Sat, Jul 07, 2007 - Page 6 News List

Biofuel will reduce wealth divide: Brazil's president

AP , BRUSSELS

Biofuels will help reduce the global gap between rich and poor nations by making many developing countries energy exporters, Brazilian President Luiz Inacio Lula da Silva said.

Europe and the US are planning to use more of the less-polluting fuel made from energy crops such as sugarcane or oilseed in an effort to lessen their reliance on imported oil and reduce the greenhouse gas emissions that cause climate change.

The biofuel boom offered an opportunity to countries in Africa, Central America and the Caribbean to claw their way out of poverty and reduce global conflict, Lula said on Thursday.

"Twenty countries produce energy for approximately 200 countries," he said. "With the adoption of biofuels, more than 100 countries will produce energy, making the access to it more democratic."

He told an international biofuels conference in Brussels that Europe should not hold these countries back with high import tariffs -- like those on Brazilian ethanol -- that are not charged on imported oil and natural gas.

EU Trade Commissioner Peter Mandelson said earlier that Europe should be open to importing a large part of its biofuels, as it was unlikely the EU could hit a target to replace 10 percent of transport fuel with biofuels by 2020 without stepping up foreign trade.

"I'm not going to maintain a rigid view that European biofuels are best for Europe," he told reporters. "We should certainly not contemplate favoring EU production of biofuels with a weak carbon performance if we can import cheaper, cleaner, biofuels."

Swedish Trade Minister Sten Tolgfors went further, calling for an end to ethanol tariffs.

Mandelson said any changes would need to be negotiated as part of a wider WTO deal, but could also be part of free trade agreements the EU plans to strike with Brazil and others.

His support for wider imports dents hopes that a biofuel bonanza could see European farmers win extra subsidies. Bright yellow rapeseed is already widespread across Europe because of generous government subsidies to help turn it into biodiesel -- which is more polluting than sugarcane-based ethanol.

Mandelson said the EU could not afford to allow the switch to biofuels to become "an environmentally unsustainable stampede in the developing world."

"Europeans won't pay a premium for biofuels if the ethanol in their car is produced unsustainably by systematically burning fields after harvests," he said.

The EU wants to set sustainability standards to encourage producers to use more production methods that are more durable -- rules that would apply to both importers and European producers.

EU Energy Commissioner Andris Piebalgs said only biofuels meeting these standards would be counted toward the 10 percent target and could receive government support such as tax breaks.

The EU aimed to work with trade partners to avoid these new rules creating "unnecessary obstacles" that could be seen as an unfair trade barrier, he said.

A UN report said on Wednesday that high commodity prices blamed on increasing demand for biofuels could last throughout the decade as more maize, wheat, rapeseed and sugar is turned into fuel.

But Lula dismissed worries that the biofuel boom would see agricultural land abandon food production for energy crops, saying the real problem was poverty, which he said was caused by agricultural subsidies rich nations pay their own farmers.

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