NotiEn - A newsletter on Energy Policy issues in Latin America
May 13, 2010Vol 1, Issue 3
Ethanol Production Plant
What about Biofuels? The Latin American perspective...
A NOTE FROM THE EDITOR
When one considers the biofuels industry and Latin America, the first country that comes to mind is Brazil. The South American giant has developed a strong sugarcane-based ethanol industry that has been viable for more than two decades. Until recently, Brazil produced ethanol primarily for domestic use, with all vehicles in the country running on a blend of ethanol and gasoline. 

 

Brazil's overwhelming success prompted other Latin American countries to look at ethanol as an alternative fuel source, especially when global oil prices began to rise in 2004. The effort to develop ethanol and other biofuels is promoted in part by the Inter-American Development Bank (IDB), which set a goal for the region to produce 5% of the world's annual ethanol by 2020, compared with its 1% rate in 2007. Central American countries and Mexico are among those who have made the biggest push for ethanol production.

 

For all its environmental benefits, the move to ethanol brought another set of problems. Because not every country has as large of a surplus of sugarcane as Brazil, the alternative raw material would be corn or some other grain. This has prompted a debate on whether governments should sacrifice the food needs of their populations to create biofuels. Read more...


Carlos Navarro - Editor

   

Region Embraces Ethanol: A CAFTA Complication

In its desperate search for solutions to skyrocketing energy costs (see NotiCen, 2005-06-16), Central America may have stumbled upon an alternative that could end up costing even more.


The production of ethanol, a plant-based combustible, can reduce the region's reliance on gasoline and diesel, but it could also hinder chances of passage of the Central America Free Trade Agreement (CAFTA) in the US Congress. If the region becomes a producer and refiner of the alcohol fuel, it could also become an exporter to the US under CAFTA provisions. This would upset the carefully crafted arrangement by which US farmers are guaranteed protections in the domestic ethanol market, souring the Midwest on the trade deal. Read more... 


Central America Caught in the Changing Political and Moral Environment of Ethanol
One of the outcomes of US President George W. Bush's recent trip to Latin America was a rare convergence of opinion between London's The Economist and Havana's Fidel Castro. The newspaper could not resist calling Castro "Cuba's tottering Communist dictator," but it nevertheless gave him full credit for warning against the "sinister idea of converting food into fuel." The glossy publication noted huge increases in the price of corn and explained, "As more land is used to grow corn rather than other food crops, such as soy, their prices also rise. And since corn is used as animal feed, the price of meat goes up, too. The food supply, in other words, is being diverted to feed America's hungry cars". Read more...

In This Issue...
A Note from the Editor
Region Embraces Ethanol: A CAFTA Complication
Central America Caught in the Changing Political and Moral Environment of Ethanol
El Salvador a Microcosm of the Biofuels Macrocosm
Region Could Suffer Severely from U.S. Ethanol Policy
Brazil Pushes to Expand Ethanol Industry with Multiple International Deals
Brazil's President Finds Ethanol a Hard Sell in Central America
Chamber of Deputies Approves Initiative to Promote Ethanol Industry in Mexico
President Felipe Calderon Vetoes Ethanol Legislation, Cites Concerns About Possible Corn, Sugarcane Shortages
Mexican Company Announces Plan to Construct Plant in Sonora to Produce Ethanol From Algae
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El Salvador a Microcosm of the Biofuels Macrocosm
Having proved itself a worthy ally in the Iraq war by steadfastly continuing to send its troops into that inferno, El Salvador has earned a place on a new front in US global policy, the ethanol wars. US President George W. Bush has chosen El Salvador as the site of a feasibility study for producing the fuel. The plan calls for a biofuels plant to be built in the country, even though El Salvador is already producing and exporting ethanol to the US under the provisions of the Central America Free Trade Agreement (CAFTA). The recently ignited conflagrations pit biofuel producers like the US and Brazil against fossil-fuel producers like Venezuela and Cuba. The stakes are not so much energy consumption as they are influence in the hemisphere. Biofuel advocates cite cost and cleanliness as rationale for touting the burgeoning industry, even though current research leaves both those claims in doubt. Read more...

Region Could Suffer Severely from U.S. Ethanol Policy
EthanolThe tortilla paradox is coming to Central America. First seen in Mexico (see SourceMex, 2007-01-10 and SourceMex, 2007-01-31), the phrase has come into use to denote a price reversal by which tortillas now cost more in the lands where they are the staple food than they do in New York. The World Food Organization (FAO) says cereal grains, particularly corn and wheat, have reached their highest prices in a decade. The spike, says the FAO, is the result of the US choice to feed corn to its cars as well as to livestock and people, as much of the world's corn production is slated for ethanol. Read more...

Brazil Pushes to Expand Ethanol Industry with Multiple International Deals
Brazil's government has been aggressively promoting its ethanol industry, seeking to capitalize on high fuel costs by selling the fuel derived from various crops like corn and sugar. In the drive to triple the volume of ethanol exports, Brazil has signed multiple international energy agreements, most notably with the US, its biggest customer. President Luiz Inacio Lula da Silva's effort to expand ethanol production has faced criticism externally from Latin American leaders like Venezuela's President Hugo Chavez and Cuba's President Fidel Castro and internally from poor people's movements and environmentalists. Among these criticisms are assertions that using food crops for fuel could lead to a food-price crisis for millions of poor people and that monoculture could exacerbate Brazil's already-chronic economic inequality and environmental problems. Read more...

Brazil's President Finds Ethanol a Hard Sell in Central America

EthanolBrazil's President Luiz Inacio Lula da Silva visited four Central American nations in a tour of northern Latin America that began in Mexico (see SourceMex, 2007-08-08). It was, for the most part, a "biofuels diplomacy" trip that was played in the media as pitting Lula's ethanol against Venezuelan President Hugo Chavez's oil. By most accounts, oil won. Brazil is heavily invested in ethanol, and Lula has promoted the stuff as the future great source of the planet's energy and of the region's well-being (see NotiSur, 2007-04-27). "We have the opportunity to democratize access to new sources of energy, multiplying job and income creation and diversifying the energy matrix, bearing in mind the needs of our farmers and guaranteeing food production for all", Lula said just prior to leaving home for a swing through Mexico, Honduras, Nicaragua, Jamaica, and Panama. Read more...
 

Chamber of Deputies Approves Initiative to Promote Ethanol Industry in Mexico
In late April, the Chamber of Deputies approved legislation to promote the creation of an ethanol industry in Mexico, but critics are concerned about repercussions on the country's corn and sugarcane production. The ethanol provision in the bioenergy law (Ley de Promoción y Desarrollo de los Bioenergéticos), approved primarily with the support of the governing conservative Partido Accion Nacional (PAN) and the opposition Partido Revolucionario Institucional (PRI), garnered 243 votes. All other parties, including the environmentally oriented Partido Verde Ecologista Mexicano (PVEM) and the center-left Partido de la Revolución Democrática (PRD), opposed the initiative but obtained only 127 votes. The bioenergy law is scheduled to go into effect Jan. 1, 2008, but is still open to some revisions and modifications. Read more...

President Felipe Calderon Vetoes Ethanol Legislation, Cites Concerns About Possible Corn, Sugarcane Shortages
Ethanol and Food PricesCiting the priority to ensure that Mexico's food needs are secure, President Felipe Calderon has vetoed legislation to create an ethanol industry in Mexico. The veto does not end the effort but requires that Congress make several modifications to the bioenergy law (Ley de Promoción y Desarrollo de los Energéticos), which the Chamber of Deputies approved near the end of its legislative session in April (see SourceMex, 2007-06-06). The initiative that came out of the lower house was based on a similar measure approved in the Senate in 2006.

In vetoing the measure, Calderon sent the legislation back to Congress with seven recommended changes. He said it was a serious mistake to build an industry that relies almost exclusively on corn and sugarcane, which could have negative implications for the supply and the price of those products. Read more...

Mexican Company Announces Plan to Construct Plant in Sonora to Produce Ethanol From Algae
The Mexican company Biofields has announced plans to construct a plant on the Sonora coast that will produce ethanol from algae. The company hopes its facility, which eventually could produce about 2 billion gallons of fuel per year, would provide a viable alternative to corn-based ethanol. The price of corn has risen sharply in the past two years, partly due to a US campaign to promote the use of that commodity in the production of ethanol.

Company officials said construction of the new plant at Puerto Libertad on the Sea of Cortez, is scheduled to begin in 2009 at a cost of US$850 million, with operations set to start by the end of 2010 or the early part of 2011. Read more...

LA-ENERGAIA
Energy Policy, Regulation and Dialogue in Latin America

 
NotiEn is an original newsletter with breaking news that analyzes and digests relevant and contemporary information in energy, alternative energy and energy policies in Latin America. A complimentary service provided by the University of New Mexico as part of LA-ENERGAIA Project funded by the US TICFIA Program