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Brazilian Sugarcane Industry

July 16, 2008

SAO PAULO, Brazil, July 16 /PRNewswire/ — The Brazilian Sugarcane Industry Association (UNICA) welcomes the OECD Report “Economic Assessment of Biofuel Support Policies” as another major report that highlights the benefits of sugarcane ethanol in terms of greenhouse gas reduction and urges governments to level the playing field by removing trade-distorting subsidies and tariffs.

“In recent weeks, reports by diverse organizations such as FAO, Oxfam, the World Bank, the U.S. Federal Reserve and now the OECD highlight the vital role that Brazilian sugarcane ethanol has in emission reduction as well as economic development. Through competition, not subsidies or trade distortions, gasoline is now the alternative fuel in Brazil, as drivers choose lower costs and less emissions with sugarcane ethanol,” states UNICA president and CEO Marcos Jank.

The OECD report reviewed more than 60 studies on GHG balances for biofuels and concluded that, in the case of sugarcane, average emission improvements can surpass 100% because of additional products that result from the process, such as electricity. “This reflects the recent trend in the Brazilian industry towards more integrated concepts combining the production of ethanol with other non-energy products and selling surplus electricity to the grid,” the report states.

The OECD report makes clear that mitigating climate change is a global concern, and it does not matter whether biofuels are produced domestically or in other parts of the world, so long as they are produced sustainably where they can make the most significant contribution to the reduction of greenhouse gas emissions.

UNICA welcomes the emerging consensus that opening markets for biofuels and related feedstocks would allow for more efficient production with lower costs, while improving environmental gains and reducing reliance on fossil fuels. “Biofuels should be produced in those parts of the world where they can make the most effective contribution to reducing greenhouse gas emissions. More than 100 countries in the world produce sugarcane, most of them developing economies, and we should be taking advantage of that opportunity,” says Jank.

“The road to energy independence is not through isolation but energy diversification, and reducing protectionism would help reduce gasoline prices in the short term,” says Joel Velasco, UNICA’s Chief Representative in the United States. In both the U.S. and the European Union, gasoline enters the market duty-free while ethanol faces steep tariffs: US$0.54 per gallon in the United States, and EUR0.19 per litre in Europe.

The OECD report comes on the same day that Federal Reserve Chairman Ben Bernanke is testifying before the U.S. Congress on the state of the economy. Asked for his views on the U.S. tariff on sugarcane ethanol, Bernanke responded today as he did on February 28, saying that cutting the U.S. tariff “would be a good step to take.”

UNICA supports the OECD conclusion that it is paramount to reduce energy use to fight global warming, but adds that this should not deter the world from seeking out the best alternative options for motor vehicle fuels.

ABOUT UNICA

The Brazilian Sugarcane Industry Association (UNICA) represents the top producers of sugar and ethanol in the country’s South-Central region, especially the state of Sao Paulo, which accounts for about 50% of the country’s sugarcane harvest and 60% of total ethanol production. UNICA develops position papers, statistics and specific research in support of Brazil’s sugar, ethanol and bioelectricity sectors. In 2007, Brazil produced an estimated 487 million metric tons of sugarcane, which yielded 30.6 million tons of sugar and 22 billion liters of ethanol.

   FOR MORE INFORMATION, PLEASE CONTACT:   Adhemar Altieri   Corporate Communications Director   Sao Paulo, Brazil   (5511) 3093-4949   (5511) 3812-1416 - fax   aaltieri@unica.com.br   http://www.unica.com.br/en  

UNICA – Brazil’s Sugarcane Industry Association

CONTACT: Adhemar Altieri, Corporate Communications Director, UNICA,+011-5511-3093-4949, Fax +011-5511-3812-1416, aaltieri@unica.com.br

Web site: http://www.unica.com.br/en




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