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Statement: Brazilian Sugarcane Industry Responds to Introduction of Pomeroy-Shimkus Legislation that Taxes Clean, Renewable Energy

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Washington, DC (March 25, 2010) In response to newly introduced legislation from Reps. Earl Pomeroy (D-ND) and John Shimkus (R-IL) extending subsidies to corn ethanol and the 54-cents per gallon tariff on imported ethanol – particularly sugarcane ethanol from Brazil – for five more years, the Brazilian Sugarcane Industry Association (UNICA) issued the following statement.  The statement should be attributed to Joel Velasco, UNICA’s Chief Representative in North America.

Sugarcane ethanol from Brazil is an advanced, low-carbon fuel that could help the United States save money at the pump, cut dependence on Middle East oil and improve the environment as both the U.S Environmental Protection Agency and the California Air Resources Board have recognized.  However, Americans will not fully benefit from this clean, more affordable alternative if Congress continues to erect trade barriers against imported ethanol. It is ironic that Congress allows oil from nations hostile to America into the country tariff-free, but is more than willing to punish clean energy from Brazil, a long-standing democratic ally.

Thanks to generous government incentives and consumption mandates over the last 30 years, the United States has built the world’s largest ethanol industry producing more than 12 billion gallons of corn ethanol per year.  Brazil is the world’s second-largest producer with about 6 billion gallons, without government subsidies.  Americans and Brazilians share the same goal to reduce dependency on fossil fuels, and Brazilians are proud to have replaced half of their gasoline needs with sugarcane ethanol.  America has displaced less than 10 percent of its gasoline needs.

Unfortunately, the world’s #1 ethanol producers –– American producers who comprise what is according to President Obama’s Biofuels Working Group a “well established” and “mature” industry –– appear determined to avoid healthy market-based competition. They continue to ask for government bailouts, this time to the tune of $7 billion a year on top of the consumption mandate in the federal Renewable Fuel Standard.

Expert after expert – including the U.S. Government Accountability Office – agrees that government subsidies and trade-distorting import taxes are no longer needed when consumers are required to use ethanol.  In fact, here is what an Iowa State University economist from the heart of corn country had to say just this month:

“It is puzzling why the biofuels industry continues to defend these subsidies when it has its mandates in place. Tax credits cost taxpayers more than $5 billion per year, and import tariffs convey the message that the ethanol industry is so uncompetitive that it needs protection against foreign competition. It would seem that there would be major political benefits from simply giving up all subsidies and import tariffs and for the industry to rely solely on the mandates.”

Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs.  The same principle holds true for the renewable fuels market.  Competition will create a race to the future and generate better options for American consumers.

After 30 years of subsidies and import taxes, American consumers deserve clean fuels at a market-based price.  Brazilian sugarcane ethanol producers are ready to compete.  What about American corn ethanol producers?

Media Contact

Ana Carolina Lessa
Public Affairs, North America
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