Burdening Brazil With Biofuels
Lúcia Ortiz and David Waskow
March 19, 2007
President Bush is back in the United States, but he may still be hearing echoes of the protests he faced in Sao Paulo, Brazil on his recent trip to Latin America. Some of those echoes are still somewhat surprising: the protesters criticized not only the usual issues like the Iraq war, but also Bush’s new biofuels pact with Brazil’s President Luiz Lula da Silva.
As the leaders of the world’s two largest ethanol producers, the presidents share a common desire to see agricultural crops turned into fuel that they believe can help free us from our oil addiction. Brazilian ethanol made from sugarcane is hailed as an energy-saving fuel source that creates as much as eight times as much energy as is needed to produce it and currently displaces nearly half of Brazil’s gasoline demand. So why not send more of it to the United States (perhaps making Brazil the Saudi Arabia of ethanol)?
The Brazilian protesters weren’t so sanguine about the prospects of a massive boom in ethanol production to meet demand in the United States. The magnitude of this demand is staggering. If the U.S. moves to meet a substantial proportion of its fuel needs from biofuels—as the Bush administration is proposing—the pressure to import ethanol and other biofuels will mount rapidly, reaching quantities far beyond what Brazil currently produces. Providing biofuels to meet just 10 percent of current U.S. gasoline consumption would require multiplying Brazil’s already sizeable ethanol production five ties over.
Expanding Brazil’s biofuel industry on such a large scale will create serious environmental and social problems. In Brazil, much of the expansion of ethanol production to meet U.S. and broader international demand is likely to take place in environmentally sensitive areas. One of these critical areas is the cerrado , the enormous Brazilian savannah, which is one of the most biologically diverse areas in the world. And the environmental damage would not stop there if biodiesel demand is added to the mix. The spread of soy plantations to produce bio-based diesel fuel will exacerbate the intense pressure on the Amazon rainforest as the forest frontier is pushed back further and further. Not only will precious land and forests be lost as biofuels production grows, but the leveling of trees and grasslands will also release large quantities of greenhouse gases into the atmosphere, further fueling global warming.
As Brazilian organizations have pointed out, the benefits of expanded biofuels production in Brazil would flow mainly to agribusiness corporations, and the growth of large-scale plantations will undermine family-based agriculture and the country’s land-reform process. Meanwhile, throughout much of the ethanol industry, labor conditions are substandard. A recent study of the sugarcane industry in Brazil documented the serious health impacts of their methods of burning sugarcane fields during the harvest process, as well as the decline by half in workers’ incomes over the past 20 years under a quota-based pay system.
The economic implications of importing biofuels into the United States also deserve scrutiny. Some proponents have argued that imports would help build the overall biofuels market, stimulating demand that would eventually benefit farmers. But imports will likely have a particularly harmful impact on small- and medium-scale biofuels producers in the United States, who will have difficulty competing with large quantities of lower-priced imported biofuels.
Yet an even more important question looms: Is it a good idea for a developing country like Brazil to export the biofuels it produces? Biofuels have helped Brazil displace oil imports and limit the price volatility they face in the petroleum market. Meanwhile, the domestic market for biofuels in Brazil is not close to being satisfied and energy advocates there understandably want to keep their own fuel at home. Beyond that, many Brazilians believe it would be unfair for the U.S. and European countries to place their ever-increasing fuel demand on Brazilian shoulders, instead of cutting wasteful energy consumption and global warming pollution in their own countries.
The United States already imports more than 10 percent of its fuel ethanol, even with a tariff on ethanol of 54 cents a gallon. Before taking any actions to increase the imports of ethanol from Brazil, we should at a minimum ensure that there are safeguards in place to ensure it is produced in appropriate ways. These standards should include a bright line that would prohibit incentives, like the current ethanol tax credit, for any biofuels produced on land that has been recently converted from forests or other environmentally important land. A global market in biofuels may be coming, as Bush and Lula want it to, but we shouldn’t open that door before we take a close look and make sure it is for the best.