Gustavo de Lima Palhares – Council on Hemispheric Affairs, 01/11/2012
Source: Exame.com
After decades of taxing foreign ethanol, the United States government decided to open up its market by allowing the federal tariff impost to expire on December 31, 2011. Previously, foreign ethanol producers had to forfeit USD 0.54 in taxes per gallon of ethanol exported to the U.S. In addition, Congress passed the country’s federal spending bill without renewing the VEEC subsidy that would have been granted to domestic U.S. ethanol producers.
Brazil is quite interested in this change, as it is the biggest sugarcane ethanol producer on the globe. The revocation of the trading barrier represents a big win for the country’s ethanol industry, which seeks to maximize its production and exportation to the United States. Marcos Jank, President of UNICA (Union of the Sugarcane Industry), Brazil’s biggest representative of the sugar and bioethanol market, expects an increase of 12 billion liters of Brazilian ethanol exported to the U.S. until 2020.
Currently, the majority of the ethanol production in the U.S. comes from corn crops, which have heavily influenced world food price increases in recent years. This is because it takes a significant amount of corn to produce ethanol and, consequently, more land is needed for food production. On the other hand, Brazilian ethanol originates from sugarcane, which involves a cleaner production process and is 5 times better than corn ethanol. Also, since the use of ethanol reduces around 90 percent of pollutants compared to gas use, the aforementioned measures also represent a significant achievement for environmentalists.
Brazil Portal 