Petrobras energy development head blames US, EU for massive ethanol export gap; says Lula’s efforts to lower trade barriers failed

In Brazil, the head of energy development for Petrobras blamed EU and US tariffs for a massive shortfall in planned ethanol exports, and said that the effort by Brazilian President Luiz Inácio Lula da Silva to lower the trade barriers has not produced results.

Petrobras has stated its plans to invest $1.5 billion in biofuel projects between now and 2012.

In Brazil, November ethanol exports were down 40 percent from 2006, falling from 132 million gallons to 80 million. The fall in US demand, resulting from a production glut in the United States, caused the fall, and resulted in more than 63 percent of shipments to go to Europe.

20 percent of shipments were headed for the US or to Caribbean ports where it is typically re-exported. 83 percent of northbound shipments went to Caribbean ports, where it can be re-exported tax free to the US.

At the recent UN Conference on Climate Change in Bali, the Brazilian Foreign Minister, Celso Amorim, said that “if we want to be serious about climate change, trade barriers must be removed promptly and unconditionally.”

Brazil is expected to ask the World Trade Organization to investigate U.S. ethanol subsidies. If the WTO takes on the case, it will be the first time the organization has ruled on energy subsidies.

President Lula had conducted extensive international tours of earlier this year to promote biofuels trade, including a four-country Scandinavian tour aimed at promoting ethanol exports and signing environmental agreements. Brazil signed a new agreement for ethanol export to Sweden, adding to its existing exports to Norway, Finland and Denmark.

The Brazilian President has been active in bringing a complaint on US farm subsidies to the World Trade Organization, as well as criticizing the US ethanol tariff and EU protectionism in numerous speeches and appearances. Brazil accused the United States and Europe of having a “biased and protectionist agenda” at the World Trade Organization. Brazil was criticizing a proposed compromise on commercial rules which it said are biased towards the US.

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