05/19/2010 05:12 am ET Updated May 25, 2011

Ethanol and Diplomacy

The U.S. Environmental Protection Agency (EPA) recently granted sugarcane ethanol the status of "advanced biofuel" after recognizing -- based on scientific studies -- that it reduces the emission of greenhouse gases by 61% when compared to gasoline.

The world's top economy is justifiably concerned about climate change, which increasingly threatens the quality of life on our planet. We all know that without energy, there can be no development, but the production and use of energy and industrial activity are large carbon emitters. The greatest challenge of our times is precisely to try to reverse the current trend of environmental degradation without disrupting economic growth in its role of generating employment, particularly in developing countries where the most shameful pollution is poverty.

Brazil has much to say in this debate. In the 1970s, the response we gave to the sudden increase in oil prices, when the country imported about 80% of our fuel, came in the form of the Pro-Alcohol Program. With ups and downs, government, businesses and research centers engaged in developing a competitive fuel -- sugarcane ethanol -- which quickly proved to be the product with higher agricultural productivity, higher energy efficiency, and more opportunity for socially-inclusive development, as wages paid in the sugar-alcohol industry are the highest in farming.

At the same time, the adoption of flex-fuel technologies ignited the process that enabled Brazil not only to develop the world's cleanest energy matrix -- with a 46% share of renewable energy against a world average of 13% and just 6% in industrialized countries -- but also to prevent releasing carbon emissions to the tune of 850 million tons since the Pro-Alcohol program was enacted. It is worth stressing that Brazil is now the only country in the world where gasoline -- not ethanol -- is the alternative fuel.

Therefore, the recognition sugarcane ethanol received by the EPA is not a surprise for us, and filled us with satisfaction.

But some analysts in the United States and Europe support the thesis that the production of sugarcane, accelerated by the success of ethanol, was displacing the growth of other food crops. This growth, they argue, pushed cattle ranching into extractive areas that, in this indirect land use change (ILUC), caused areas of native vegetation to be deforested. Of course, in the case of Brazil, they refer to the Amazon. This is an essential element in the current debate on the sustainability of biofuels.

The EPA's announcement shows that Brazil is not the only one to say that -- despite the theoretical ILUC possibility -- sugarcane ethanol does reduce greenhouse gas emissions significantly, and acclaim it as an invaluable ally in the fight against climate change.

On August 19, 2009, in a major milestone for the scientific debate on biofuels, a meeting was held in Brasilia under the Memorandum of Understanding to Advance Cooperation on Biofuels between Brazil and the USA. The event was attended by about 50 experts in biofuels from both countries, who discussed aspects of the new U.S. legislation. Assisted by relevant ministries and government agencies, the private sector, Brazil's Sugar Cane Industry Association (UNICA), and the academic community (including several universities and the Institute for International Trade Negotiations), it was clearly demonstrated that the new areas of sugarcane production in Brazil are located in areas that became underutilized due to the increased productivity in cattle ranching.

Last December, in a side event at the United Nations Conference on Climate Change in Copenhagen, the Brazilian Ministry of External Relations organized a seminar to highlight the contribution of sugarcane ethanol to reducing greenhouse gas emissions, in cooperation with the Ministry of Mines and Energy, the Ministry of Science and Technology, the National Institute for Space Research and UNICA. In the opening ceremony, EPA Administrator Lisa Jackson stated the EPA's keen interest in the Brazilian case, which we interpreted later as an indication of the direction their studies were taking.

The EPA's announcement has opened up huge economic and commercial opportunities. The U.S. Congress has set a target for U.S. energy consumption to include 80 billion liters of "advanced biofuels" by 2022. Of these, 15 billion liters could come from sugarcane ethanol. Today, Brazil exports only 1.5 billion liters of this product to the United States.

Unlike oil, sugarcane is not pumped as needed. One has to prepare the land, plant the cane, harvest it and turn it into ethanol in a mill that takes three years to become operational. In spite of the recent financial crisis, which has affected investment, domestic and foreign entrepreneurs decided to bet on ethanol, even before the EPA's announcement, as illustrated by the many joint ventures and acquisitions that have occurred in Brazil over the last few months.

These developments all provide much to celebrate, especially since, from now on, Brazilian ethanol will be recognized as the most competitive and cleanest global fuel option. New global opportunities for sugarcane ethanol also reinforce a fundamental principle of Brazilian foreign policy: that of socially-inclusive development. How many shortcuts could we have taken in the past in our efforts to fight social inequality and poverty, if developed countries were willing to share the technological advances they had achieved? Now, Brazil is determined to share our expertise in sugarcane ethanol production technology, installation, regulatory frameworks, and project management with other developing countries. We believe that the resulting reduction in oil consumption, increased local production of raw materials, bioelectricity generation from bagasse, job generation in poor societies, and the possibility of additional income from the export of surplus production generated by sharing this knowledge all translate Brazil's diplomatic mission toward developing countries.

The announcement of this positive final position of the U.S. government on Brazilian ethanol is proof that the combination of serious scientific and entrepreneurial work and coordinated action from the government, private sector and scientific community is an unbeatable recipe. We succeeded through the unprecedented cooperation of institutions and private sector partners who worked toward the common goal of defending Brazilian interests abroad. This joint governmental and private sector effort was essential to generate awareness and understanding of the sustainability of ethanol produced and consumed in our country. In the three years since the Memorandum of Understanding was established, the close cooperation between Brazil and the United States has been able to generate positive results in order to materialize a shared vision by the two largest producers and consumers of biofuels in the world: the creation of an international market for ethanol and biodiesel.

Originally published in Portuguese by Valor Econômico on March 15, 2010