biotechnology is lagging behind development; information can be anecdotal and contradictory …”

Jiggins notes that, among other problems, “the capacity to monitor and regulate GM has failed to keep up.”

In reaction to the IAASTD report, some commentators have leaped on the idea that people who are “afraid of science” are irrationally keeping biotech and companies like Monsanto from saving the world.

Oxford professor Paul Collier, writing in The London Times, said that Europe and Japan are “befuddled by romanticism” for subsidizing inefficient small farms. “The remedy to high food prices is to increase supply,” he said, and the only solution to the food crisis is more food produced by “unromantic industrialized agriculture.”

He also said, “The most realistic way is to replicate the Brazilian model of large, technologically sophisticated agro-companies that supply the world market. There are still many areas of the world – including large swaths of Africa – that have good land that could be used far more productively if it were properly managed by large companies. To contain the rise in food prices, we need more globalization, not less.”

Brazil’s Big Agriculture

Taking a closer look at the Brazilian model shows why the IAASTD authors overwhelmingly rejected the big business model as a way to sustainably feed the world.

Brazil’s Mato Grosso region is the world’s most active agricultural frontier. Satellite photos show the relentless push of soybean monocultures and cattle grazing into the Amazon rainforest. Forest ecologist Daniel Nepstad of the Woods Hole Research Center, says that soy agriculture in the Mato Grosso has “greased the skids” for deforestation of the Amazon.

The success of soy farming in Mato Grosso is based on two advantages: the region’s abundant rainfall and the discovery that heavy applications of fertilizer, especially lime and phosphorus, could impart impressive fertility to the tropical soils. Both of these assets are likely to be short-lived.

First and foremost is the rain. Nepstad’s research focus is drought in the Amazon. He has found that after only two years of drought, trees begin to die and the forest fires start. Once a regular fire regime takes hold, a tipping point is reached that rapidly converts rainforest to dry scrub. The consequence is not just losing the rainforest, but losing the rain.

Through a process called transpiration, trees in the Amazon seed the clouds that water the fields and pastures of South America and the Caribbean. Researchers are finding that clouds and air currents that originate in the Amazon can drive weather patterns as far away as the North Atlantic. As the forest evaporates, so does the rainfall.

The second factor, a reliance on heavy applications of fertilizer, is also bound to be a temporary phenomenon. Little noted in the popular press, fertilizer prices have skyrocketed in recent months.

Reuters reported on April 16 that Chinese fertilizer importers have “agreed to pay more than triple what they did a year ago to reserve tight supplies of potash, sending the shares of global fertilizer makers to record levels.”

Phosphorus, like potash, is mostly produced by mining mineral deposits and there is a limit to global reserves – a limit that we are rapidly approaching. Patrick Dery and Bart Anderson looked at phosphorus production data in a report for Energy Bulletin titled “Peak Phosphorus.” They concluded that the world has passed the peak of phosphorus production and is already in decline.

“In some ways,” say Dery and Anderson, “the problem of peak phosphorus is more difficult than peak oil. Energy sources other than oil are available…” But, they point out, “Unlike fossil fuels, phosphorus can be recycled. However if we waste phosphorus, we cannot replace it [with] any other source.”

The main way to recycle phosphorus is to reclaim it from sewage and animal waste. The need to do this will bring us full circle from modern high-tech agriculture back to traditional practices that used animal manure and human “night soil.”

Researchers in Sweden and Australia are already working on a new toilet design that would siphon off human urine to use as a source of phosphate. It would be stored in tanks for supply to farmers.

What will happen to the farms of Mato Grosso when the price of phosphorus doubles, quadruples, and then doubles again? For that matter, what will happen to the fields of Iowa?

Brazil and the New Agriculture

It is the specter of resource limits that has led the authors of the IAASTD study to recommend that traditional practices be studied and adopted where they make sense. One of the most promising traditional practices that is now being studied at Cornell and other major agricultural research institutions has its origins in Brazil.

Brazil’s President Luiz Inácio Lula da Silva has been on the defensive for his government’s role in deforesting the Amazon. Most recently, critics have attacked Brazilian agriculture for diverting capacity from food to biofuels.

Lula has countered the criticism by insisting that Brazil will expand its agriculture without further encroachments on the Amazon. One of the best ways to do that, and conserve scarce fertilizers like phosphorus at the same time, might be to adopt a practice used by an ancient civilization that occupied the Amazon before Columbus.

The practice is called terra preta, Portuguese for “dark earth.” These dark earths are highly fertile soils that were created by burying charcoal along with manure and other organic wastes. Charcoal is a porous material that is very good at holding nutrients like nitrogen and phosphorus and making them available to plant roots. It also aerates soil and helps it to retain water.

Some terra preta fields are thousands of years old, and yet they are still so fertile that they are dug up and sold as potting soil in Brazilian markets.

Because making charcoal from biomass releases energy, researchers today are looking at integrated biomass energy and food production systems using “biochar” – the modern term for terra preta. There is a good account of the terra preta in Charles C. Mann’s book, “1491: New Revelations of the Americas Before Columbus.”

Biochar may be the answer that Lula is looking for. Biochar could be a great gift from Brazil to the rest of the world. Charles C. Mann notes that “it might improve the expanses of bad soil that cripple agriculture in Africa – a final gift from the peoples who brought us tomatoes, corn, manioc, and a thousand different ways of being human.”

Biochar is just one of the traditional agricultural practices that a world running out of fossil fuels and cheap fertilizer may be very grateful to rediscover in the coming years. The IAASTD report, if acted upon quickly, could jumpstart this research.

The IAASTD report does not go so far as to provide a road map or an action plan, but the various private-public partnerships that are working to implement its goals are already finding it useful.

Inter Press Service reports that a delegate from Costa Rica said “These documents are like a bible with which to negotiate with various institutions in my country and transform agriculture.”

Benny Haerlin, the representative from Greenpeace, sees the document as a blazing signpost, lighting the way. He said: “This marks the beginning of a new, of a real Green Revolution. The modern way of farming is biodiverse and labor intensive and works with nature, not against it.”

Kelpie Wilson is Truthout’s – www.truthout.org – environment editor. Trained as a mechanical engineer, she embarked on a career as a forest protection activist, then returned to engineering as a technical writer for the solar power industry. She is the author of “Primal Tears,” an eco-thriller about a hybrid human-bonobo girl. Greg Bear, author of “Darwin’s Radio,” says: “‘Primal Tears’ is primal storytelling, thoughtful and passionate. Kelpie Wilson wonderfully expands our definitions of human and family. Read Leslie Thatcher’s review of Kelpie Wilson’s novel “Primal Tears.”

The United States doesn’t have to look far to find an example of a major nation that has done just that. Brazil, South America’s largest economy, launched an ethanol motor fuel program in 1975 and, against heavy odds, has developed a cost-efficient alternative to gasoline.

It appears now as though Brazil’s sugar industry, once viewed as a remnant of the country’s colonial past, may have a prominent place in the world’s energy future.

About half of the country’s 21,000 square miles of sugar cane under cultivation is used to make ethanol that, according to the World Bank, is being produced at a cost of US$ 1 per gallon compared to US$ 1.50 for gasoline.

Getting to that point required decades of steady pressure from Brazil’s government, in ways that would be hard to duplicate in the United States.

In the 1970s, with Brazil being hit hard by Mideast oil shocks, the ruling military dictatorship launched a national program to reduce the country’s dependence. It encouraged the construction of ethanol plants by doling out low-interest loans to sugar companies, financed a national distribution network and imposed subsidies to keep the price of the fuel low.

By the mid-1980s, most new cars sold in the country ran exclusively on ethanol, and the share of Brazil’s energy needs filled by imported crude fell from around 80 percent in the late 1970s to about 45 percent in 1990.

When gasoline prices fell again in the late 1980s, though, demand for ethanol stalled.

In the late 1990s, the government of President Fernando Henrique Cardoso ended government subsidies for Brazil’s sugar industry, spurring the sector to new competition and innovation.

"After the end of state protection, a number of sugar mills went bankrupt, but now they are coming back and they are fully restructured," says Bruno Soares, an attorney with the New York business law firm Chadbourne & Parke.

The government also switched its emphasis from alcohol-only to "flexible fuel" vehicles, mandating that all gasoline must be mixed with at least 25 percent ethanol. Now cars that can run on ethanol, gasoline or a mixture of the two account for 70 percent of all cars manufactured there.

That has made motorists happy, because they can easily shift to whichever fuel is cheaper.

Investing in Innovation

With at least 300 sugar mills in Brazil employing an average of 2,000 people at each facility, Brazil’s politicians also have seen the advantages of investing in innovation.

"For the government, each mill creates a lot of employment," says Frederico Humberg, executive director of the Brazilian agribusiness company Bunge Ltd.

However, the conversion has not been without its hitches, especially supply problems.

In January, Agriculture Minister Roberto Rodrigues announced that the country’s sugar cane industry would need an estimated US$ 10 billion worth of investment by the year 2012 to meet rising demand.

That reflected the need to build 73 new mills to convert raw sugar into ethanol, and to plant another 10,000 square miles of cane, nearly a 50 percent increase.

Also, the percentage of ethanol required in auto fuel recently was temporarily lowered to 20 percent because of limited supply.

Still, Brazil plans to raise its profile as an ethanol exporter to the world. The country exported US$ 600 million worth of ethanol last year, and that figure is expected to more than double to US$ 1.3 billion by 2010.

Brazil is going to "replace other players," says Soares. "Brazilian ethanol is cheaper, more efficient."

Customers such as Japan and Sweden hope that using cleaner-burning ethanol will help them meet their obligations under the Kyoto Protocol to cut emissions.

"Over time, we are trying to reduce our … emission of greenhouse gas," says Guido Mantega, Brazil’s new Finance Minister and until recently president of the Brazilian Development Bank, "and the demand for ethanol will increase as countries attempt to adhere to Kyoto."

The U.S. government’s interest in ethanol is embodied in the energy bill Bush signed last year, which mandates doubling the amount added to gasoline to 8 billion gallons by 2012 still only a tiny fraction of the approximately 146 billion gallons of gas the country consumes each year.

In February, the top executives of Internet search giant Google, Larry Page and Sergey Brin, visited ethanol maker Cosan’s factory in the city of Piracicaba, Brazil, indicating their interest in investing in the fuel.

U.S. Making Its Own Path

But there’s little prospect that the United States is ready to follow in Brazil’s footsteps toward energy independence.

U.S. ethanol is made almost entirely from corn, not sugar. Because of the need to convert the corn’s starch into sugar before creating a usable alcohol fuel, it costs 30 percent more than its sugar-based counterpart.

Adding to the costs, the motor fuel industry also would face a huge investment in a system to distribute ethanol nationwide and install new tanks and pumps at filling stations.

At the same time, the political clout of agriculture and the auto industry make it unlikely that the United States will remove some of the constraints that bind its ethanol market.

There’s little chance of reducing the tariffs that keep much of Brazil’s lower-priced ethanol out of the country. And slashing farm subsidies, which attracted more efficient producers to the ethanol market in Brazil, is seen as a non-starter in Washington.

Finally, politicians are extremely wary about hiking the nation’s low gasoline taxes, which make gas a bargain at U.S. pumps compared to most other countries and make it more competitive with ethanol.

This article was published originally by Cox News Service.

Clean burning, renewable energy promises to fuel globalization’s potential to propel human development and environmental protection to every corner of the planet. Ethanol as fuel can play a growing role in delivering on this promise, and as a useful tool to reduce greenhouse gas emissions and lessen the human and environmental costs of petroleum dependency.

Brazil’s own experience with ethanol demonstrates that this biofuel can be incorporated within a practical sustainable development framework that employs people, helps to clean petro-polluted urban environments, and plays an important role in making the transition toward clean renewable energy.

A chorus of mayors from all corners of the world provided a strong voice for these same goals at this year’s United Nations World Environment Day meetings, held in June in San Francisco. It was more than appropriate that the meetings were held in California, the state that leads the nation in legislating strict emissions standards despite President George W. Bush’s withdrawal from the Kyoto Protocol.

The World Environment Day’s 2005 theme of “Green Cities” appropriately followed the enactment of the Kyoto Protocol earlier this year, and tightened the global focus on cutting greenhouse gas emissions.

Moreover, the gathering served to provide a necessary, although too often overlooked contrast to the U.S. congressional deliberations of an “over compromised” 2005 Energy bill that continues to feed petroleum and coal interests through pork barreled subsidies and protections.

In sharp contrast, mayors of some of the largest cities in the world joined together at the event, to jumpstart a “new global environmental grassroots movement focused on cities.” They agreed that meeting Kyoto’s targets for reducing fossil fuel emissions in the cities depends upon greater international cooperation to make the market work for “green and clean” fuel alternatives.

The search for renewable and affordable energy to fuel globalization has often been suffocated by the economic reach and political weight of petroleum and coal. Yet, today’s surging gasoline prices, the mounting costs of keeping petroleum “king,” and the violent political conflict surrounding the Persian Gulf oil exporting states, together cast a limelight on the renewed efforts to replace fossil fuels, making the enactment of Kyoto a new season in the drama of global warming.

Fossil fuels are far from dead, but the plot is increasingly clear. Can Brazil’s tried and trusted experience with ethanol help to fuel a sustainable globalization that meets people’s needs, cuts emissions and protects the environment?

The Origins of Ethanol as Fuel

Ethanol has occupied a central place in the debate over petroleum substitutes since the first OPEC oil shock in 1973. “Gasohol” as it was termed in the U.S. captured the imagination of those waiting in long lines at the pump, but failed to compete with petroleum over the long run and falling oil prices in the 1980s and 1990s.

Over the course of the last few decades, ethanol played an inconsequential role in U.S. energy policy. Rather than the incorporation of ethanol as a cleaner, renewable alternative to gasoline, successive U.S. governments chose to use ethanol policy as a lever to raise the price on a bushel of corn, the primary biomass used in U.S. production.

Brazil’s experiment with ethanol was born from necessity. The country’s “miracle” economy was expanding annually by 6 to 10 percent in the 1970s under authoritarian rule. The oil shocks threatened the military government’s development strategy and compelled it to borrow “petrodollars” to finance continued growth and the country’s dependence on oil imports.

Brazil sought energy independence to guarantee future development. In 1975, the Brazilian National Alcohol Program, Proálcool, was unveiled to take advantage of the country’s sugar industry in order to commercialize ethanol as a renewable fuel.

Despite the stabilization of petroleum markets in the 1980s and 1990s, Brazil continued to produce ethanol and took measures to increase its commercialization.

The federal government guaranteed its market viability by mandating that all gasoline be blended with this renewable and relatively clean fuel. Each year the Brazilian authorities regulate the blend ratio in accord with world oil and sugar prices, reaching up to 25 percent at the pump.

In addition, the government provided attractive credits and loans to stimulate the expansion of sugarcane cultivation and processing capacity, even when market conditions did not. Brazil has now eliminated direct subsidies, but the government continues to foster the public/private partnerships required to make ethanol competitive at the pump.

These efforts paid off. According to Brazil’s Minister of Economic Development and International Trade, Luiz Fernando Furlan, “an analysis of our balance of payments shows that the increasing replacement of gasoline by ethanol saved some US$ 43.5 billion between 1976 and 2000.”

Brazil also created a market for ethanol fueled products by extending tax credits to the subsidiaries of multinational automakers willing to manufacture all ethanol – called E100 at the pump – fueled cars. Initial efforts to roll out the “álcool” cars had a mixed record, but the experiment led to a series of impressive and practical technological developments.

Today, Brazilian automakers are manufacturing a growing fleet of “flex fuel” vehicles capable of running on the ethanol-blended gasoline, sometimes referred to as “gasohol” or E100. U.S. automakers also produce flex fuel vehicles that run on a blend that can include as much as 85% ethanol, called E85 at the pump. Unfortunately, these vehicles are not adequately marketed to consumers, and are largely produced in order to qualify for emission reduction tax credits.

The increasing presence of these flex fuel cars in the marketplace promotes ethanol use, stimulates greater technological innovation for both the ethanol and vehicle manufacturing sectors, and allows consumers to decide at the pump: fossil fuel or renewable energy?

Three decades after Proálcool, Brazil’s ethanol experience stands as a well prepared understudy to petroleum, and a marketable mechanism for reducing greenhouse gases and advancing the Green Cities vision of sustainable urban development.

Ethanol and Global Warming

Brazil’s ethanol program was sparked by economic nationalism, but is best understood as a model of renewable energy production with global implications. Ethanol burns much cleaner than gasoline, without the dangerous hydrocarbon emissions associated with global warming. Gasoline and coal account for nearly three quarters of the carbon dioxide that threatens our atmosphere.

Fossil fuel emissions include sulfur and nitrogen oxides, carbon monoxide and other particulate matter that contribute to global warming through the greenhouse effect. Ethanol’s use as a fuel significantly lowers levels of greenhouse gases. Its expanded use may increase levels of the toxic aldehydes and peroxyacyl nitrates. Yet, these emissions do not threaten air quality or public health to the extent that carbon dioxide does.

In Brazil, the elimination of lead and the introduction of ethanol, as both a gasoline additive and fuel, led to a dramatic fall in carbon emissions, approximately ninety percent by 1995. This experience demonstrates ethanol’s potential as a pragmatic and marketable tool for achieving Kyoto’s emission limits.

Further research is required to better understand and mitigate ethanol’s modest environmental drawbacks, all of which pale in comparison to the extraction and use of fossil fuels. Moreover, these modest costs must be balanced against the proven, substantial benefits of lower levels of greenhouse gas emissions and higher rates of job creation than fossil fuel production.

Ethanol and Employment

The ethanol alternative waits in the wings, ready to create jobs and contribute to sustainable rural development, especially in the poorest of countries. Globalization of economic activities often eliminates employment in the countryside and marginalizes the poor from productive resources.

Ethanol’s reliance on the cultivation of bio-mass, such as sugarcane in Brazil, coupled to a decentralized system of processing facilities, provides more human and sustainable development opportunities than the capital intensive and centralized production of petroleum. Moreover, many poor countries import oil, drawing precious resources away from productive, employment generating activities.

In Brazil, ethanol production creates many more jobs than fossil fuel production. For each unit of energy generated, oil creates one job, coal production employs four, and ethanol 152. In terms of investment required for job creation the numbers are equally impressive.

The petrochemical industry spends US$ 220,000 for each job created, while ethanol producers create one for each US$ 15,000 spent. Minister Furlan reports: “there are currently one million jobs directly related to ethanol production, and in the next five years we expect the number to grow by 204,000.”

Brazil’s recent insertion into the global economy has significantly increased unemployment throughout the nation. Increasing ethanol production promises to partially alleviate this disappointing outcome of neoliberal economic reform.

In the U.S., ethanol production is now responsible for creating more employment in rural areas than any other economic activity. The lower entry costs of sugarcane and other bio-mass cultivation, when compared to fossil fuel or nuclear energy, can create additional opportunities for family farmers and rural workers around the world.

Moreover, governments and multilateral organizations can sponsor the public/private partnerships needed to attract investment and transfer technology to poor countries willing to move forward with ethanol.

Ethanol can play a supporting role in fueling local and national development in many poor countries. Biomass cultivation and local ethanol production can generate employment and decrease expenditures for oil imports.

These conditions are essential for increasing wages and improving working conditions while freeing up resources for deeper investments in health, education, and productive infrastructure.

Ethanol is only part of the solution for job creation, rural development, and urban air quality in the poor countries of Africa, Asia and Latin America, but continued dependence on foreign oil only serves to prolong the poverty and developmental bottlenecks.

Ethanol’s Energy Balance

To cut emissions, create jobs and beat petroleum at the pump, ethanol must achieve a positive and profitable “energy balance.” This goal requires the elimination of fossil fuel use in production, increasing energy cogeneration, and continued efforts to reduce costs and lower prices relative to oil.

Brazil has already done much of the homework. Sugarcane growers, ethanol refineries, producer associations, government authorities and researchers teamed up to develop the technology needed to promote higher sugarcane yields and sugar content, more efficient juice extraction methods, and cogeneration of electricity during the production process.

A steady flow of investments now permit refineries to produce more ethanol per hectare of sugarcane and generate electricity from the steam created from the burning of the waste (bagasse). This sustainable cycle of cogeneration is capable of fueling the production process without reliance on fossil fuels.

Brazilian industry has also taken additional measures to achieve a positive and sustainable energy balance. Organic fertilizers, including the by-products of sugarcane processing, vinasse and filter cake, are increasingly used to replace petrochemical based products.

Moreover, genetic engineering has reduced the need for dangerous pesticides while the introduction of green cane harvesting has reduced carbon emissions from the burning of fields before harvest. These innovations demonstrate that ethanol can be produced through low cost, and increasingly sustainable techniques.

Brazil is also taking additional measures to make ethanol cheap for consumers. Sillas Olivo Filho, Petrobras’ Manager of Commercial Ethanol Sales, predicts ten percent annual growth in production to meet the escalating domestic and foreign demand.

Aside from delivering blended gasoline and pure ethanol fuel to growing numbers of domestic consumers, Brazil is the largest exporter of ethanol. In 2004 the country exported to India, the U.S., South Korea, Japan and members of the European Union among others. The country’s exports could increase substantially if more countries turn to ethanol to reduce energy costs and improve air quality.

The Brazilian government is preparing for ethanol’s global role. According to Minister Furlan, “we are also expanding the cultivation of sugarcane to meet the increasing domestic and foreign demand for ethanol.

We project that by 2013 we will need to increase cultivation by 3 million hectares from the 5.7 million currently used for sugarcane. Brazil does have the potential for increasing sugarcane cultivation since their remains vast tracts, up to 90 million hectares, of unused agricultural lands.”

Petrobras, Brazilian government authorities and private stakeholders are increasing their investments in production, pipelines, railways and port facilities to meet the rising demand and further reduce production and logistical costs.

Minister Furlan notes, “the logistical infrastructure for the export of ethanol serves up to 2.5 billion liters a year. With the recent negotiation of additional export contracts, Petrobras will make additional investments to expand the logistical capacity to serve up to 9 billion liters and construct fuel pipelines to add another 3 billion liter export capacity. By 2010 Brazil will have an export capacity of 12 billion liters a year.”

These efforts promise to lower the costs to domestic consumers and importers in order to make the energy balance meaningful to consumers at the pump. According to Sillas Olivo Filho of Petrobras, “additional infrastructure and international standards are needed to further reduce costs and make the price right for international markets as petroleum based fuels did in the past.”

Brazil’s sugarcane ethanol has overcome the energy balance challenge and demonstrated increasing market viability. The challenge now is harnessing this experience to make a global ethanol market that can compete with petroleum.

Going Global with Ethanol

Brazil’s ethanol experience plays well to the hometown audience, but to take the show on the road requires multilateral cooperation and a partnership with the second largest producer of ethanol, the United States. Since the 1970s, the U.S. industry has depended upon corn for production and politics for profits.

The only production related advantage is corn’s ability to be stored and used between harvests. Corn is more expensive than sugarcane and other promising biomass alternatives, and provides less ethanol production per hectare. U.S. corn cultivation requires greater amounts of petrochemical fertilizers and toxic pesticides than Brazil’s sugarcane fields.

Corn processing, for sweetener or ethanol, requires additional fossil fuel. Without the capacity for cogeneration, corn based ethanol’s energy balance lags far behind Brazil’s sugarcane based ethanol. Corn based ethanol producers only generate 2 units of energy for each unit required in production.

Brazil’s industry generates at least 3.7, and possibly up to 10.2 units. After three decades, ethanol production in the U.S. remains locked to efforts to increase the price of corn, rather than improve air quality and lower dependence on oil.

The developing U.S. ethanol industry is held “captive” to the political interests of domestic corn and sugar producers. For decades, U.S. ethanol producers have received tax credits for each gallon. This ensured that corn producers had a secondary market to dump surplus and increase aggregate prices for corn, from 25 to 50 cents a bushel.

Legislation in 2004, the American Jobs Creation Act, instituted the Volumetric Ethanol Excise Tax Credit (VEETC), which continues to offer domestic gasoline refiners a 51-cent kickback on every gallon of ethanol used. The 2005 Energy bill incorporates this subsidy within a larger mandate, requiring gasoline refiners to nearly double their use of renewable energy additives (read ethanol) in the coming years.

These policies do promote greater ethanol use, but only to the limits of current or forecasted corn based production. They fall short of moving the country toward higher blend ratios that could guarantee lower greenhouse gas emissions.

In addition, domestic producers are protected from imports, largely Brazilian. The U.S. adds on a 54 cent per gallon secondary duty to the normal tariff to shield domestic producers from competitive imports based on cheaper biomass and more efficient technology.

According to Taxpayers for Common Sense, “between the ethanol mandate, the 51-cent per gallon tax incentive, and the huge host of handouts and tax breaks for producers, the ethanol industry is riding high.

Ethanol producers don’t need to compete with gasoline to take in huge profits; they can still haul home truckloads of cash so long as Congress remains their sugar daddy. But while corporate agriculture is getting drunk off of ethanol subsidies, taxpayers are getting stuck with a nasty hangover.”

In fact, the largest ethanol producer, Archer Daniels Midland (ADM), controls handsome global market shares in corn and other feed grains. ADM and their partners have carefully steered the U.S. Congress toward a policy that increases the value of corn, but effectively increases the price of ethanol. Such a policy does little to achieve energy security in renewable fuels or lower emission levels.

U.S. energy and ethanol policies effectively curb the production of biomass alternatives to supply ethanol refineries. The generous subsidies doled out to corn fed ethanol producers and gasoline refineries diminish interest in cheaper forms of biomass and more efficient technology.

Most of the ethanol production facilities are owned by corn producers to increase the price of their harvest, with little interest in making the investments necessary to improve the energy balance, lower costs and make their product work for consumers at the pump.

Gasoline refineries, even those that market “cleaner” gasoline like British Petroleum, are very resistant to increasing the blend of ethanol to cheapen gasoline, improve air quality or make E85 widely available. Moreover, the most promising biomass alternative, sugarcane from Hawaii, Louisiana and Florida, already enjoy generous subsidies and protection that bring in exorbitant rents from higher than world market prices.

The 2005 Energy Bill does provide a six million dollar budget to promote sugarcane based ethanol, but this pales in comparison to Subtitle E, Section 951 which authorizes $1.82 billion dollars over three years for fossil fuel based research and commercial applications. Decades of protection and subsidies for U.S. ethanol production have actually worked to undermine the market viability of this important tool for sustainable development on a global level.

There is a growing demand for ethanol in the U.S. An increasing number of states, including California, have banned the very toxic gasoline oxygenate MTBE leaving refineries to choose ethanol to meet federal emission standards under the Clean Air Act. Hawaii and Minnesota now require ethanol to be blended in all gasoline, with many more states considering such a mandate.

Also, Minnesota, the third largest producer of ethanol in the country, has legislated a graduated increase of the blend ratio to eventually reach twenty percent by 2013. The U.S. Governors Ethanol Coalition recommends that ethanol make up at least ten percent of the nation’s fuel use, and that the federal government provide the funds necessary to develop large scale production with cheaper, more widely available biomass.

The Renewable Fuels Association (RFA), the major representative of the U.S. ethanol industry, has also advocated for increases in the use of ethanol. Yet, the RFA is reluctant to advocate a partnership with Brazil, preferring to seek shelter for producer-members that process ethanol merely as an instrument to add value to the corn harvest.

Senate Finance Committee chairperson, Charles Grassely, represents the largest ethanol producing state, Iowa. As the voice of corn fed ethanol and one of the most important trade policymakers, Senator Grassely regularly submits legislation to curb the cheaper Brazilian imports. Ever vigilant, the RFA and Senator Grassely have narrowly focused on Brazil as a threat to the domestic market, rather than a co-star in a global cast of ethanol producers and consumers.

The U.S. and Brazil, due to their productive capacity, automobile industries, growing consumption, and history of compromise and cooperation in matters related to air quality are best prepared to partner up in developing the technology, standards and infrastructure necessary to give structure to the global ethanol marketplace.

Matt Peak, Clean Transportation Policy Analyst for CALSTART, suggests that U.S. policymakers should encourage “price competitiveness,” to make ethanol a “tremendous boon to the country’s economy, job base, foreign policy and level of greenhouse gas emissions.”

A partnership between the U.S. and Brazil promises to accelerate advances in sustainable and low cost production, expand commercialization, and set standards for the manufacture of flex fuel vehicles around the world. Replacing MTBE with ethanol is a good first act, but the plot can only thicken if ethanol is produced to compete with petroleum.

Together, the U.S. and Brazil are capable of meeting the imposing obstacles. According to Brazilian Minister Furlan, “the growing need to make political and strategic decisions over ethanol, and its impact upon the national energy security of many nations, are important obstacles to be overcome in the coming years.”

Yet, without strategic cooperation between the heavyweights of ethanol, policymakers and investors around the globe will think twice before regulating higher ethanol blends and promoting flex fuel vehicle markets.

The world is waiting. Canada, China, India, Japan and Russia are considering higher ethanol blends to cut energy costs and meet the challenges of Kyoto. The European Union is actively searching to find the best ways to develop and commercialize ethanol and biodiesel. Most automakers oppose emission standards, but are now capable of delivering E85 or E100 flex fuel vehicles with few additional costs.

An emerging, environmentally conscious and “Green Cities” based global movement is searching for sustainable, and often market friendly, solutions to global warming. Critics are right to identify the environmental drawbacks of ethanol, but even the most severe recognize that it can be “important in regions or cities with critical pollution problems.” Strategic cooperation can make ethanol a partial, pragmatic solution to the many problems related to energy security, climate control and rural development throughout the world.

The U.S. government supports increasing ethanol production and reduction of greenhouse gases, but from a unilateral and protectionist framework that undermines the nation’s potential leadership role. The next act is fast approaching, with both the Bush administration and U.S. Congress taking a back seat to efforts to bury fossil fuel once and for all.

It may well play out that California, host of World Environment Day 2005 and home to a mammoth fleet of passenger and commercial vehicles, has the last say, given its strict emissions standards and escalating need for ethanol. Should California policymakers opt to follow in the policy steps of Minnesota and Hawaii, the story of ethanol will no doubt sweeten.

If California and its booming clean vehicle industry choose a leading role, then the U.S. and Brazil may well find their way to the center-stage of this drama, helping to fuel sustainable global development for decades to come.

Mark S. Langevin, Ph.D., is Assistant Professor of Political Science at Chapman University College in Santa Maria, California. He is also National Organizer for the Brazil Strategy Network, a U.S.-based group of forty academics, activists, trade union leaders and representatives from non-government organizations dedicated to Brazil-related issues. The group was formed in October of 2002 in Washington, D.C., following the election of Luiz Inácio Lula da Silva as President of Brazil.

At Chapman, he sits on the university’s “Critical Friends” board of the Paulo Freire Democratic Project. He has lived and worked in Brazil, conducted research on United States-Brazil Economic Relations, and is an appointee to the California State Senate – California/Brazil Partnership’s Strategic Action Team. His e-mail address is: langevin@chapman.edu.

This article was originally published in InfoBrazil – www.infobrazil.com.

The Brazilian Petroleum and Gas Institute (IBP) maintains its forecast that, by the end of the year, 1 million cars will have been converted to use compressed natural gas (CNG) as fuel, despite the slower pace of conversions observed in May.

After a succession of record-breaking months during which the conversion rate averaged 20 thousand per month, the number of light vehicles converted to CNG use in May (16,236) retreated to the levels that prevailed up to last December.

These data, released, Tuesday, June 21, by the IBP, show that May’s results raised the national total of CNG-fueled vehicles to 936,338.

The coordinator of the Institute’s Gas Committee, Rosalino Fernandes, says that this result surpassed expectations, considering the impact of the crisis in Bolivia and the output of alcohol, which caused alcohol prices to drop below gas prices in some regions.

In São Paulo, for example, a liter of alcohol costs US$ 0.37 (88 centavos), while a cubic meter of gas costs US$ 0.46 (1.10 real).

The Institute predicts that, even with these factors, the total of cars converted to CNG use in Brazil will reach 1 million before the end of the year.

According to Fernandes, this mark, based on a study done by the Getúlio Vargas Foundation’s Brazilian Institute of Economics (Ibre) in 2000, should be met between October and November.

The IBP also estimates that the monthly average of vehicle conversions to CNG use will return to 20 thousand between August and September.

According to Fernandes, one of the advantages of CNG use is the reduction of greenhouse gas emissions.

Moreover, CNG, which is normally cheaper than gasoline or alcohol, is a more efficient fuel: On a cubic meter of gas, a car runs between 12 and 13 kilometers, while on a liter of alcohol, it goes only 7, according to the IBP.

The IBP is a private organization formed by various public and private enterprises in the sector, including Petrobras.

ABr – www.radiobras.gov.br

Brazil’s investment in biodiesel production is expected to reach US$ 515 million in 2008, when production of this fuel is expected to amount to around 800 million liters.

The figure should grow to US$ 1.5 billion in 2013, when domestic production will be 2 billion liters.

This estimate was given by the deputy head of Analysis and Accompaniment of Government Policies of the Presidential Civilian Advisory Office, José Honório Accarini, who participated in the seminar, “Biodiesel – Strategies for Production and Use in Brazil,” April 26, in São Paulo.

The encounter, which ended yesterday, was held to demonstrate the advantages of biodiesel for the country, the progress of research in the field, the technologies employed to develop the fuel, and the lines of production incentives, among other topics.

Entrepreneurs involved in this area also had a chance to express their opinions and provide successful examples from other countries to speed up the introduction of biodiesel on the market.

Accarini points out that everybody can gain from biodiesel. “The businessman and the family farmer can make money, and poor regions can get jobs and energy in remote communities,” he said.

ABr