As I wrote a couple weeks ago in my last post, sugarcane ethanol producers are stepping up our profile in the debate over the Renewable Fuel Standard (RFS). We’ve been active for a while sharing vital facts about clean, advanced biofuels like sugarcane ethanol and lending our expertise and support to policymakers currently exploring the issue. Here’s a quick update on our activities so far and future plans.
Where We’ve Been: On the Record
In April, the Brazilian Sugarcane Industry Association (UNICA) submitted comments to the Environmental Protection Agency in response to their proposed RFS requirements for 2013. Our letter touches on a number of key issues, but most importantly, addresses concerns that Brazil cannot supply enough sugarcane ethanol to meet America’s needs. On the contrary, updated harvest and export capacity estimates confirm that Brazilian sugarcane ethanol producers can meet EPA’s projections for ethanol exports to the United States. Our comments to EPA conclude:
UNICA is confident that Brazilian sugarcane ethanol producers will be able to meet—and if necessary surpass—EPA’s projections for Brazilian sugarcane ethanol exports to the United States. Further, we believe this updated information resolves any residual uncertainty regarding Brazilian sugarcane production and ethanol production and obviates any need to reduce the statutory volume requirement for advanced biofuels as a hedge against poor production in Brazil. (Page 12)
Congress is also getting into the act, with the House Committee on Energy and Commerce releasing a series of white papers seeking input on the renewable fuel standard.
We welcomed the opportunity to answer the committee’s questions and illustrate the ways sugarcane ethanol is helping America meet RFS goals – particularly improving energy security and reducing greenhouse gas emissions. Some of the highlights from last month’s letter to Congress:
The RFS – and sugarcane ethanol in particular – works to reduce greenhouse gas emissions (GHG). As demonstrated by EPA’s own lifecycle analysis, the GHG emissions reductions associated with Brazilian sugarcane ethanol exceed the emissions thresholds for all categories of advanced biofuels included in the RFS program. Sugarcane ethanol is the most efficient biofuel produced at a commercial scale and can reduce GHG emissions by over 60% when compared to a fossil fuel baseline. (Pages 1-2)
Sugarcane ethanol helps meet advanced biofuel mandates. The Environmental Protection Agency has conducted rulemakings each year that waive significant portions of the Energy Independence and Security Act of 2007 (EISA) cellulosic ethanol mandate. As development of commercial-scale cellulosic biofuel facilities has been slow, that volume mandate has been met with other advanced biofuels that offer comparable GHG emission reduction benefits, such as Brazilian sugarcane ethanol. As a result, the GHG emission reduction benefits anticipated by the EISA have been achieved, even if through different paths. (Page 5)
Brazil is dedicated to the current and future success of the RFS. Our members are committed to producing increasing quantities of Brazilian sugarcane ethanol to help ensure compliance with the RFS program’s advanced biofuel mandate in the future. Brazilian sugarcane producers have made a long-term commitment to providing clean, renewable sugarcane ethanol to meet energy and environmental goals in Brazil and globally as evidenced by the considerable investments by major global energy companies, such as Shell, BP, Total and Petrobras, in the sugarcane industry. (Page 2)
Where We’re Going
We’re proud of the role that sugarcane ethanol plays in helping the U.S. reduce greenhouse gases. And sugarcane ethanol producers are committed to providing clean, renewable fuel for Brazil, the U.S. and the world. As the debate heats up and congressional scrutiny intensifies this summer, we will continue to highlight the benefits and stress the importance of access to clean, advanced biofuels like sugarcane ethanol.
We’ll also be keeping a close eye on RFS rulemaking coming out of EPA later this year. We’ve seen troubling signs that the regulatory process might be misused to impose onerous, anti-competitive requirements on foreign ethanol. More to come.
Sugarcane ethanol plays a modest but important role supplying the United States with clean renewable fuel. Last year, Brazilian sugarcane ethanol comprised only 3 percent of all renewable fuel consumed by Americans, but provided nearly one-quarter of the U.S. supply of advanced biofuels. Is that amount significant? It is if you care about cleaner air and a healthier planet! The 460 million gallons of sugarcane ethanol Americans used in 2012 cut CO2 emissions by the same amount as planting nearly 57 million trees and letting them grow for 10 years.
These vital facts are getting lost in a debate that's heating up in Washington, D.C. over renewable fuels. The key policy – known as the Renewable Fuel Standard – was enacted to improve U.S. energy security and reduce greenhouse gases. And the Renewable Fuel Standard (RFS) is clearly working as Congress intended when measured in terms of increasing American consumption of renewable fuel. It has grown production and use of biofuels in the U.S. from around 4 billion gallons in 2006 to 15 billion gallons last year. But critics and special interests are lining up to urge changes by both Congressional legislators and environmental regulators.
So sugarcane ethanol producers, along with our colleagues in the advanced biofuels industry, plan to step up our profile. We'll take a more active role setting the record straight on the importance and benefits of this advanced biofuel – starting with new information available at our dedicated website: Sugarcane.org/rfs. Here you'll find a brief summary of the issue and our position that Congress and environmental regulators should maintain American access to clean, advanced biofuels like sugarcane ethanol. We also answer many frequently asked questions. Topics like: What is sugarcane ethanol? Why would Americans want it? What are advanced biofuels and other biomaterials from sugarcane? And many more.
You'll also see more regular posts from me and other collaborators here on the Sugarcane Blog. So to kick things off, I'd like to reiterate some guiding principles (first articulated by my friend and colleague Joel Velasco) that will serve as ground rules for our blogging and participation in the RFS debate:
- Honesty. Americans' trust in government keeps getting lower. I think this decline is mostly because our policy discussions are no longer honest debates, but a litany of overheated talking points that all too often veer from the truth. So, on this blog, we commit to sticking to the truth and promise to admit if we come up short. Honesty is the best prescription to regain the public trust.
- Consistency. Cherry-picking may be a good strategy at an orchard, but not for public policy. Being consistent means practicing what we preach, demanding accountability and, yes, being fair and balanced.
- Sweet Humor. There's nothing wrong with mixing a little fun with work, and we'll try to do that on this blog as well. Like this: In Brazil, a common sugar industry saying is "drink the best, drive the rest." That's because the national drink in Brazil, the "caipirinha", is made with sugarcane alcohol, which, when it fills the tank of our cars, is called ethanol. We're eagerly awaiting the "booze vs. fuel" debate to heat up. Any takers?
So take a look around and check back whenever you want an update. You'll find that the United States and Brazil are the world's largest biofuels producers and exporters. Both countries recently removed trade barriers protecting their domestic ethanol industries and have taken initial steps towards greater energy cooperation. And I firmly believe that Brazil and the U.S. have a responsibility to work together to build a global biofuels market that provides clean, affordable and sustainable solutions to the planet's growing energy needs. That's the ultimate goal of the campaign we renew today.
Most Americans who start the day stirring a spoonful of sugar into their coffee would be surprised to learn they generally pay more for the sweetener than residents of other countries buying it on the global market. Major American commodities traders track two prices for sugar – a world price and a more expensive U.S. price.
Why the difference? According to the Wall Street Journal, "U.S. prices tend to be higher than world prices because the U.S. restricts sugar imports as part of the [U.S. Department of Agriculture’s] price-support program” for sugar (subscription required). One USDA economist recently estimated this price-support scheme could cost American taxpayers $80 million in 2013 on top of requiring U.S. consumers to pay artificially higher prices for raw sugar, candy and other confections.
Given these sour facts and movement in the U.S. Congress to reform the sugar program, I'm not surprised the American Sugar Alliance is trying to change the subject to defend its price supports. Last month, the group released a report arguing that Congress must maintain current U.S. sugar policy "to shield consumers from foreign market manipulation," particularly by Brazil which subsidizes sugar production according to the American Sugar Alliance.
The influential Cato Institute took a look at the group’s report and summarized its findings succinctly:
The sugar lobby for years have been complaining that we need the sugar program, which keeps prices high for producers by keeping imports strictly controlled, in order to enable “reliable” (i.e., managed) access to sugar. Now they think sugar is too available (i.e., cheap)? For sure, if I was a Brazilian taxpayer, I would baulk at the thought of subsidising (if that in fact is the situation) the sugar addictions of my richer neighbours to my north, but as a consumer? Muito obrigado! The sugar lobby’s talking points are getting ever more creative. But none of them are valid.
I added emphasis on the last line above and was tempted to end my rebuttal there! However, the Brazilian Sugarcane Industry Association felt obligated to set the record straight on this misleading report which overstates Brazilian support for domestic producers and turns a blind eye to comparable programs in the U.S. You can download our point-by-point response here, and see for yourself how the American Sugar Alliance’s report reveals “the desperate need of the American sugar industry to keep the U.S. market closed and protected from competition.”
As I write this, my Brazilian and American colleagues from government and private sector are working around the clock to ensure that President Dilma Rousseff’s trip to Washington D.C. on this upcoming Monday is a great success. Success for Brazil and success for the U.S. And because this is the President’s first trip to the U.S. in her current post it makes it all the more important. I am particularly glad that this meeting takes place at a time when the ethanol import tariff is an issue of the past. So, we can strike that item off the agenda once and for all.
Those who follow us closely will know that as of the end of 2011 Brazil and the U.S. have zeroed their import tariffs on ethanol, creating a truly free and impressively large market for sugarcane derived biofuel. We and many others see this as a big milestone in time. If you add the Strategic Energy Dialogue to this you’ve got continued political commitment on the U.S. part. And if you add President Dilma’s and President Obama’s announcement of the expansion of the MoU on biofuels to include cooperation in aviation in March last year, you’ve got nothing short of a new era in energy cooperation between our two great nations.
We’ve passed some major hurdles, that’s for sure. We should now focus on finding ways to help create a global market for ethanol. This is my hope for the meeting next week. I strongly believe our governments are moving in the right direction on the MoU and on the Strategic Energy Dialogue. But I also believe we’d have more and faster impact if the private sectors in both countries are actively engaged in these processes. We’re hopeful that our government will call on us. Our capacity to bring new ideas to the table and our desire to innovate and invest can help make this political cooperation a reality for businesses and for consumers.
We all recognize that finding renewable, affordable and sustainable solutions to the world’s energy challenges requires a great deal of commitment and a good deal of courage. When Brazil and the U.S. eliminated their import tariffs they sent a clear signal to the global community. But both nation’s commitment and dedication need to be met with open minds and open arms if we want real, positive change for the environment. Come end of day Monday, we might know what energy deliverables will be announced and what new challenges will be put before us. I am excited to see what the results will be.
Brazil and the U.S. have shown what’s possible when policy is right, when markets are open and when trade and innovation are encouraged. But the challenges we face are complex and they require everyone’s genuine commitment that goes beyond what’s said in policy papers. We need to get things done! The goal here is to move the world away from near complete dependence on fossil fuels. When the ambition is so high, you can safely assume that the gains will be too.