Brazilian Ethanol

DDI 2008, Kernoff Olney

Jim Peterson

Brazilian Ethanol
NO THREAT TO AMAZON.................................................................................. .........2
NO SLAVE LABOR – MACHINES & REGULATIONS.........................................................3
LIFTING TARIFF  GLOBAL SPILLOVER......................................................................4
TARIFFS LIFTED IN SQUO.................................................................................... ......5
LOOPHOLE IN SQUO............................................................................. ....................6
BRAZIL ETHANOL COUNTERS CHAVEZ.......................................................................7
BRAZIL ETHANOL CHEAPER.................................................... ..................................8
BUSH PUSHING ETHANOL........................................................................ .................9
ETHANOL SOLVES GREENHOUSE GASSES........................................... ......................10
SQUO SOLVES – RISING DEMAND.................................................................... .........11
ETHANOL SOLVES GLOBAL WARMING.................................... ..................................12
ETHANOL  DEFORESTATION & GW........................................................................13
ETHANOL KILLS AMAZON....................................................................................... .14

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

No Threat to Amazon
Brazil has plenty of land suitable for sugar cane production – no threat to Amazon.

Gary Duffy, BBC News, “Brazil defends biofuel's merits”, http://news.bbc.co.uk/1/hi/business/7528323.stm , July
28th 2008

Other fears have been raised by the Brazilian experience; some worry that the rapidly growing demand for ethanol will push
crops and cattle further north, threatening the Amazon rainforest. It is a concern that Marcus Jank of the sugar cane producers
association is keen to reject. "We are using 3.5 million hectares to produce sugar cane ethanol, and there are 200 million
hectares of pastures in Brazil, so it is extremely small," he says."We believe that we are going to double the ethanol area in
the next 20 years, but it will still be only 2% of arable land."

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

No Slave Labor – Machines & Regulations

Slave labor is being solved by machines and more stringent federal safety standards.

Gary Duffy, BBC News, “Brazil defends biofuel's merits”, http://news.bbc.co.uk/1/hi/business/7528323.stm , July
28th 2008

"There are companies that work properly and others that don't. "The machines replacing the men who cut down sugar cane can
already be seen in parts of the state of Sao Paulo and elsewhere. Producers say this will help to address many concerns about
working conditions. At ethanol plants such as Sao Manoel, they say they keep within rules set by the government for rural workers,
and have introduced changes to improve working practices.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Lifting Tariff  Global Spillover

Removing the tariff on Brazilian ethanol would create a global incentive to transition to ethanol.

Ben Lieberman, The Heritage Foundation, “Lift Tariffs on Foreign Ethanol”,

http://www.heritage.org/Research/EnergyandEnvironment/wm1074.cfm , May 12th 2006

In past years, the 7-percent import cap has not been reached. For one thing, current ethanol production in some nations just
meets their domestic consumption, leaving only small quantities for export. Also, the costs of diverting Brazilian or other
supplies to CBI nations has discouraged full use of the tariff exemption, especially given the relatively low ethanol prices that
prevailed in the U.S. until this year. If the tariff were dropped, foreign producers would now face a strong incentive to export to
the U.S. Allowing this ethanol into the country without penalties or special requirements would, over time, act as a catalyst for
increased global production.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Tariffs Lifted in Squo

Brazilian tariffs will be lifted in squo negotiations

PR Newswire, The Heritage Foundation, “Ethanol Should Be Fully Integrated in International Trade, According to
Brazilian Sugarcane Industry Association ”, http://www.prnewswire.com/cgi-
bin/stories.pl?ACCT=ind_focus.story&STORY=/www/story/07-25-
2008/0004856028&EDATE=FRI+Jul+25+2008,+07:46+PM , July 25th 2008

Access to major markets around the globe for Brazilian sugarcane ethanol with lower tariffs, and full integration of ethanol in
global trade, as is the case with any other product: these are the key expectations of the Brazilian Sugarcane Industry
Association (UNICA) as the current phase of Doha Round negotiations in Geneva, Switzerland, draws to a close." What we
expect now is full integration for ethanol into global trade. 1Ethanol should not be treated any differently because currently it is
not considered a sensitive product in Europe or the United States," according to UNICA president and CEO, Marcos Sawaya
Jank. He adds that World Trade Organization rules are developed for all products, including ethanol, sothe idea that a specific
product is somehow "outside the list" doesn'texist.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Loophole in Squo
Brazilian tariffs will be lifted in squo negotiations

Jerry Perkins, Desmoine Register “BRAZIL: Loophole hurt U.S. ethanol prices”,
vhttp://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20071018/BUSINESS01/710180388/1056/NEWS09 ,
October 18th, 2007

A loophole in U.S. customs law grants oil companies incentives to import Brazilian ethanol, negating a tariff that protects
American ethanol producers.The so-called duty drawback allowed imported ethanol to lower the price of the fuel in the United
States last year, according to one economist - and it costs the U.S. Treasury millions of dollars each year.More than 434 million
gallons of Brazilian ethanol were imported into the United States last year, but Customs Service officials in Washington, D.C.,
declined a request by The Des Moines Register to provide the amount of duty drawback collected by companies for ethanol
imports. Maggie Myers, a spokeswoman for the U.S. Customs Service, said the information was deemed to be "law
enforcement sensitive" by lawyers at the Customs Service, which is now part of the Homeland Security Department.Here's how
the so-called duty drawback works: Companies import Brazilian ethanol into the United States, then receive a rebate on taxes
they've paid on the ethanol when they sell jet fuel for export.Here's one potential impact: If importers can avoid the tariff, U.S.
producers worry that they may lose out to Brazil, which can make ethanol more economically with sugar cane and lower labor
costs.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Brazil Ethanol Counters Chavez

Increasing import of Brazilian ethanol is a blow to Chavez.

LA Times, “Going south”, http://articles.latimes.com/2007/mar/08/opinion/ed-brazil08 , March 8th, 2007

Bush is deeply unpopular in most of Latin America – a region he has largely ignored – in part because many feel the U.S.
focus on free-trade pacts and drug interdiction may have exacerbated poverty instead of relieving it. Into that breach has
stepped autocratic President Hugo Chavez of oil-rich Venezuela, who has backed successful leftist leaders in Bolivia, Ecuador
and Nicaragua. During his trip to Latin America, Bush will try to counter Chavez’s influence by appealing directly to the
region’s impoverished underclass and signing energy deals – such as a partnership with Brazil and other ethanol producers –
that are designed to wean countries from Venezuela’s cheap oil.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Brazil Ethanol Cheaper

Brazilian ethanol is cheaper than corn and fossil fuels

LA Times, “Going south”, http://articles.latimes.com/2007/mar/08/opinion/ed-brazil08 , March 8th, 2007

Brazil’s sugar-based ethanol is more energy efficient and far cheaper to produce than U.S. corn-based ethanol, yet we
impose a steep tariff on the Brazilian product to protect domestic corn growers and ethanol producers. The damage wrought by
this policy is enormous. It raises consumer prices for all corn products, sabotages long-overdue attempts to move away from
dirty fossil fuels and poisons the U.S. relationship with Latin America.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Bush Pushing Ethanol

Bush is pushing for Brazilian ethanol

Popular Mechanics, “Bush's Brazilian Biofuel Pact: Ethanol at the Pump?”,

http://articles.latimes.com/2007/mar/08/opinion/ed-brazil08 , March 9th, 2007

George W. Bush is doing his best to become the biofuels president. He's long been bullish on corn-derived ethanol, and now
he's touting Brazil’s sugarcane and sugarbeet fuel. News outlets today are littered with headlines about the biofuels "pact" he
signed in Brazil, intended to "promote international production of ethanol."

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Ethanol Solves Greenhouse Gasses

Ethanol is a low-carbon fuel that combats the use of greenhouse gasses

Biodiesel and Ethanol Investing, “Heat is on for Tariff Removal of Brazilian Ethanol”,
http://www.biodieselinvesting.com/biodiesel-archives/2007/03/22/heat-on-for-tariff-removal-for-brazilian-ethanol/ ,
March 22nd, 2007

The Financial Times News reports that President of the World Bank and former member of the Bush Administration, Paul
Wolfowitz, stated that the U.S. should lower or remove tariffs against ethanol from Brazil. While President Bush recently
discussed biofuel cooperation with the country, he has rejected the removal of the tariff. Comments from Mr. Wolfowitz came
from a conference on financing low-carbon energy in London. He is a strong supporter of a global regulatory framework to
reduce greenhouse gas emissions, similar to the Kyoto protocol, which Bush has also rejected.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Squo Solves – Rising Demand

Increasing internal transportation costs and volatility in U.S. ethanol prices make the increased import of
Brazilian ethanol inevitable.

Simla Tokgoz, Iowa Review, “Policy and Competitiveness of U.S. and Brazilian Ethanol”,
http://www.card.iastate.edu/iowa_ag_review/spring_06/article3.aspx , March 22nd, 2007

The cost of ethanol per gallon of fuel from sugarcane in Brazil, at $0.83 per gallon of fuel, is lower than the cost from corn in
the United States, at $1.09 per gallon (see the OECD report "Agricultural Market Impacts of Future Growth in Production of
Biofuels," available at http://www.oecd.org/dataoecd/58/62/36074135.pdf). In addition to higher costs of production, there are
high costs in the United States of transporting supply from the Midwest to major population areas. This has led to an increase
in competitiveness of Brazilian ethanol imports despite the steep tariffs. Furthermore, volatility in U.S. ethanol prices, which
sometimes leads to spikes, provides Brazil the opportunity to export ethanol to the United States. For example, in October
2005, the Brazilian ethanol price was $1.38 per gallon. Adding freight and the import tariff, the price for ethanol would be
about $2.12 per gallon (including the 16¢-per-gallon transportation cost), which is below the $2.47 per gallon U.S. price for the
same month. Consequently, Brazil was able to export 5.2 million gallons to the United States, up from zero exports in August
and 2.7 million gallons in September 2005. In total, Brazil exported 86.5 million gallons of ethanol in 2004 and 65.9 million
gallons in 2005, becoming the major source of U.S. ethanol imports. These imports may increase in the future, because of the
projected expanding demand for ethanol in the United States.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Ethanol solves Global Warming

Brazilian ethanol has the potential to cause a transition away from fossil fuels and solve global warming.

Kelly Heam, National Geographic News, “Ethanol Production Could Be Eco-Disaster, Brazil's Critics Say”,
http://news.nationalgeographic.com/news/2007/02/070208-ethanol.html , Feb 8th, 2007

In Brazil ethanol has become economically competitive with gasoline, and the country's biofuels program could serve as a
world model for producing sustainable energy, officials say. South America's largest country is the world's reigning ethanol
king, producing 4.4 billion gallons (16.5 billion liters) of the biofuel from sugarcane each year, on average. Biofuel is widely
considered a way to reduce greenhouse gases from fossil fuel use and thereby reduce human-caused global warming. Brazil's
sugarcane-based ethanol program is "appropriate for replication in many countries," writes José Goldemberg, secretary of the
environment for the Brazilian state of São Paulo, in a perspective article in

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Ethanol  Deforestation & GW

Growing demand for biofuels in Brazil sustains deforestation that is the root cause of global warming

MICHAEL GRUNWALD, Time Magazine, “The Clean Energy Scam”,

http://www.time.com/time/magazine/article/0,9171,1725975,00.html , March 27th, 2008

From his Cessna a mile above the southern Amazon, John Carter looks down on the destruction of the world's greatest
ecological jewel. He watches men converting rain forest into cattle pastures and soybean fields with bulldozers and chains. He
sees fires wiping out such gigantic swaths of jungle that scientists now debate the "savannization" of the Amazon. Brazil just
announced that deforestation is on track to double this year; Carter, a Texas cowboy with all the subtlety of a chainsaw, says it's
going to get worse fast. "It gives me goose bumps," says Carter, who founded a nonprofit to promote sustainable ranching on
the Amazon frontier. "It's like witnessing a rape." The Amazon was the chic eco-cause of the 1990s, revered as an incomparable
storehouse of biodiversity. It's been overshadowed lately by global warming, but the Amazon rain forest happens also to be an
incomparable storehouse of carbon, the very carbon that heats up the planet when it's released into the atmosphere. Brazil now
ranks fourth in the world in carbon emissions, and most of its emissions come from deforestation. Carter is not a man who gets
easily spooked--he led a reconnaissance unit in Desert Storm, and I watched him grab a small anaconda with his bare hands in
Brazil--but he can sound downright panicky about the future of the forest. "You can't protect it. There's too much money to be
made tearing it down," he says. "Out here on the frontier, you really see the market at work." This land rush is being
accelerated by an unlikely source: biofuels. An explosion in demand for farm-grown fuels has raised global crop prices to
record highs, which is spurring a dramatic expansion of Brazilian agriculture, which is invading the Amazon at an increasingly
alarming rate.

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Brazilian Ethanol
DDI 2008, Kernoff Olney
Jim Peterson

Ethanol Kills Amazon

Increased production of biofuels leads to the deforestation of the Amazon.

Associated Press, “Proposed U.S.-Brazil ethanol alliance threatens Amazon rainforest”,

http://news.mongabay.com/2007/0306-ap.html , March 6th, 2007

But environmentalists fear growing demand for biofuel could put renewed pressure on the Amazon which in recent years has
been losing forest to make way for agriculture. Steiner praised Brazil for reducing Amazon deforestation by 11 percent last
year and said he was hopeful the government would develop sufficient safeguards to protect the wilderness. But many
environmentalists say much of the reduction in deforestation was due to an overvalued currency and stagnant prices for soy
beans on the international market, which made it far less lucrative to cut down remote forest plots to grow soy beans. In the
near term, soybean growers likely will continue to expand into the Amazon as farmland in the Brazil's south and central regions
moved to sugarcane, which requires greater infrastructure.

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