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Brazil Lacks Cane to Boost Fuel Exports, Senator Says

(Corrects units of ethanol exports to gallons in 12th paragraph.)

Brazilian sugar cane companies, which are preparing to boost ethanol exports to the U.S., don’t produce enough of the renewable fuel to do so, a lawmaker said.

Brazil won’t make enough ethanol to meet increasing foreign demand unless cane producers invest in new mills and plantations, Senator Katia Abreu said in an interview at Bloomberg’s headquarters in New York.

U.S. oil companies, which must comply with government mandates to blend environmentally friendly biofuels, are expected to expand their use of sugar-cane ethanol next year, and more than 100 Brazilian mills are preparing to deliver it.

“Our production won’t allow for a significant increase in exports,” said Abreu, a member of the Social Democratic Party who represents the state of Tocantins and heads the Brazilian Confederation of Agriculture and Livestock, a lobby group.

“We need investments, so that producers can expand their production before we start talking about exportation,” she said in an interview yesterday.

Under the U.S. Environmental Protection Agency’s Renewable Fuel Standard, U.S. oil companies must blend into standard fuel 2 billion gallons (7.58 billion liters) of “advanced biofuels” next year, Alejandro Zamorano Cadavid, an analyst at Bloomberg New Energy Finance in New York, said in a telephone interview.

Advanced biofuels must emit at least 50 percent less carbon dioxide than the petroleum-based products they replace, through their entire life cycle, including growing the crops, processing it into fuel and transporting it to the gas pump. Brazilian sugar-cane ethanol meets that standard, while U.S. corn-based ethanol does not, he said.

The market for advanced biofuels in the U.S. will grow to 21 billion gallons in 2022, Zamorano Cadavid said.

EPA-Certified Exporters

About 107 Brazilian ethanol mills had registered with the EPA at the beginning of October to export fuel to the U.S., up from 55 in February, the Sao Paulo-based cane industry association Uniao da Industria de Cana-de-Acucar said Oct. 19.

Brazil may export more than 250 million gallons of ethanol next year to the U.S., Tarcilo Ricardo Rodrigues, director of Sao Paulo-based ethanol marketer Bioagencia, said in an interview.

“There’s just one supplier of advanced biofuel now and that’s Brazil,” he said.

The U.S. imported 45.3 million gallons of ethanol from Brazil this year through Aug. 30, according to Zamorano Cadavid. The U.S. exported 155 million gallons of corn ethanol to the South American nation over the same period.

Mills are expected to process this year 488.5 million tons of cane in center-south Brazil, the top production region, Unica said yesterday in a statement. That’s down from 556.9 million tons in 2010 after cold weather cut yields.

For Related News and Information:

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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