US tariff on Brazil ethanol 'makes no sense' – Unica – VIDEO

17 February 2010 16:34  [Source: ICIS news]

ORLANDO, Florida (ICIS news)--The US tariff on Brazilian ethanol is illogical and reveals a fundamental disagreement between the US and Brazil on policy and vision, Brazilian sugarcane association Unica said on Wednesday.

“It makes no sense to have a policy that taxes clean energy...while petroleum products trade around the world freely,” said Unica North American representative Joel Velasco on the sidelines of the National Ethanol Conference.

The Renewable Fuels Association (RFA), which is hosting the conference in Orlando, on Tuesday called for an extension of the 54 cent/gal duty on foreign ethanol, saying the US cannot “trade its dependence on imported oil for a dependence on imported ethanol”.

Velasco blasted the RFA for its continued support of the tariff, saying Brazil's sugarcane ethanol is now rated an advanced biofuel, which the US is required to blend under its own the Renewable Fuels Standard (RFS).

The RFS requires the US to blend 950m gal of advanced biofuels in 2010. That figure is scheduled to jump to 7bn/year gal in 2016 and 21bn/year gal in 2022.

The Environmental Protection Agency (EPA) defines advanced biofuels as a renewable fuel other than corn ethanol that achieves a 50% greenhouse gas (GHG) emissions reduction requirement.

The EPA earlier this month ruled that it found sugarcane ethanol to reduce GHG emissions by 61%, nearly three times the 21% reduction achieved from corn ethanol.

“It is an inconsistency between the country's trade policy and the country's climate policy,” Velasco said.

The Unica representative also criticised the 45 cent/gal blender credit the US gives for ethanol, saying the tax incentive costs the US Treasury around $6-7bn (€4-5bn)/year in foregone revenues.

Velasco expressed hopes of building a US coalition over the next six months around the need to get the ethanol tariff phased down or eliminated at the end of the year.

Brazil is the world's second-largest ethanol producer after the US, but the top exporter of the product.

($1 = €0.73)

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By: William Lemos
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