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Bush, Lula sign ethanol accord for energy security

Bush, Lula sign ethanol accord for energy security
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First Published: Sat, Mar 10 2007. 12 07 AM IST
Updated: Sat, Mar 10 2007. 12 07 AM IST
Bloomberg
Sao Paulo: President George W. Bush and Brazilian President Luiz Inacio Lula da Silva agreed to share technology to develop alternative fuels and reduce reliance on oil imports from Venezuela and its Bush administration critic, President Hugo Chavez.
“If you’re dependent on oil from overseas, you have a national security issue,” Bush, 60, said here on the first stop in his six-day visit to Latin America. “Dependency on energy from somewhere else means you’re dependent on the decisions from somewhere else.”
The biofuels partnership between the US and Brazil, the two biggest global produces of ethanol, is also designed to help reduce pollution and improve local economies.
Brazil, the biggest Latin American economy, is the world’s only major exporter of ethanol, and total ethanol shipments from Brazil may more than triple in eight years as production outpaces domestic demand, according to Brazil’s agriculture minister. Brazil and the US account for more than 70% of world production.
“Other countries want to share Brazil’s experience,” Lula said, adding that avoiding use of fossil fuels helps combat global warming.
Farmers in Brazil have increased planting of sugarcane to meet surging demand for ethanol, the Brazilian government’s statistics agency said.
Bush earlier toured a facility of Petrobras Transporte SA, a unit of Petroleo Brasileiro, Brazil’s state- controlled oil and natural gas company, in an industrial area of Sao Paolo. The company operates in South America and elsewhere around the world.
Developing energy alternatives offers political benefits to the US, Brazil and their allies, as a counterweight to Venezuela’s oil reserves, the seventh largest in the world, and Chavez. About 10% of total US crude oil imports, or 1.04 million barrels a day, in December came from Venezuela, according to Department of Energy data.
After the joint announcement, Chavez said the agreement was another tilt to benefit Americans. “That’s the Bush plan,” he said at the presidential residence of Argentina’s President Nestor Kirchner. “They want to replace the production of food so they can sustain their American way of life.”
Creating energy from agriculture “will increase the independence of these countries and improve their ability to address social and development issues”, said US Assistant Secretary of State Thomas Shannon on 7 March in Washington.
Brazil has been producing ethanol from sugarcane for about 30 years. The crop now replaces 40% of gasoline consumption. More than 70% of the new automobiles sold are “flex-fuel” vehicles, meaning they can run on gasoline or ethanol.
One point of contention between the US and Brazil is tariffs. Ethanol producers in Brazil want President Lula to press Bush to end the 54-cent-a-gallon tariff on fuel shipped to the US, a request that White House National Security Adviser Stephen Hadley rejected on 5 March.
“The tariff is not under negotiation and we have no intention to propose altering the tariff,” Hadley said. Removing the tariff would provoke strong opposition from farm- state members of Congress.
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First Published: Sat, Mar 10 2007. 12 07 AM IST