VZCZCXRO6641
RR RUEHRG
DE RUEHBR #1176/01 2492025
ZNR UUUUU ZZH
R 052025Z SEP 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2363
INFO RUEHSO/AMCONSUL SAO PAULO 2667
RUEHRG/AMCONSUL RECIFE 8403
RUEHRI/AMCONSUL RIO DE JANEIRO 6546
RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 03 BRASILIA 001176 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/BSC, WHA/EPSC FOR FCORNEILLE, E FOR GMANUEL, 
STATE ALSO FOR EEB MMCMANUS, E FOR THASTINGS 
STATE PASS USTR FOR KDUCKWORTH 
STATE PASS DOE/NREL FOR HCHUM 
DEPT OF ENERGY FOR CGAY, RDAVIS, GWARD, AKARSNER 
 
E.O. 12958: N/A 
TAGS: ENRG EAGR ETRD ECON EINV BR
SUBJECT: BIOFUELS IN BRAZIL 
 
ENTIRE CABLE SENSITIVE BUT UNCLASSIFIED--PLEASE PROTECT ACCORDINGLY 
¶1. (SBU) SUMMARY:  The U.S. Brazil biofuels steering committee met 
at the technical level on August 20 in Brasilia, following the 
postponement of travel to Brazil by Under Secretary for Economic 
Affairs Reuben Jeffery.  The meeting included a highly constructive 
private sector element and a very positive technical level working 
group meeting.  There are opportunities to continue moving forward 
under each of the three pillars of the bilateral biofuels Memorandum 
of Understanding (MOU) (bilateral, third country, and international) 
and to address some sector needs identified by the private sector. 
Brazil's high level biofuels summit planned for November 17 - 21 in 
Sao Paulo presents an excellent catalyst for action under the MOU. 
This is the optimal time for moving the biofuels agenda forward, 
building on the sense of positive momentum and interest in achieving 
demonstrable results for upcoming biofuels events.  END SUMMARY. 
¶2.  (SBU) The August 20 technical level meeting of the U.S. Brazil 
Biofuels Steering Committee was opened by Ministry of External 
Relations (MRE) Ambassador Evarton Vargas, who with support from 
Ambassador to the United States Patriota and Director of the Energy 
Division Andre Correa do Lago, led the Brazilian side for the first 
part of the meeting.  Greg Manuel, State Department International 
Energy Advisor, along with Ambassador Cliff Sobel, led the U.S. 
side.  Vargas noted that though he regretted the postponement of 
Under Secretary for Economic Affairs Reuben Jeffery's trip to 
Brazil, it presented some opportunities to make progress in 
preparation for the eventual Steering Committee meeting.  Ambassador 
Sobel disclosed that likely dates for a postponed Jeffery trip were 
October 1-3.  Vargas said that his successor in what is to be a 
newly created position of Undersecretary for Energy and Technology, 
Andre Amado (currently Ambassador to Japan) would be taking up his 
post on October 10.  Vargas and MRE Energy Division Director 
promised to inquire as to whether Amado could arrive in Brasilia 
early enough to take part in a Committee meeting on Jeffery's 
proposed dates. (Note: Post has learned that Amado is willing to 
change his travel plans to be available for an October 2 meeting.) 
 
¶3.  (SBU) Greg Manuel opened the meeting up to the private sector 
advisory group via conference call.  Private sector participants 
included Jeffrey Leonard, President and CEO, Global Environment Fund 
and Max Guinn, Senior Vice President, Deere & Company on the U.S. 
side and Jos Luiz Olivrio, Vice President, Dedini S/A, also 
representing the Brazilian Machinery Builders Association (ABIMAQ), 
Marcos Sawaya Jank - who attended in person, President of the 
Brazilian Sugar Cane Industry Association (UNICA) and Marcio Nappo, 
UNICA's Environmental Advisor, who also attended in person, for the 
Brazilians.  After Manuel reviewed a list of accomplishments under 
the MOU, Jank took the floor to present a proposal with six items 
UNICA has identified as private sector action priorities (proposal 
has been emailed to WHA/BSC, WHA/EPSC, EEB, FCS, and DOE.) 
¶4.  (SBU) Jank prefaced his proposal by noting the need for the U.S. 
and Brazil to continue working together, both to counter 
anti-ethanol forces and to maximize the potential for commercial 
partnerships given the U.S.'s technology and investment capacity and 
Brazil's feedstock scale and infrastructure.  Janks' proposal 
included: 1) fast track environmental licensing in Brazil for site 
selection, 2) joint recognition of fuel quality specifications and 
production process certification schemes, 3) facilitating approval 
for next generation technologies entering Brazil, 4) a lifting of 
geographic restrictions to permit funding from U.S. public grants to 
be utilized in joint research projects in Brazil, 5)improved U.S. 
market access for next generation products from U.S.- Brazilian 
joint ventures, and 6) a series of entrepreneurial meetings with 
members of private sector advisory group, and other interested 
members of the private sector to address issues in the biofuels 
sector and develop commercial opportunities.  Jank noted that he had 
consulted numerous private sector entities in Brazil in preparing 
his proposal, including CTC, EMBRAPA, etc.  He proposed that the 
advisory group consider meeting in person for a one day discussion 
on the margins of the November biofuels conference and that perhaps 
the first preparatory meeting could be held by the end of September. 
 
¶5.  (SBU) Janks' proposal was well received by all parties. 
Ambassador Sobel suggested working closely with the private sector 
to fully develop these ideas into a joint advisory group proposal, 
permitting the governments to respond to the expressed interests of 
the private sector representatives.  Both Oliveira of Dedini and 
Quinn of Deere Co. stated their interest in supporting such a 
proposal, though Glen cautioned that one possible area of concern 
regarding joint research projects could be confidentiality 
provisions in existing research and development agreements. 
 
BRASILIA 00001176  002 OF 003 
 
 
Ambassador Patriota suggested it would be useful if the private 
sector advisory group examined the three pillars of the MOU 
(bilateral scientific cooperation, multilateral standards 
cooperation, and third country assistance) from a private sector 
perspective and made recommendations as appropriate. 
¶6.  (SBU) The meeting also addressed sustainability issues.  During 
Manuel's opening report, he noted that as a practical matter there 
was now a fourth pillar to the biofuels relationship:  the 
sustainability task force and then went on to describe joint 
sustainability efforts in the G-8 established Global Biofuels Energy 
Partnership (GBEP).  Later in the meeting, Quinn inquired about the 
possibility of incorporating the Alliance for Abundant Food and 
Energy which includes Deere, ADM, Dupont and others in the 
sustainability discussion.  Manuel noted that the international 
commercial alliance MOSAN, with 800 members, was involved in the 
GBEP process and further constructive private sector engagement 
would be welcome. Manuel committed to get the appropriate contact 
information to Quinn.  Vargas noted that having this type of 
involvement was crucial, since other private sector influences were 
having strong effects in countries like Germany.  Jank endorsed what 
he saw as the more balanced approach via GBEP and remarked that 
UNICA now has five people working full time to address 
sustainability and respond to the plethora of fora examining these 
questions. 
¶7.  (SBU) With an eye towards Brazil's November 17-21 biofuels 
conference, Ambassador Patriota suggested that to ensure continuity 
of the steering committee work, perhaps members of the incoming 
transition team could be invited to attend the conference.  The GOB 
also confirmed that they will be inviting prominent members of 
Congress to attend the conference as well.  Ambassador Sobel 
suggested that perhaps there would be some work out of the 2007 
Biofuels MOU Standards group that could be either presented or 
announced at the conference.  Sobel also discussed the need to 
compile a register of all ongoing research efforts in both countries 
and Vargas enthusiastically agreed. 
TECHNICAL WOKING GROUP 
----------------------- 
¶8.  (SBU) In the technical working group meeting that followed, the 
Head of MRE's Energy Division, Andre Correa do Lago noted that both 
he and Ambassador Vargas were now in support of expanding third 
country assistance to five countries but they were encountering 
unspecified internal resistance among those who want to expand the 
third country tranche by only two countries out of a concern about 
getting over extended and wanting to ensure quality work.  Head of 
MRE's Renewable Energy Division, Claudia Vieira Santos, noted that 
the outreach component was important as well and that we should be 
defining our outreach strategy so that once a decision is made on 
the additional countries, we can begin that outreach. 
¶9.  (SBU) Both sides expressed alarm at the current trajectory of 
the sustainability argument in Europe, particularly in Germany and 
in the European Union, and agreed on the need to work together to 
counter protectionist forces using the sustainability argument to 
exclude outside sources of ethanol from entering European markets. 
Do Lago pointed to the more positive Swedish model in which Swedish 
importers developed a specific voluntary contract with particular 
Brazilians mills, ensuring that sustainability priorities indicated 
by consumer research would be respected as part of their sales 
agreements.  There was also concurrence on the importance of 
maintaining a science-based discussion in GBEP, despite the 
Brazilians' repeated misgivings about the G-8 focused nature of the 
forum, and ensuring that any criteria which are used to ensure 
sustainability of biofuels are measurable. 
¶10.  (SBU) Much of the ensuing discussion focused on how to use the 
prospects of the November conference to advance the agenda.  Both 
sides further agreed that it is important to document all ongoing 
research efforts and foster lab-lab, public/private partnerships 
with public/private partnerships, and university to university 
cooperation.  It was also agreed that bilaterally we should prepare 
as much in the way of deliverables for the November conference as 
possible, including on standards if at all possible, and on third 
country cooperation.  Manuel pledged to provide the GOB with his 
briefing materials on all the ongoing third country cooperation 
projects.  Although they said that the attempts by the standards 
agency, INMETRO, to put together a Brazilian sustainable biofuels 
certification was "dead," the Brazilians also previewed a new plan 
to be presented at the November biofuels conference which will 
detail agricultural environmental zones, a mapping of the arable 
land in Brazil with 3 sustainable development designations: 1) 
optimal for developing sugar cane, 2) okay but not optimal, and 3) 
off limits to development. 
 
BRASILIA 00001176  003 OF 003 
 
 
¶11.  (SBU) At a follow up meeting between Ambassador Sobel, Manuel, 
and do Lago the same day, the Ambassador suggested that high level 
attention from the White House and its Brazilian counterpart, Casa 
Civil, would be useful in maintaining the new momentum of the 
private sector advisory group and suggested we examine a model 
similar to the CEO Forum to demonstrate the importance placed by 
both governments on this work. 
¶12. (SBU) COMMENT:  The main result of the August 20 biofuels 
meeting is the sense of positive momentum and interest in achieving 
demonstrable results, in part in response to the private sector 
initiative, and in part to ensure deliverables for Brazil's November 
biofuels conference.  This is the optimal time for moving the 
biofuels agenda forward.  The most immediate ways to do that are: 1) 
Private sector: members will exchange email addresses and discuss 
UNICA proposal further.  We will encourage entrepreneurial meetings 
in September as Jank discussed as well as on the margins of the 
November conference, focusing on technological integration and 
financing; 2) Research: The USG and GOB should work together to 
establish databanks or registries of R&D efforts on both sides to 
facilitate matchmaking, 3) Third countries: USG and GOB should reach 
consensus on which countries to add to third country cooperation, 
and define outreach plan to selected countries, as well as achieve 
clarity on funding for each, 4) Standards: The Steering Committee 
should further explore what work from the Standards working group 
might be possible to present as a deliverable for the Nov. 
conference, 5)Sustainability: GOB and USG should continue to work on 
a sustainability strategy, including joint approaches to the EU and 
ways to highlight the work of GBEP sustainability group at Nov. 
conference.  Post looks forward to U/S Jeffery's early October visit 
as an opportunity to have a formal Steering Committee meeting and 
achieve progress in these areas in advance of the November biofuels 
conference. 
 
SOBEL