Energy at the centre of Obama's visit to Brazil

Date: March 21, 2011

Obama's visit to Brazil led to a few annoucements.

The first major announcement expands the existing memorandum of understanding between Brazil and the U.S. to advance cooperation on biofuels, signed in 2007, to include a new partnership for the development of aviation biofuels.

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The other announcement of interest to Brazilian biofuels producers is the launch of a Strategic Energy Dialogue that involves development and access to Brazil's huge new petroleum reserves, but will also deal directly with clean energy technologies. During a speech to about 500 Brazilian and U.S. business executives in Brasilia, Obama pointed out that focusing on fossil fuels in the near term doesn't mean losing sight of what needs to happen in the future.

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Of particular interest to UNICA (the Brazilian Sugarcane Industry Association) is a clause calling on the two countries to work to "prevent international barriers to biofuels trade and development."

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With energy at the top of the agenda, prominent members of Brazil's sugarcane ethanol industry were involved throughout the first day of President Obama's visit to Brazil, including a luncheon offered by Brazilian President Dilma Rousseff at the External Affairs Ministry, where UNICA's Jank was among the guests with direct access to the U.S. President.

My comment: Obama appears to have made the Rio trip to increase the U.S. access to new offshore oil fields as he's clearly said he is intent on sourcing more oil from friendly nations as a matter of national security. Another issue is the development of aviation biofuel from renewable feedstocks which plays well on a PR platform and may well involve ADM, BP, Shell or other companies with significant access to Cane sugar ethanol chain. The aviation biofuel project may well be the political price Obama has to pay to have preferential access to the new oil fields, and his visit to Rio (where oil companies are located) may well give further ground to this assumption. On the other hand, UNICA's professed hope that the US will lower trade barriers may be too optimistic in vew of the strong US corn ethanol lobby led by RFA, ncga and GrowthEnergy that has called for keeping tariffs in place and maintaining subsidies. Let's not forget the fact that Obama is the son of Chicago politics.

Link: ethanolproducer.com