Ethanol, the much-maligned biofuel of the hour, is gaining some traction on the Hill. Today I attended a conference on the global food and energy crisis at the American Enterprise Institute, where Senator Richard Lugar argued (pdf link) that the United States should lift its existing 54-cent tariff on imported sugarcane ethanol from Brazil:
There are striking examples in oil and natural gas, where increased political interference puts upward pressure on price…To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry.
Proponents of sugar ethanol say that the critics have it all wrong: not all biofuels are created equal, and sugar ethanol is far greener and cheaper than its corn-based pariah cousin. Sugar ethanol can produce over eight times the amount of energy expended in its production (versus a 2:1 ratio for corn ethanol production, or nearly nil, depending on whom you talk to), and it doesn’t divert crops from heavily relied-upon food stocks. The potential downsides? Reports of forced labor in Brazilian sugarcane fields and the alleged threat to the country’s ecosystem.
All things being equal, even if we started importing cheaper sugar ethanol, it probably wouldn’t provide immediate relief for Americans at the gas pump. Sugarcane ethanol is a fuel additive that contributes only a few cents to the current price of American gas. Nevertheless, the U.S. could conceivably raise the amount of sugarcane ethanol in its fuel and make a more significant dent in gas prices.
McCain, ever the free-tradist, joins Senators Lugar and Dianne Feinstein in supporting the removal of the sugar ethanol tariff. Obama--with his close ties to the corn ethanol industry--is an opponent, saying that relying on such energy sources would compromise America’s “energy independence.” But America is far from being liberated from foreign energy sources any time soon, and to exclude such options wholesale smacks of sheer protectionism.
A more realistic objective would be to diversify America’s energy sources--not only by developing domestic energy sources and alternative fuel technologies, but also by cultivating foreign energy sources that are secure and sensible. For America, Brazil would be a fairly benign shoulder to lean on. The country doesn’t carry the same security risks as other energy-rich nations, linking us to autocratic regimes or explosive regional conflicts. And the ethanol issue might be a good opportunity for the U.S. to build closer ties to Latin America, one of the most neglected areas of the world under the Bush administration. The human rights and land-use concerns certainly warrant further investigation, but sugar ethanol could ultimately prove to be a sweet deal.