Brazil ethanol advocates say House bill ‘backslides’ on U.S. open market commitment

Source: Amanda Peterka, E&E reporter • Posted: Thursday, June 19, 2014

The trade group for Brazilian sugar cane ethanol producers yesterday warned that legislation introduced in the House last week could put the United States in violation of international trade rules.

The legislation by Rep. James Lankford (R-Okla.) would stipulate that only domestically produced biofuels qualify for credit under the renewable fuel standard, the federal mandate that refiners blend biofuels into petroleum fuel.

Brazilian-produced sugar cane ethanol currently fills a portion of the yearly advanced biofuels requirement that U.S. cellulosic biofuel producers have not been able to meet. EPA has found that the ethanol meets the RFS’s required greenhouse gas reduction requirements to qualify.

“The United States has commitments as a member of the World Trade Organization (WTO). WTO member countries have trade obligations, such as commitments to nondiscrimination in terms of product origin,” Leticia Phillips, North American representative for the Brazilian Sugarcane Industry Association, or UNICA, said in a statement. “By discriminating against foreign biofuel manufacturers, this legislation would violate important American commitments to the WTO.”

The Lankford legislation, H.R. 4849, would eliminate the corn ethanol portion of the renewable fuel standard, as well as limit the biodiesel, advanced biofuel and cellulosic biofuel mandates to domestic production only (Greenwire, June 13).

“I introduced this legislation to provide a common-sense solution to the unworkable RFS,” the chairman of the House Oversight Subcommittee on Energy Policy, Health Care and Entitlements said in a statement last week.

This is not the first piece of legislation to target Brazilian ethanol imports. Last year, Sens. Bob Corker (R-Tenn.) and Joe Manchin (D-W.Va.) introduced the “Foreign Fuels Reduction Act,” a bill that would compel EPA to lower its overall target for advanced biofuels whenever it lowers its target for cellulosic biofuels in an attempt to remove the gap that Brazilian ethanol has helped fill (Greenwire, May 17, 2013).

UNICA also opposed the Corker-Manchin legislation, S. 977.

In her statement yesterday, Phillips said that Brazil and the United States should “lead by example in creating a free market for clean, renewable energy.” The Lankford legislation “backslides” on America’s commitment to open markets, she added.

“The United States and Brazil are the world’s top two biofuel exporters, and both nations enjoy the economic and environmental benefits of global trade in renewable fuels,” Phillips said. “But not everyone is aware of this long-lasting and mutually beneficial trading history.”