Domestic Fuel

In a bid to get the United States to eliminate tariffs on imported ethanol, the Brazilian government has announced it will reduce their tax on ethanol imports to zero from the current 20 percent through the end of next year. The Brazilian Chamber of Foreign Trade (CAMEX) announced the temporary reduction Monday and it is expected to go into effect before the end of the week.

The Brazilian Sugarcane Industry Association (UNICA) called the action a major step forward in building a global biofuels marketplace. “UNICA believes that free trade is a two way street and Brazil, as the largest producer of cane ethanol and largest exporter of ethanol in the world, with 60% of the global market, will lead by example and eliminate barriers to renewable, clean fuels. We hope this move will encourage other countries around the world to develop open, free markets for clean, efficient renewable fuels such as ethanol,” said UNICA President & CEO Marcos Jank.

“The question now is whether the U.S., as the world’s number-one ethanol producer, will follow suit,” said UNICA’s Chief Representative for North America, Joel Valasco.

Not if the U.S. ethanol industry has anything to say about it. The Renewable Fuels Association (RFA) reaction to the announcement is that Brazil’s action “undermines its claims for wanting a global trade in ethanol. Vacillating regulations regarding Brazil’s trade policy as well its domestic consumption of ethanol make it impossible for foreign ethanol producers to even consider exporting product into Brazilian markets.” According to RFA, the U.S. tariff on imported ethanol “serves to protect American taxpayers from further subsidizing foreign ethanol industries already benefiting from generous government support in their own countries” and should be continued.

Growth Energy had a similar response to the action. “We would not support reducing the U.S. import tariff, despite whatever Brazil is temporarily doing, because Brazilian ethanol already enjoys generous subsidies from the Brazilian government and to provide them access to additional subsidies from the U.S. government makes no sense,” said Growth Energy CEO Tom Buis. “If we want to import something from Brazil it should be the same resolve to become energy independent. Brazil wisely saw the importance of supporting and incentivizing their domestic ethanol industry and now they are energy exporters while the U.S. continues to rely heavily on foreign oil. The U.S. would do well to follow their example and promote American ethanol producers rather than giving tax breaks to foreign ethanol and increasing our dependence on foreign energy.”