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Business leaders from the United States and Brazil, gathered in Washington, D.C. to discuss ways to develop new innovation-driven growth models, turned to the sucess of Brazilian ethanol and the new products the industry is spawning as an example to be considered. A bilateral partnership in biofuels signed between Brazil and the U.S. in 2007 was idetified by several speakers as a key area of cooperation, during the 2nd US-Brazil Inovation Summit, held on September 20 and 21 by the Council on Competitiveness, the Brazilian Competitiveness Movement (MBC in Portuguese) and the Brazilian Agency for Industrial Development (ABDI in Portuguese).

“Brazil and the United States are the largest ethanol producers in the world. They should work together to create a competitive open market. The Innovation Summit is a great forum for this type of debate and how to further enhance this partnership,” emphasized Joel Velasco, Chief Representative in North America for the Brazilian Sugarcane Industry Association (UNICA).

“Renewable liquefied fuels are extremely important for a country’s global competitiveness. Therefore, this is a true partnership opportunity for both countries,” said Andy Karsner, former U.S. Assistant Secretary of Energy. A clear example of this partnership is the recently announced joint venture between Brazil's largest sugar and ethanol proucing group, Cosan, and global energy giant Royal Dutch Shell, in which Codexis, a U.S. company, export technology to Brazil to further enhance the production of next-generation biofuels. “We are currently using bagasse and leaves, converting them into sugars to produce even more fuel. But it doesn’t have to be ethanol, we can convert sugar into diesel. We have the power to create new fuels,” said Shaw.

Shaw explained that the Brazilian renewable fuels market is not composed of a single crop or type of fuel. While companies such as Boeing invest in renewable jet fuel from different sources, companies such as Vale Soluções em Energia (VSE), a joint venture between Brazilian mining giant Vale and the Brazilian Social and Economic Development Bank (BNDES), are developing ethanol-powered industrial engines. “The biofuels market in Brazil is extremely diversified. The many different uses for sugarcane wil be on display in November at the Brazilian Auto Show, in an exhibit organzed by the AGORA Project, of which UNICA is a supporting member," said VSE CEO James Pessoa. The idea of renewable energy diversification was also emphasized by the Head of the Research and Development Center at Brazil's state oil company Petrobras, Carlos Fraga.

Ethanol Import Tariff

Most speakers agreed that a key factor in innovation is removing trade barriers that obstruct partnerships. Several countries impose trade barriers to ethanol, such as the US$0,54 per gallon import tariff imposed by the United States. Besides the tariff, the U.S. maintains an elaborate system of subsidies. The current set of policies is set to expire on December 31, 2010. “It would be wonderful to have the tariff go away. The Shell-Cosan joint venture is a global partnership and it will ultimately come back to the United States. The bottom line is that U.S. taxpayers deserve access to cleaner, more accessible fuels,” said Shaw.

According to a study by Dr. Bruce Babcock, head of the Center for Agricultural and Rural Development (CARD) at Iowa State University, Americans would benefit from eliminating the subsidies and the tariff. Some of the benefits include a savings of US$6 billion, lowe fuel costs and greater diversity in the U.S. energy supply