Brazil signs deal to export sustainable ethanol

SAO PAULO (Reuters) - A group of Brazilian ethanol companies signed a deal to export certified sustainable ethanol to Sweden, in the world's first agreement of such a kind, they said on Wednesday.

Brazilian groups Cosan, Guarani, NovAmerica and Alcoeste agreed sell to Sweden's Sekab 115 million liters of anhydrous ethanol that will adhere to certain social and environmental standards.

"This initiative addresses European consumers' concerns related to the sustainability of ethanol," Martinho Seiiti Ono, director at trading company SCA that will manage the exports, said.

"It is the first practical application of verified sustainable ethanol and is a major step toward realizing an international standard," Ono told reporters.

Mills will receive 5 to 10 percent more for the certified product than for a similar ethanol without traceability, he said, declining to give other details.

The deal will be valid for at least nine months and the first cargo was shipped earlier in June.

Among the standards is zero tolerance for child or slave labor. Mills must use at least 30 percent mechanized harvesting today and increase this to 100 percent by 2014. An independent international company will audit all the groups production units twice a year.

Sustainable ethanol will result in a reduction of carbon dioxide emissions from farming, production and transport to Sweden by at least 85 per cent compared with petrol, Anders Fredikson, vice-president at Sekab, said.

"There have been many articles about forced labor in Brazil and also ecological issues, deforestation of the rain forest, local pollution... We are in the business and know many are exaggerated, some are false," Fredikson said.