14 Juli 2004

Argentine Senate pushes plant-based green fuels

BUENOS AIRES, Argentina – Argentina’s senators are proposing that farmers turn everything from soybeans to beets into clean-burning biofuels to cut vehicle pollution at home and supply markets in Europe and Japan.

The world’s top soyoil exporter and No. 2 corn exporter wants to produce more ethanol, a fuel additive usually made from corn or sugar cane, and vegetable oil-based biodiesel that may be mixed with ordinary fuels to cut harmful emissions.

Argentina hopes to join the United States and Brazil in cornering this niche market as the European Union and Japan try to meet new fuel-mixing targets meant to stem global warming.

A Senate bill enjoying broad support would boost the industry at home by offering tax breaks to biofuels producers and setting mandatory fuel mixes. “Without a doubt, we are in a privileged position because we have the products to make both ethanol and biodiesel,” Vice President Daniel Scioli said on Tuesday during the unveiling of the national biofuels bill. “And while we export a high percentage of certain products as commodities, now we have the chance to sharply increase the value added,” Scioli said.

Government efforts to boost biofuels fell flat in the past. But Argentina suffered natural gas shortages this year, and the specter of blackouts convinced some that alternative energy sources must be found, Sen. Luis Falco, the bill’s sponsor, said. “Crisis creates opportunities,” Falco said.

Two-thirds of senators back the bill, which would require gasoline mixes in Argentina to contain 5 percent ethanol. Diesel fuel would include a 5-percent biodiesel component. Argentina already produces ethanol from corn and sorghum on a small scale, Falco said. And Brazil’s state oil firm Petrobras (PETR4.SA: Quote, Profile, Research) (PBR.N: Quote, Profile, Research) is researching whether biodiesel could be made from rapeseed in Patagonia.

Getting Trendy

The search for alternative energy sources took off in the 1970s when an Arab oil embargo provoked shortages and panic buying in many oil-consuming nations. As crude oil prices surge again, the United States is betting more on corn-based ethanol, the use of which jumped 35 percent in 2003. One-tenth of the U.S. corn crop goes toward making ethanol.

In Brazil, the world’s largest ethanol producer, the government requires that the cane-based additive make up 25 percent of gasoline mixes. And the state is drafting new rules that could set a voluntary mixing standard of 2 percent biodiesel with conventional diesel, raising the bar to 5 percent in 2005.

The Argentine proposal to boost biofuels would give producers a host of tax breaks, which Falco said would cut the sales price by up to 30 percent. Biofuels tend to be much more expensive to produce than gasoline or diesel. The industry would provide between 15,000 and 18,000 new jobs within three years, Falco said. Argentina puts the national jobless rate at about 14 percent, as the economy struggles to recover from a devastating crisis in 2002. “We are creating an industry that doesn’t exist today, and this will have an exponential effect in terms of job creation,” Falco said.

Source: Planet Ark July 9, 2004.

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