Bernanke favors lower tariffs on Brazilian ethanol
U.S. Federal Reserve Chairman Ben Bernanke has said he favors cutting high tariffs on Brazilian ethanol. He thereby joins a growing rank of world leading economists, energy experts, social scientists, international development institutions (like the IMF and the World Bank), economic think tanks (like the OECD), key food and agriculture analysts (like the FAO and the IFPRI) and development organisations, who have all spoken out in favor of international free trade in biofuels. Many of these analysts have said current high food prices are partly the result of protectionism in the biofuels market.
Biomass based fuels can be made in a far more efficient, environmentally friendly and cost effective way in countries like Brazil and other nations in the Global South. Countries in the North should import these fuels, which would end pressures on food markets and benefit consumers. But both the EU and the US levy high tariffs on these biofuels, to protect their own inefficient, subsidized producers.
Speaking before the Senate Banking Committee, Bernanke said in this context:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: biodiesel :: subsidies :: tariffs :: trade :: Bernanke :: Brazil ::
Biomass based fuels can be made in a far more efficient, environmentally friendly and cost effective way in countries like Brazil and other nations in the Global South. Countries in the North should import these fuels, which would end pressures on food markets and benefit consumers. But both the EU and the US levy high tariffs on these biofuels, to protect their own inefficient, subsidized producers.
Speaking before the Senate Banking Committee, Bernanke said in this context:
As you know, I favor open trade and I think allowing Brazilian ethanol, for example, would reduce costs in the United States.Most of the ethanol made in the United States comes from corn, and domestic production is protected from much more efficient and cost-effective sugar-based Brazilian ethanol by a steep, US$0.54 per gallon tariff. This uncompetitive reliance on corn has distorted global food markets. Bernanke said it was hard to say how much current strong demand for ethanol was boosting food prices.
But it is the case that a significant portion of the corn crop is being diverted to ethanol, which raises corn prices. And there's some knock-on effects. For example, some soybean acreage has been moved to corn production, which probably has some effect on soybean prices. So there is some price effect on foodstuffs coming through the conversion to energy use.Promoting free trade in biofuels combined with a framework that ensures environmental and social sustainability, will unlock a large and efficient biofuel potential that benefits consumers everywhere. According to researchers, such a global 'biopact' between the North and the South may help alleviate poverty in developing countries, where large rural populations can benefit from the new biofuels opportunity (previous post). Some analysts, like the WorldWatch Institute have even concluded that, with good policies, biofuels can help end hunger [entry ends here]
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: biodiesel :: subsidies :: tariffs :: trade :: Bernanke :: Brazil ::
6 Comments:
You DO understand what the difference is between Sen Charles Grassley (Ia,) and Sen Ben (Over My Dead Body) Nelson (Neb,) and Ben Bernanke is don't you? The first two gentlemen will have jobs next year.
Ain't gonna happen guys. Everyone's had all they want of the B&B (Bush, and Bernanke) Boyz, right now. We'll let aboout 500 Million Gallons of Brazilian ethanol into the country Duty-Free this year; how many of our products will Brazil allow sans tariffs do you imagine. Zero?
We've got some serious work to do on "Cellulosic" Ethanol. Dropping those tariffs would destroy the financing for those projects, immediately. Bad for Us; Bad for the World.
Oil: $102.00/bbl - Dow off 2,000 - Country sliding into Recession. Swing states - Mn, Ia, Wi, Mi, Oh
Yeah, Good Luck wit dat.
Just keeping up the conceptual or moral pressure, Rufus! So you guys effectively make cellulosic ethanol a reality sooner than planned. Cause that would benefit us all.
You've got the scientific and research capacity to pull this off. So do it.
They done got me to "drinkin" the stuff *Hic*, Jonas. :)
BTW, I've been linking your Biomass stuff around some of the "Peak Oil" websites. I think a few of them are starting to "get it."
Probably, GM is going to be voted "MVP" when this is all over. Their support of Coskata is powerful medicine. The Oil Companies are scared to death, and fighting like Tigers; but, GM's support insulates the cellulosic industry, somewhat. It just might turn out to be the crucial push.
This long-time Ford Owner will be driving a flex-fuel HHR this fall (yeah, Americans Really Do Think that way.)
Corn was a Necessary First Step, gentlemen. It built the Political support, necessary. Besides, any time you can take 35,000 btus of nat gas, and diesel, and come up with a replacement for 116,000 btus of gasoline it's not a "Bad" Thing, right?
Cheaper, more efficient Brazilian ethanol is offset by other factors that make it less desirable. The expense to ship Brazilian ethanol to the U.S. using fossil fuels. Compare this with locally produced and consumed ethanol in the U.S. – no shipping cost and no fossil fuels used to ship it, also less pollution produced. Localized biofuels also create thriving local economies. In contrast, Bernanke represents the International Bankers who control the Federal Reserve and milk the American people with debt instruments. By infiltrating the U.S. Government, the Fed has driven the Nation Debt up to $9 Trillion, on which they are collecting floating interest. The U.S. is currently importing 60% of its oil from foreign countries, and is also paying for its foreign oil trade deficit with Federal Reserve debt instruments. Importing ethanol would be similar to importing foreign oil. The trade deficit on imported ethanol would also be paid for with debt instruments. That benefits the Fed, because the privately owned Federal Reserve Corporation collects floating interest though the IRS on National Debt and Trade Deficit debt instruments. And that interest is laundered through a secret trust fund in Puerto Rico. The Federal Reserve is not a government agency, and neither is the IRS. These same International Bankers who control the Fed also control Big Oil, which is now threatened by new American policies favoring biofuels. Importing cheaper ethanol from Brazil into the U.S. will compete with the domestic ethanol industry and weaken it. In the eyes of the Fed, the U.S. biofuels industry is out of control and getting too big for its britches. Fed-Big-Oil is now trying to limit U.S. biofuels, in order to protect its heavy position in crude oil and to keep petroleum based fuels dominant. That would be accomplished by disrupting or slowing down the momentum of the thriving U.S. biofuels industry. If the U.S. lowers tariffs and imports more Brazilian ethanol, it will become dependent on imported ethanol, instead of the foreign oil it displaces. What’s the point in trading one dependency for another? The whole push in the U.S. for alternative energy and biofuels is to become totally energy independent – to end its dependency. This is not a pipedream. It’s a goal that can and will be achieved. Brazil is a perfect example. We should help every country in the world to become energy independent and to end its dependency on imported oil and imported ethanol.
Anonymous, you're partly right: most of the new ethanol produced in Brazil will go to the domestic market.
However, it may be opportune for producers to export, when demand from the local market has been met and they want to expand.
Guaranteed markets offer important signals informing investment decisions.
Your point about the shipping costs is in fact irrelevant: these costs are extremely low. Ethanol is exported in large ships which are very efficient in transporting the commodity over vast distances.
There's quite some good research showing these extra costs are extremely small and have almost no impact on the energy balance of Brazilian ethanol. Check the IEA Bioenergy Task 40 and its reports about biofuel logistics, trade chains and costs.
Best, Jonas
Jonas – You’re skipping most of the shipping and handling costs. Account for shipping Brazilian ethanol from the ethanol plants in the interior of the country to an oceangoing port. Account for loading it onto a tanker. Account for shipping it using fossil fuels to the destination port. Account for transferring it off the tanker into holding tanks. Account for loading it from the holding tanks to fossil fuel powered trailer trucks and then shipping it to where it will be consumed. Each one of these steps consumes energy and fossil fuel and contributes to global warming. Now compare this to local production and consumption of ethanol which stimulates local economies.
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