BRAZIL TO PRODUCE PAPER ON TECHNICAL BILATERAL

UNCLAS BRASILIA 001089

SIPDIS

SIPDIS

USDOE FOR GWARD/SLADISLAW
USDOC FOR 3134/ITA/USFCS/OIO/WH/EOLSON
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD
USDA FOR FAS/ITP AND FAS/FAA/WH
STATE PLS PASS TO OPIC FOR MORONESE, RIVERA, MERVENNE
STATE PLS PASS TO EXIM FOR NATALIE WEISS, COCONNER
STATE PLS PASS TO USTDA FOR AMCKINNEY
STATE PLS PASS TO USAID FOR LAC/AA
STATE PASS USTR FOR MSULLIVAN
STATE FOR OES/STC GDRAGNICH/TSCOTT
STATE FOR WHA/BSC WPOPP

E.O. 12958: N/A
TAGS: TRGY ENRG KSCA EINV ETRD EAGR BR
SUBJECT: BRAZIL TO PRODUCE PAPER ON TECHNICAL BILATERAL
COLLABORATION ON ETHANOL/BIOFUELS; FRANCE AND JAPAN ANNOUNCE
AGREEMENTS

REF: BRASILIA 000773


1. Science Counselor met on June 1 with Paulo Rogerio Goncalves,
Director of International Relations for Brazil's Ministry of Science
and Technology. Goncalves said that Minister of Science and
Technology Rezende had asked his scientists to quickly develop a
non-paper to address how Brazil envisioned technical collaboration
with the United States in ethanol/biofuels. While awaiting that
document, Goncalves spoke in general terms about Brazil's overall
vision.


2. Goncalves said that Brazil does not want to be in the position
of trying to supply the world with ethanol, if it tried the country
would become one large sugar cane plantation and would not be able
to feed its own people. In addition, Brazil would always be open to
the risk of a virus destroying much of their yield, although it had
tried to minimize that risk by developed nearly 100 different
strains of sugar cane (some better for fuel, others better for
consumption). Brazilian scientists would like to work with their
U.S. counterparts to possibly develop a fuel that would serve the
consumption needs of both countries, and perhaps the world. He was
aware that the product produced in Brazil now may not be suitable
for colder climates. Goncalves recounted an experience years ago
when he lived in the south of Brazil, where the colder temperatures
during winter caused his ethanol-fueled car not to start.


3. Goncalves, who last week accompanied Minister Rezende on a visit
to Europe, said he understood that the United States needed more
specific information about possible technical collaboration because
each country has different needs. While in London, he said, the
Brits expressed a desire to collaborate with Brazil on ethanol, he
heard the same thing in Brussels. Each one of those relationships
will be different, he said.


4. In related stories, the May 26 issue of the newspaper Estado de
Sao Paulo, ran an article saying that Brazil and France planned to
announce during the upcoming G-8 meeting in St. Petersburg, Russia,
the creation of an international fund for the dissemination of
ethanol technology in developing countries. According to the
article, this is part of an effort by the government of Brazil to
transform ethanol into a commodity and to encourage developed
economies to collaborate with poorer countries. Another objective
mentioned in the article was to raise the value of sugar cane
produced in countries in Africa and the Caribbean, and to reduce the
dependence of these nations on petroleum. Brazil's President Lula
and French President Chirac signed this agreement on May 25.


5. Two major Brazilian dailies reported on June 2 that Japan will
invest approximately US$500 million in bioenergy in Brazil. The
article says the money will be used in ethanol and biodiesel
programs for research and financing for the installation of new
industrial plants. An agreement between Brazil and Japan will be
signed in October and the investment funds will start flowing as
early as March 2007 the article reports. Ricardo Dornelles,
director of the Department of Renewable Energy in Brazil's Ministry
of Mines and Energy, is quoted as saying that countries are looking
for alternatives to petroleum and that Brazil is confronting the
challenge of creating a market for ethanol and biodiesel.


6. Post will pass Brazil's non paper on bilateral cooperation on
research on biofuels/ethanol when received.

CHICOLA