By Reese Ewing
SAO PAULO (Reuters) - A leader in Brazil's ethanol industry said on Wednesday that the world's top producers of biofuels needed to begin working together toward the common goal of replacing petroleum-based transport fuels.
"Instead, it never ceases to amaze me, we are still considering the shift from oil to renewables through a 19th Century protectionist model," said Eduardo Pereira de Carvalho, president of Brazil's Cane Industry Association (Unica).
The United States currently imposes a 54 cent import tariff on Brazilian ethanol.
Participating in Reuters Global Biofuel Summit, Carvalho referred to the lack of cooperation between the United States and Brazil "the world's two biggest producers of ethanol and we aren't working together.
"We all know the logistic problems the United States faces getting ethanol from its corn belt to its large consumer market on the west coast. Why haven't U.S. officials visited Brazil to find out how we distribute ethanol via pipeline across Brazil without any problem?" Carvalho said.
He added that U.S. advancements in distillation could benefit Brazil but there was little sharing of information between the two ethanol giants.
The world produces about 400 billion gallons of gasoline a year, while ethanol production is less than 10 billion gallons, mostly from the United States and Brazil, Carvalho said.
Carvalho was recently in California in an effort to meet with government officials over greater ethanol ties and said he was inviting Gov. Arnold Schwarzenegger to an Unica Ethanol Summit in Sao Paulo on June 4 and 5 that he hopes will be a platform for sharing information and discussing policy.
"The U.S. corn lobby acts like we want to invade the U.S. market with ethanol," Carvalho said. "Even if we had the Marines, we wouldn't have the ethanol to supply the U.S. market. We are just keeping up with supplying local demand."
Brazil is expected to export about 3.9 billion liters of ethanol in 2006 but it consumed more than three times that domestically. Exports are not expected to grow much in the near term compared with domestic consumption.
And Carvalho said that domestic ethanol demand will likely triple in six-to-seven years due to the success of the flex-fuel car model that runs on gasoline or ethanol. Flex-fuel cars make up 80 percent of all new car sales now in Brazil.
"In 20 years time, I doubt there will be no more gasoline market in Brazil. It will all be ethanol fueled cars. This is our forecast and I hope Petrobras (the state-run oil and gas company) doesn't hear this," Carvalho joked.
Unica estimates that $15 billion is currently being invested in cane milling capacity in Brazil. Milling equipment supplier Dedini said around 90 new mills are under construction or about to be and nearly twice that number in new projects are being considered by investors.
The BNDES development bank estimates that Brazil's can output may reach 1 billion metric tons by 2020, up from the current 426 million metric tons.
When asked if there was a risk of excessive optimism by investors in Brazil's cane industry, Carvalho said current oil price projections indicated that prices would not likely return to $20 a barrel. Continued...
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