Alexandre Marinis, Business Times 28 May 08;
SOMETIMES two things look pretty much the same, such as a Cartier diamond and a Home Shopping Network cubic zirconia. There's a world of difference between the two.
The same is true of ethanol made in the US, mainly from corn, and ethanol from Brazil derived from sugar cane. They look the same, though that's where the similarities end between what I like to call ethacorn and ethacane.
Although ethacane doesn't produce a fraction of the negative economic, environmental and social problems that ethacorn does, as international food prices soar and environmental concerns mount, both are being thrown into the same pinata to get hammered. Ethacorn deserves the beating, not ethacane.
It's hard to know whether those wielding the sticks are just temporarily blindfolded or whether they have an interest in defending the fossil-fuel industry or the agricultural subsidies of rich nations. There are four main arguments against the wide use of Brazilian ethacane:
# Food prices are being driven out of sight as farmers grow more-profitable sugar cane instead of other crops.
# Amazon rainforest is being destroyed to make way for cropland.
# Ethacane pollutes as much or more than oil-based fuel.
# Cane production uses the equivalent of slave labour and is morally unjust since it takes food from the mouths of the poor to put in the gas tanks of the rich.
Each of these points is a myth.
To start with, let's make a broad point. "Brazil has the oldest, most advanced and efficient ethanol programmes in the world", according to the report of an international conference on biofuels in February 2007 at the Woodrow Wilson International Centre for Scholars in Washington.
That brings up the first question: If ethacane were responsible for higher food prices, wouldn't food cost more in Brazil than elsewhere? It doesn't.
According to the United Nations Food and Agriculture Organization, or FAO, Brazil is one of the world's cheapest producers of corn, soybeans, beef, chicken, pork, milk and rice. In a clear sign of agricultural competitiveness, Brazil is also a leading exporter of food.
"When we talk about the influence of biofuels on the economy of grains, we are talking about the corn from the US, not the sugar cane from Brazil," said Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains within FAO. A recent study by the International Monetary Fund shows that Brazil's ethacane hasn't been responsible for higher international food prices.
Brazil also has all the room needed to grow sugar cane and increase agricultural productivity without tearing down a single tree in the Amazon. Five hundred years ago, the Portuguese learned that the Amazon isn't the best region to grow sugar cane, which requires a long dry season. Out of 320 million hectares of arable land in Brazil, only 3.2 million hectares, or one per cent, are used to grow sugar cane for ethanol. Moreover, Brazil has 100 million hectares of underutilised pastures suitable for agriculture. That's more land than France and Germany combined. While every hectare, equal to about 2.5 acres, of Brazilian pasture feeds one cow, in many countries there are as many as six cows per hectare. If Brazilian ranching becomes slightly more intensive, the country could easily boost production of food and biofuels without destroying the forest. Proving economist Thomas Malthus wrong, in the past 15 years, Brazil increased the amount of land used to grow grains by 21 per cent, while production soared 119 per cent.
Arguing that ethacane pollutes more than fossil fuels is ludicrous. While oil already costs US$130 a barrel and will eventually run out, ethacane is renewable, cleaner and more efficient. In comparison with gasoline, ethacane reduces the emission of greenhouse gases by more than 80 per cent, according to the US Energy Department. As for efficiency, ethacane produces 8.2 joules of energy per unit of fossil-fuel input, compared with 1.5 joules for ethacorn and less than one joule for diesel and petrol. Ethacane is twice as productive as ethacorn - 6,800 liters per hectare for the former and 3,100 liters per hectare for the latter. It also produces 24 percent more fuel per hectare than the beet- or wheat-based ethanol common in Europe.
The argument that ethacane pollutes the environment because the cane must be burned before being manually harvested is a nonstarter. In the state of Sao Paulo, which produces 62 percent of Brazil's ethanol, more than half of the cane is already harvested mechanically and manual cane-cutting will be abolished by 2014. That should also put an end to the argument that cane harvesting relies on the equivalent of slave labor.
Nor does ethacane take from the poor and give to the rich. Agricultural subsidies in wealthy nations do that.
Far more problematic than any of these issues is the U.S. Congress's refusal to eliminate a 54-cent tariff on each gallon of imported ethanol. This levy was introduced in 1980 to protect U.S. makers of corn-based ethanol from competitors such as Brazil, which can produce ethacane for 22 cents per liter, while U.S. ethacorn costs 35 cents per liter. Lifting this tariff would ease the demand for corn and take a step toward easing pressure on food prices.
Brazil is threatening to challenge the US tariff at the World Trade Organization. Pascal Lamy, the director-general of the WTO, has already said Brazilian ethacane "isn't competing with food" and "is more respectful to the environment than the corn-based ethanol in the US and Europe."Sooner or later, the WTO might have the chance to decide whether the world can finally have a real substitute for oil. Pascal Lamy, the director-general of the WTO, has said Brazilian ethacane "isn't competing with food" and "is more respectful to the environment than the corn-based ethanol in the US and Europe." Sooner or later, the WTO might have the chance to decide whether the world can finally have a real substitute for oil. Until then, we'll have to live in a world where fake goods are passed off as the real thing. - Bloomberg
Alexandre Marinis, political economist and founding partner of Mosaico Economia Politica, is a Bloomberg News columnist. The opinions expressed are his own
