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Our Comments So Far to Environmental Regulators and Legislators
Leticia Phillips — posted 20/06/2013
As I wrote a couple weeks ago in my last post, sugarcane ethanol producers are stepping up our profile in the debate over the Renewable Fuel Standard (RFS). We’ve been active for a while sharing vital facts about clean, advanced biofuels like sugarcane ethanol and lending our expertise and support to policymakers currently exploring the issue. Here’s a quick update on our activities so far and future plans.
WHERE WE’VE BEEN: ON THE RECORD
In April, the Brazilian Sugarcane Industry Association (UNICA) submitted comments to the Environmental Protection Agency in response to their proposed RFS requirements for 2013. Our letter touches on a number of key issues, but most importantly, addresses concerns that Brazil cannot supply enough sugarcane ethanol to meet America’s needs. On the contrary, updated harvest and export capacity estimates confirm that Brazilian sugarcane ethanol producers can meet EPA’s projections for ethanol exports to the United States. Our comments to EPA conclude:
UNICA is confident that Brazilian sugarcane ethanol producers will be able to meet—and if necessary surpass—EPA’s projections for Brazilian sugarcane ethanol exports to the United States. Further, we believe this updated information resolves any residual uncertainty regarding Brazilian sugarcane production and ethanol production and obviates any need to reduce the statutory volume requirement for advanced biofuels as a hedge against poor production in Brazil. (Page 12)
Congress is also getting into the act, with the House Committee on Energy and Commerce releasing a series of white papers seeking input on the renewable fuel standard.
We welcomed the opportunity to answer the committee’s questions and illustrate the ways sugarcane ethanol is helping America meet RFS goals – particularly improving energy security and reducing greenhouse gas emissions. Some of the highlights from last month’s letter to Congress:
The RFS – and sugarcane ethanol in particular – works to reduce greenhouse gas emissions (GHG). As demonstrated by EPA’s own lifecycle analysis, the GHG emissions reductions associated with Brazilian sugarcane ethanol exceed the emissions thresholds for all categories of advanced biofuels included in the RFS program. Sugarcane ethanol is the most efficient biofuel produced at a commercial scale and can reduce GHG emissions by over 60% when compared to a fossil fuel baseline. (Pages 1-2)
Sugarcane ethanol helps meet advanced biofuel mandates. The Environmental Protection Agency has conducted rulemakings each year that waive significant portions of the Energy Independence and Security Act of 2007 (EISA) cellulosic ethanol mandate. As development of commercial-scale cellulosic biofuel facilities has been slow, that volume mandate has been met with other advanced biofuels that offer comparable GHG emission reduction benefits, such as Brazilian sugarcane ethanol. As a result, the GHG emission reduction benefits anticipated by the EISA have been achieved, even if through different paths. (Page 5)
Brazil is dedicated to the current and future success of the RFS. Our members are committed to producing increasing quantities of Brazilian sugarcane ethanol to help ensure compliance with the RFS program’s advanced biofuel mandate in the future. Brazilian sugarcane producers have made a long-term commitment to providing clean, renewable sugarcane ethanol to meet energy and environmental goals in Brazil and globally as evidenced by the considerable investments by major global energy companies, such as Shell, BP, Total and Petrobras, in the sugarcane industry. (Page 2)
WHERE WE’RE GOING
We’re proud of the role that sugarcane ethanol plays in helping the U.S. reduce greenhouse gases. And sugarcane ethanol producers are committed to providing clean, renewable fuel for Brazil, the U.S. and the world. As the debate heats up and congressional scrutiny intensifies this summer, we will continue to highlight the benefits and stress the importance of access to clean, advanced biofuels like sugarcane ethanol.
Regulatory Oversight Threatens Sugarcane Ethanol Supplies to U.S.
Leticia Phillips — posted 15/06/2013
Brazilian sugarcane ethanol has become an important component of America’s advanced biofuels supply. But language tucked away in a proposed Environmental Protection Agency (EPA) rulemaking could effectively end U.S. access to this clean renewable fuel.
First, a little background. Under the Renewable Fuel Standard (RFS), sugarcane ethanol has become an important part of meeting America’s desire to use more advanced biofuels. Brazilian exports provided nearly one-quarter of the entire U.S. advanced biofuel supply in 2012, are projected to supply nearly 700 million gallons of fuel required to meet 2013’s targets, and could supply up to one billion additional gallons in 2014 – all with at least 61% fewer emissions than gasoline, according to the EPA.
Economic and Environmental Causes for Concern
However, EPA’s proposal as currently written would cause three principal problems that could halt the steady supply of this clean fuel.
1 – Cost-prohibitive requirements – If approved, every sugarcane ethanol producer exporting to America would be subject to a host of burdensome new requirements, like physically segregating the ethanol they export from the production plant all the way to port arrival in the U.S. and spending considerable sums on expensive third-party auditors and bonds. By our estimates, producers would have to post a compliance bond of roughly $1 million for every 5 million gallons exported to meet EPA’s proposed rules. In addition, every gallon of sugarcane ethanol would have to be segregated from the moment of production across each of Brazil’s 400 mills, and could no longer be combined for shipment to domestic or other international markets if even one drop was destined for America.
These new requirements will drive up production costs to the point where sending this advanced biofuel to the U.S. may no longer make economic sense. Biofuels thrive on the global market, and since half of Brazil’s sugarcane ethanol exports already go to other countries, new costly mandates could force exports away from America.
2 – Increased emissions– Segregated supplies would also boost associated transportation emissions of shipping sugarcane ethanol. Producers could no longer use pipelines or bulk storage facilities, rail shipments would have to be separated for exports, and ocean vessels might have to be shipped at less than capacity. More ships and trains mean more emissions – a change that seems incongruent to President Obama’s climate goals.
3 – Impossible requirements – Perhaps most concerning, proposed rules would force all Brazilian sugarcane ethanol producers to demonstrate compliance by January 1, 2013 – a deadline that passed more than seven months ago! By our calculations, $40 million in bond payments would be retroactively due on the 200 million gallons of sugarcane ethanol imported into the U.S. so far this year.
An Unnecessary Change
EPA’s intentions are laudable, and we support the agency’s goal of ensuring the regulatory system that tracks U.S. biofuel consumption (known as Renewable Identification Numbers or RINs) is accurate. But the current system monitoring foreign producers isn’t broken.
Significant protections already guard against RIN concerns, and the Brazilian sugarcane industry worked proactively with EPA to ensure Brazilian producers maintain records to comply with reasonable expectations. Plus, there has never been an instance of RIN fraud linked to Brazil.
These proposed changes appear to be a solution in search of a problem that will have (what we trust are) unintended consequences – namely threatening American access to one of the few advanced biofuels on the market today. We hope EPA will take our comments into consideration, and keep our reliable supply of clean and renewable sugarcane ethanol flowing into U.S. vehicles.
Increasing the cost of low carbon sugarcane biofuels by 20 cents per gallon all the while increasing transport emissions doesn’t seem like the right way to implement the RFS. If you agree with us, make sure the EPA hears your concerns.
A Renewed Voice in the Debate Over Renewable Fuels
Leticia Phillips — posted 28/05/2013
Sugarcane ethanol plays a modest but important role supplying the United States with clean renewable fuel. Last year, Brazilian sugarcane ethanol comprised only 3 percent of all renewable fuel consumed by Americans, but provided nearly one-quarter of the U.S. supply of advanced biofuels. Is that amount significant? It is if you care about cleaner air and a healthier planet! The 460 million gallons of sugarcane ethanol Americans used in 2012 cut CO2 emissions by the same amount as planting nearly 57 million trees and letting them grow for 10 years.
These vital facts are getting lost in a debate that’s heating up in Washington, D.C. over renewable fuels. The key policy – known as the Renewable Fuel Standard – was enacted to improve U.S. energy security and reduce greenhouse gases. And the Renewable Fuel Standard (RFS) is clearly working as Congress intended when measured in terms of increasing American consumption of renewable fuel. It has grown production and use of biofuels in the U.S. from around 4 billion gallons in 2006 to 15 billion gallons last year. But critics and special interests are lining up to urge changes by both Congressional legislators and environmental regulators.
So sugarcane ethanol producers, along with our colleagues in the advanced biofuels industry, plan to step up our profile. We’ll take a more active role setting the record straight on the importance and benefits of this advanced biofuel – starting with new information available at our dedicated website: sugarcane.org/rfs. Here you’ll find a brief summary of the issue and our position that Congress and environmental regulators should maintain American access to clean, advanced biofuels like sugarcane ethanol. We also answer many frequently asked questions. Topics like: What is sugarcane ethanol? Why would Americans want it? What are advanced biofuels and other biomaterials from sugarcane? And many more.
You’ll also see more regular posts from me and other collaborators here on the Sugarcane Blog. So to kick things off, I’d like to reiterate some guiding principles (first articulated by my friend and colleague Joel Velasco) that will serve as ground rules for our blogging and participation in the RFS debate:
1 – Honesty. Americans’ trust in government keeps getting lower. I think this decline is mostly because our policy discussions are no longer honest debates, but a litany of overheated talking points that all too often veer from the truth. So, on this blog, we commit to sticking to the truth and promise to admit if we come up short. Honesty is the best prescription to regain the public trust.
2 – Consistency. Cherry-picking may be a good strategy at an orchard, but not for public policy. Being consistent means practicing what we preach, demanding accountability and, yes, being fair and balanced.
3 – Sweet Humor. There’s nothing wrong with mixing a little fun with work, and we’ll try to do that on this blog as well. Like this: In Brazil, a common sugar industry saying is “drink the best, drive the rest.” That’s because the national drink in Brazil, the “caipirinha”, is made with sugarcane alcohol, which, when it fills the tank of our cars, is called ethanol. We’re eagerly awaiting the “booze vs. fuel” debate to heat up. Any takers?
So take a look around and check back whenever you want an update. You’ll find that the United States and Brazil are the world’s largest biofuels producers and exporters. Both countries recently removed trade barriers protecting their domestic ethanol industries and have taken initial steps towards greater energy cooperation. And I firmly believe that Brazil and the U.S. have a responsibility to work together to build a global biofuels market that provides clean, affordable and sustainable solutions to the planet’s growing energy needs. That’s the ultimate goal of the campaign we renew today.
Why do Americans pay more for sugar?
Leticia Phillips — posted 15/05/2013
Most Americans who start the day stirring a spoonful of sugar into their coffee would be surprised to learn they generally pay more for the sweetener than residents of other countries buying it on the global market. Major American commodities traders track two prices for sugar – a world price and a more expensive U.S. price.
Why the difference? According to the Wall Street Journal, “U.S. prices tend to be higher than world prices because the U.S. restricts sugar imports as part of the [U.S. Department of Agriculture’s] price-support program” for sugar (subscription required). One USDA economist recently estimated this price-support scheme could cost American taxpayers $80 million in 2013 on top of requiring U.S. consumers to pay artificially higher prices for raw sugar, candy and other confections.
Given these sour facts and movement in the U.S. Congress to reform the sugar program, I’m not surprised the American Sugar Alliance is trying to change the subject to defend its price supports. Last month, the group released a report arguing that Congress must maintain current U.S. sugar policy “to shield consumers from foreign market manipulation,” particularly by Brazil which subsidizes sugar production according to the American Sugar Alliance.
The influential Cato Institute took a look at the group’s report and summarized its findings succinctly:
The sugar lobby for years have been complaining that we need the sugar program, which keeps prices high for producers by keeping imports strictly controlled, in order to enable “reliable” (i.e., managed) access to sugar. Now they think sugar is too available (i.e., cheap)? For sure, if I was a Brazilian taxpayer, I would baulk at the thought of subsidising (if that in fact is the situation) the sugar addictions of my richer neighbours to my north, but as a consumer? Muito obrigado!The sugar lobby’s talking points are getting ever more creative. But none of them are valid.
I added emphasis on the last line above and was tempted to end my rebuttal there! However, the Brazilian Sugarcane Industry Association felt obligated to set the record straight on this misleading report which overstates Brazilian support for domestic producers and turns a blind eye to comparable programs in the U.S. You can download our point-by-point response here, and see for yourself how the American Sugar Alliance’s report reveals “the desperate need of the American sugar industry to keep the U.S. market closed and protected from competition.”
UNICA @Rio+20, be ready to commit!
Géraldine Kutas — posted 19/06/2012
The day we have all been waiting for has come.
Over the last few months, governments have been working on a document that needs signatures of more than 130 international leaders coming to Rio from all over the world.
Keeping in line with the level of ambition associated with the summit the paper is called “The Future We Want”. It is meant to commit its signatories to do their best to put the world on a more sustainable development path and ultimately a green economy.
But just how much agreement governments reach should not be the only measure of success for Rio+20. At Rio, private sector and NGOs will be working in partnership across platforms to chart a path towards a more sustainable use of resources. Our commitment to each other is just as real and as binding. I’m excited that UNICA will be part of this historic moment, and we hope that what’ve learnt is a good blueprint for others.
I have previously talked on this blog about the future that UNICA wants and the urgency to take action and act responsibly.
In a world of rising energy demand, decreasing traditional energy supplies and a rapidly growing population, renewable energies are essential. And because the Brazilian experience shows that they can be an engine for economic growth there is even more good reason to hear us out. Times are tough for everyone, but if you can open up market opportunities, grow GDP and satisfy consumer demand for clean fuels, there is a solid business case.
We’ve been preparing for Rio+20 for some time now because we see an opportunity, economic as much as environmental. We have also been actively telling our story, and with great authority, through the “Dialogues for Sustainable Development”, a UN platform for civil society participation in official discussions that has given an outstanding support to all our energy proposals. And for those of you here in Rio or those who’ll be following us from far, we plan to continue showing our commitment to a green economy and engaging with our stakeholders at a number of events this week:
On June 18th, UNICA talked about the potential of sustainable bio-energy at an event organised by the Global Bioenergy Partnership (GBEP).
On the 21st, we will venture into the Bioeconomy debate alongside Novozymes and Electrobras.
And we will round off our busy Rio schedule on June 22nd with a presentation on the opportunities and challenges for bioenergy in Brazil at a conference organised by the CNA.
Sound busy? It’s not all.
A few days ago, we unveiled our latest contribution to understanding the potential of Brazilian sugarcane. We have launched an interactive digital tool that tells the story of our industry, provides timely information about market developments, and gives an overview of prospects and future uses of sugarcane ethanol. And it’s good fun to use it. You can also download the app on your mobile devices and connect to our facebook page.
As you all see, much of the action in Rio+20 will not just take place at the negotiating table. We invite you to follow the debate and take part in the conversation.
We hope that this conference will mark the beginning of the future we all want.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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