ENERGY-SOUTH AMERICA:
Leaders Overcome Impasse on Ethanol
Humberto Márquez

ISLA DE MARGARITA, Venezuela, (IPS) - The controversy over whether to put the accent on fossil fuels or biofuels was overcome by the presidents in the first South American energy summit with the assertion that the answer depends on each country's specific circumstances, and that the different national policies are complementary to each other, not contradictory.

The ministers who drafted the final document for the meeting on Venezuela's Margarita Island in the Caribbean "established something that is fundamental: that there is no opposition between biofuels and fossil fuels, but rather that there are different national circumstances and experiences, and that they are complementary," Marco Aurelio García, Brazilian President Luiz Inácio Lula da Silva's foreign affairs adviser, told journalists.

Over the last few weeks, Lula and host President Hugo Chávez were at the centre of a heated debate on the pros and cons of ethanol. Brazil produces 17.3 billion litres a year of the biofuel from sugar cane -- nearly as much as the United States produces from corn.

The rising interest in biofuels is occurring in a context of soaring oil prices and scientific reports that the burning of fossil fuels is the main culprit in global warming.

Washington and Brasilia agreed last month to foster the development of a large global market for ethanol, which in the case of Brazil will mean a more than ten-fold increase in its current output within the next decade, while other countries in Latin America as well as African nations would dedicate large extensions of land to growing crops for biofuel.

When Lula signed the accord with U.S. President George W. Bush, Cuban leader Fidel Castro complained about the "internationalisation of genocide" that he said was implicit in the growing of crops for producing fuel instead of food for the hundreds of millions of hungry people in the world.

Chávez, whose government had agreed with Cuba and Brazil to dedicate 270,000 hectares to producing sugar cane for ethanol, underwent an apparent change of heart after his close ally Castro criticised the large-scale production of biofuels.

Venezuela currently imports nearly 30,000 barrels (4.7 million litres) of ethanol a day to mix with gasoline.

The Venezuelan leader lashed out at "the madness of producing food, not for people but for rich people's cars," and said prior to the summit that Latin America should stop worrying about guarantees of energy supplies, because Venezuela would put at the region's disposal all of the oil and gas that will be needed over the next 100 years.

But most countries in the region have welcomed the plans to produce crops for biofuel. Argentina is moving ahead with its plans to produce biodiesel, Uruguay and Chile have expressed great interest, Colombia has reached a deal with the United States to encourage the industry, and Ecuador has made a similar deal with Brazil.

Before heading to the summit in Venezuela, Lula said he did not "understand yet what is the technical or scientific basis for the criticism" voiced by the governments in Caracas and Havana, which invoked "ethical and environmental" reasons.

Chávez said the expansion of the agricultural frontier would not only lead to the destruction of forests, but would also threaten the world's fresh water reserves.

The backdrop to the debate is the political and diplomatic standoff between Washington and Caracas, despite which the United States is the biggest client for Venezuelan oil, purchasing nearly half of the 2.4 million barrels a day that are exported by this country.

On Margarita Island, García summed up Brazil's position, which helped pave the way for a consensus: fossil fuels and biofuels are complementary, and food production will not be neglected. A mere one percent of farmland in Brazil currently goes towards biofuel production.

The agreement between Brasilia and Washington involves cooperation to develop a new technology based on hydrolysis, which according to studies could boost productivity per hectare by 40 percent.

The ethanol producing crops in Brazil will be grown on land that "is not in the Amazon region," and therefore will not harm the rainforest, according to García. In addition, he said, jobs and incomes for thousands upon thousands of small farmers and agribusiness workers can be provided.

In conclusion, according to the Brazilian point of view, countries can at one and the same time reduce their dependence on imported fuels, and export a proportion of their biofuels, which would help their trade balance.

While ministers drew up the final document, the presidents, in a climate of consensus, approved other initiatives, such as renaming the South American Community of Nations, created in 2004, as the South American Union of Nations, UNASUR.

The organisation will have a permanent secretariat based in Quito, the presidents agreed in informal talks ahead of the formal session of the summit this Tuesday, which was attended by the presidents of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay and Venezuela.

Guyana, Peru, Surinam and Uruguay were represented by their vice presidents or ministers.

A South American Energy Council, led by the energy ministries of each government, will be in charge of formulating harmonious strategies for the region. Chávez formally proposed that a South American Energy Treaty be adopted in a few years' time, to establish "a secure energy production and supply system for our nations."

According to García, "If we are intelligent, we will completely transform South America into the world's biggest energy power," because the region has oil, gas, hydroelectric power, wind power, biofuels and even nuclear energy.

This potential, and the overcoming of mutual differences, was demonstrated on the eve of the summit by Presidents Lula and Chávez, who laid the cornerstone of a petrochemical complex in Barcelona, Venezuela on the mainland opposite Margarita Island, in the presence of Presidents Evo Morales of Bolivia and Nicanor Duarte of Paraguay as their invited guests.

The new petrochemical plant is a joint 50-50 Venezuelan-Brazilian venture costing five billion dollars. It is to be constructed by Brazilian company Braskem and the state Venezuelan enterprise Pequiven, and from 2009 it will produce several million tons a year of ethylene, polyethylene, polypropylene and plastic supplies.

As for the controversy about ethanol, Chávez had already changed his tune before the summit, saying "what the United States proposes is to substitute gasoline with products derived from corn, while in the case of Brazil they are seen as complementary sources of energy."

With Lula seen on the closed-circuit television view of the summit listening and smiling, Chávez emphasised Tuesday: "I want to clarify that we are not against biofuels, in spite of certain elements of the press who claimed there was a fight between Chávez and Lula."

"Biofuels are a valid strategy so long as food production is not affected, and they are extracted from sugar cane or castor oil plants," Chávez said, adding that far from opposing them, his country could buy 200,000 barrels a day to improve the gasoline produced by Venezuela's state oil giant PDVSA's refineries in Venezuela and the United States.