Lula talks up Brazil renewable fuels effort in meeting with Bush

Lula talks up Brazil renewable fuels effort in meeting with Bush

Rio de Janeiro (Platts)--17Jul2006

Brazilian President Luiz Inacio Lula da Silva Monday pressed Brazil's
alternative fuels programm -- including ethanol, biodiesel and Brazil's new
HBio diesel fuel that contains soybean oil -- as a model for US energy
development in a meeting with US President George W. Bush in St. Petersburg,
Russia.

Lula and Bush, meeting on the sidelines of the G8 conference in Russia,
discussed possible Brazil-US cooperation in the area of renewable fuels,
according to Brazil's government news Agencia Brasil.

Among other issues of common interest, Lula briefed Bush on several
aspects of Brazil's renewable energy program, including a new refining process
developed by Petrobras to add about 10% vegetable oil to diesel production in
conventional refinery crackers, known as H-Bio. The technology may reduce
Brazil's diesel imports by 10% in the upcoming years, Lula has said.

The presentation to Bush "is practically an invitation for a large-scale
partnership" between Brazil and the US in the area of renewables, Lula said,
according to Agencia Brasil.

Brazil is seeking to become the world's largest exporter of renewable
fuels, making it one of the world's biggest energy exporters, over the next
few decades. Already, Brazil depends on sugarcane-based ethanol as a petroleum
substitute, with about 40% of consumer vehicle fuel made up by ethanol.

Bush has been pushing more ethanol production in the US as a means to
reduce US reliance on imported oil, and has said he favors the elimination of
a 54 cents/gallon tariff on Brazilian ethanol imports in the US. Analysts say
the US Congress is unlikely to approve the tariff elimination any time soon.

Ethanol in the US is made from corn in a process that is more costly than
Brazil's ethanol production.

--Joshua Schneyer, newsdesk@platts.com

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