Europe resists tariffs to Brazilian biofuels

By Tobias Buck in Brussels and Jonathan Wheatley in São Paulo

Financial Times

Europe gave a boost to Brazilian biofuel producers on Thursday when Peter Mandelson, the EU trade commissioner, said he opposed tariffs to protect domestic producers.

He said ambitious goals for biofuel use should not be an excuse to subsidise dom­estic farmers.

“Europe should be open to accepting that we will import a large part of our biofuel resources . . . we should certainly not contemplate favouring EU production of biofuels with a weak carbon performance if we can import cheaper, cleaner biofuels.”

Mr Mandelson added: “Resource nationalism does not serve us particularly well in other areas of energy policy. Biofuels are no different.”

The EU wants biofuel – which is derived from plants such as sugar cane or corn – to account for 10 per cent of road fuels by 2020, under an agreement made by the 27 EU heads of government earlier this year.

Should the EU meet this pledge largely through a rise in imports, it would be good news for Brazil, one of the world’s biggest and most efficient producers.

Mr Mandelson made his remarks at a conference on biofuels in Brussels, which was also attended by Luiz Inácio Lula da Silva, the Brazilian president.

However, Mr Mandelson raised concerns about the environmental sustainability of the biofuel industry. “Europeans won’t pay a premium for biofuels if the ethanol in their car is produced unsustainably by systematically burning fields after harvests. Or if it comes at the expense of rainforests,” he said.

The remarks were rejected by Brazilian producers, who say the main obstacles to growth in the country’s ethanol exports are not environmental but a shortage of transport infrastructure and, primarily, tariffs and subsidies in developed markets.

Burning of sugar cane will be phased out in São Paulo state, the main producing area, by 2015. New sugar cane plantations in other states are mostly on flatter land where automation is possible, removing the need for burning before manual cutting.

Sugar cane also cannot be grown in the Amazon for climatic reasons, although critics point out that plantations may displace other crops such as soya which would then encroach on the Amazon forest. More...