Latin America — the ‘Persian Gulf’ of Biofuels?

Today there is a lot of excitement among current and former U.S. and Latin American officials, regional think tanks and multilateral institutions over this thesis: The U.S. pursuit of oil alternatives may lead to unprecedented levels of cooperation in the Western Hemisphere, bringing with it the strategic, social and environmental benefits long promised by trade integration advocates.
Because demand will outpace their ability to produce, the United States and Brazil are about to officially launch a new energy partnership. The same two countries that in recent years have been at loggerheads over economic and trade priorities, stalling regionwide trade integration, now see their biofuel industries growing as partners rather than competitors, according to Marcos Jank, president of the Brazilian Institute for International Trade Negotiations. In the words of Luis Alberto Moreno, president of the Inter-American Development Bank (IDB), biofuel energy is becoming a “great point of convergence for the Americas.”

Part of their common interests will be to motivate other countries to pick up the slack in production. In this regard, Guatemala, Peru and Colombia, large sugar cane growers in the region, stand to benefit from the new boom in ethanol demand. These three are considered to be very efficient producers, yielding more sugar per acre than Brazil, which in turn is eight times more efficient than U.S. corn-based ethanol producers. Colombia too, as the fifth-largest exporter of palm oil, could become a source for biodiesel.

“To the extent that there is a global demand, Latin America will be the Persian Gulf of biofuels, except that of course Latin America is much more stable as a source of energy,” said David Rothkopf, a senior trade official during the Clinton administration and author of the soon to be released new report commissioned by the IDB “Blueprint for Green Energy in the Americas.” The study finds that in order for biofuels to account for 5 percent of all fuel consumption by 2020, there will need to be $200 billion in new investment worldwide.

Washington Post