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Pacific Ethanol, Inc. (PEIX) Message Board

  • dvillal123 dvillal123 Sep 14, 2012 6:32 PM Flag

    Insight: U.S. and Brazil - At last, friends on ethanol

    The breakthrough came in January when Washington allowed a three-decade-old subsidy for U.S. ethanol producers to expire and ended a steep tariff on foreign biofuels. The tariff, in particular, had
    poisoned diplomatic relations between the world's top two ethanol-producing countries for years.

    Since then, industry executives and government officials from both countries have seen tangible progress in efforts to boost the production and consumption of ethanol around the world, they told Reuters.

    The two nations have been lobbying foreign governments to create new markets in Africa and Latin America, planning joint "road shows" to attract new investments in biofuel companies, and pushing for a uniform global standard for ethanol, which could make it easier to trade the biofuel across borders.

    THE NEXT FRONTIER: CUBA?

    Brazil and the United States have stepped up their lobbying in recent months. Pilot ethanol programs

    to introduce the biofuel to consumers with blend requirements are set to begin in three countries, starting in Honduras by early 2013, another U.S. official said.

    To accelerate the process, Brazil and the United States are planning presentations in coming months to attract new investors interested in biofuel projects in the three countries, officials said.

    MERCANTILE EXCHANGES

    Separately, Brazil and the United States are addressing obstacles that have prevented ethanol from becoming a globally traded commodity like oil.

    The only ethanol futures trading on the Chicago Board of Trade are for the U.S.-produced corn variety. As a result, U.S. companies that buy Brazilian ethanol must often do so through brokers or purchase complex forms of insurance to limit their risks - all of which make deals more expensive.

    The sticking point: Brazil requires higher purity levels for ethanol than the United States does. This lack of a global standard has created a host of other problems, such as delays in the development of universal flex-fuel cars that can use either ethanol or gasoline.

    But officials from both countries said technicians had made substantial progress toward a common standard in recent months.

    "We're very close now," a U.S. official said, adding that the focus of negotiations has now moved to Europe, where the talks have been more contentious.

 
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