Brazil lobbyist urges US to scrap ethanol tariff

If President Barack Obama is serious about reducing US reliance on oil and moving towards cleaner energy, he should remove a tariff on imported ethanol that protects the US maize-based industry and locks out sugarcane-based ethanol, according to Marcos Jank, president of the Brazilian sugarcane industry association.

“The US and Europe should end their discriminatory trade policies if they are serious about weaning the world from fossil fuels and not just scoring short-term political points,” he told the Financial Times.

The US imposes a tariff of 54 cents per gallon on imports of most ethanol, while most oil enters the country tariff-free. Tariffs on ethanol in the European Union are higher.

Mr Jank said Brazil’s experience of using renewable fuels offered a case study for other countries wanting to expand the use of alternative energy.

At the government’s prompting, auto makers in Brazil produced large numbers of ethanol-powered cars after the oil crisis of the 1970s and a nationwide distribution network was created. The experiment collapsed when sugar prices rose and sugarcane mills – which can switch production easily between sugar and ethanol – cut ethanol production, leaving motorists stranded.

But Brazil’s energy sector has been transformed by the introduction since 2003 of “flex fuel” engines, able to run on ethanol, gasoline (which in Brazil is 25 per cent ethanol) or any mixture of the two.

Flex fuel cars account for about 90 per cent of new car sales and more than half of Brazil’s fuel needs are now met by ethanol, making gasoline the alternative fuel for cars. Sugarcane supplies a sixth of the country’s total energy needs; according to Unica, the industry association, it has delivered more than 600m tonnes of reduced carbon emissions since the mid-1970s.

There are about 10m flex vehicles on Brazil’s roads – and about 8m in the US, Mr Jank said. “It’s no longer a question of engineering or technology but simply a matter of making [fuel ethanol] available and empowering consumers to decide how they fill their tanks,” he said.

Mr Jank said a proposal by Republican Senator Richard Lugar to require new vehicles sold in the US to run on more than one fuel would be an important step, to be followed by massive investment in distribution. “The costs will be high but they pale in comparison to the costs of offshore oil exploration,” he said.