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DE RUEHBR #0497/01 1121928
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O 221928Z APR 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4106
INFO RUEHSO/AMCONSUL SAO PAULO 3898
RUEHRI/AMCONSUL RIO DE JANEIRO 7588
RUEHRG/AMCONSUL RECIFE 9394
RUEHME/AMEMBASSY MEXICO 2150
RUEHZP/AMEMBASSY PANAMA 0331
RUEHBO/AMEMBASSY BOGOTA 4911
RUEHBU/AMEMBASSY BUENOS AIRES 6187
RUEHSG/AMEMBASSY SANTIAGO 0925
RUEHMN/AMEMBASSY MONTEVIDEO 7737
RUEHAC/AMEMBASSY ASUNCION 7496
RUEHLI/AMEMBASSY LISBON 0503
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 05 BRASILIA 000497 
 
SIPDIS 
 
DEPARTMENT FOR H/CTO, WHA/BSC, WHA/EPSC 
 
E.O. 12958: N/A 
TAGS: OREP SENV KGHG ENRG ECON ETRD EINV EFIN PREL BR
SUBJECT: CODEL HOYER BRAZIL VISIT PRODUCTIVE ON ENERGY, ENVIRONMENT, 
AND MORE 
 
REF: BRASILIA 445 
 
¶1.   (U) SUMMARY: Majority Leader Steny Hoyer and a delegation of 
nine members of the United States House of Representatives visited 
Brasilia and Rio de Janeiro April 8-10, with a focus on energy, the 
environment, and climate change.  The delegation was granted a rare 
meeting with Brazilian President Luiz Inacio Lula da Silva (reftel 
A).  Meetings with Minister of Mines and Energy Edison Lobao, 
members of the Brazilian Chamber of Deputies, the mayor of Rio de 
Janeiro, U.S. oil and gas executives, Petrobras, and the Brazilian 
Sugarcane Industry Association (UNICA) consistently highlighted the 
importance of the bilateral relationship as well as Brazil's key 
role in current energy and environmental issues.  END SUMMARY. 
 
----------------------------------------- 
Meeting with Minister of Mines and Energy 
----------------------------------------- 
 
¶2.   (U)  At a meeting with Minister of Mines and Energy Edison 
Lobao and his Deputy Minister, Mauricio Zimmermann, Lobao focused on 
the largely renewable nature of the Brazilian energy matrix.  Lobao 
told the Codel that the matrix was made up primarily of hydropower 
and Brazil would like to develop more hydro projects to take better 
advantage of its 150MW of untapped capacity. (Note: Brazil's current 
focus is away from large hydro power dams in favor of smaller scale, 
more environmentally friendly projects). 
 
¶3.   (U)  Brazil is incorporating climate change considerations into 
its energy plans wherever practical. As an example, Lobao mentioned 
planting palm in previously deforested areas, to be used for 
biodiesel.  Lobao noted that Brazil has faced financial crises in 
the past, and though the current economic crisis is a challenge to 
all countries and their plans for growth and investment, he views 
the climate change crisis as a bigger threat that cannot be ignored. 
 Lobao told the group that Brazil is making "a huge effort" to 
expand its use of alternative energy sources such as wind and solar 
power, in part due to climate change.  The primary limitation for 
Brazil in employing wind and solar power in this effort is cost. 
Lobao talked about his recent trip to Spain to study more efficient 
and cost effective wind technology; he is also interested in 
learning more about U.S. developments in this area. 
 
¶4.   (U)  Beyond expanding wind and solar programs, Lobao discussed 
Brazilian plans for its civilian nuclear energy program which will 
add four new plants to the two currently operating. (Note: Brazil's 
announced nuclear plans additionally include completing a partially 
built reactor in the near future.  End Note). He expressed his hope 
that Brazil would ultimately add up to 50 new reactors.  In response 
to Congressman Hoyer's question regarding how Brazil planned to deal 
with nuclear waste issues, Lobao described a new technology 
developed by Brazilian scientists that would mix in metals to 
transform the waste, allowing for safe disposal.  He also 
highlighted French and Japanese work on a process to completely 
eliminate the waste.  According to Lobao, Brazil is committed to 
nuclear energy as a source that is "clean and stable." 
 
¶5.   (U)  Lobao described Brazil's electronic transmission system 
which integrates 98% of the country into one electronic grid and has 
the capacity to take electricity from one source and redirect it 
depending on demand and the supply available.  He predicted that the 
remaining two percent will be integrated into the grid within the 
next year and a half (Note: The portion not currently integrated 
into the grid is in the furthermost northern state, Roraima, which 
gets its electricity from Venezuela. End Note).  Regionally, 
Brazil's supply arrangements with Argentina, Uruguay and Paraguay; 
purchase agreements with Venezuela; and cooperative hydro projects 
with Argentina, Bolivia, and Peru were examples Lobao cited of 
energy integration in the Americas, perhaps as possible models for 
an Energy Partnership of the Americas.  Turning to the social 
component of the energy program, Lobao mentioned Brazil's rural 
electrification program, "Luz Para Todos" (Light for All), as a 
means of bringing electricity and opportunities to all parts of the 
country.  He also pointed to the country's biofuels industry as a 
major employer for disadvantaged populations. 
 
¶6.   (U)  Congressman Hoyer, in praising Brazil's efforts in energy, 
encouraged an exchange of visits between Lobao and Energy Secretary 
 
BRASILIA 00000497  002 OF 005 
 
 
Chu. He also extended an invitation for Lobao to visit the U.S. 
Congress and meet with other congressional representatives. 
Representative Cummings, who seconded this invitation, called 
Brazil's efforts to use energy to improve quality of life impressive 
and underlined that "we look forward to working with you." 
 
---------------------------------- 
Meeting with Brazilian Legislators 
---------------------------------- 
 
¶7.   (U)  The Brazilian Chamber of Deputies hosted the delegation 
for a meeting and working lunch. (Note: The Brazilian Congress was 
closed for Easter during the delegation's visit.  End Note.)  During 
a wide-ranging conversation, the delegation and the Brazilian 
legislators exchanged questions and answers and focused heavily on 
the delegation's interests in energy, the environment, and promoting 
the U.S.-Brazil relationship. 
 
¶8.   (U)  Permanent Joint Committee on Climate Change Rapporteur 
Colbert Martins (Brazilian Democratic Movement Party (PMDB)-Bahia) 
welcomed the U.S. delegation.  President of the Chamber of Deputies 
Michel Temer (PMDB-Sao Paulo) called to express his desire for 
closer ties between Brazil and the United States and to offer 
regrets for having to be out of town.  Several deputies encouraged 
increased legislative ties on the topics of the economy, energy, and 
the environment.  Chairman of the Committee on Science and 
Technology Eduardo Gomes (Brazilian Social Democratic Party 
(PSDB)-Tocantins) noted that despite the economic crisis his 
committee seeks increased funding for science, technology, and 
promoting innovation.  Gomes said the committee vice-chairman, 
Raquel Teixeira (PSDB-Goias), met in Washington with U.S. 
Representative Bart Gordon (D-Tennessee), Chairman of the House 
Science and Technology Committee, to explore areas of cooperation on 
renewable energies and biofuels.  Antonio Thame (PSDB)- Sao 
Paulo)praised USG and Brazilian efforts to address the 
sustainability of biofuels and to promote biofuels under the 
bilateral biofuels Memorandum of Understanding. (Comment: Post notes 
this is an important indication of Brazilian congressional support 
for the Executive Branch biofuels MOU.  End Comment.)  Thame called 
biofuels a "fantastic fuel" that could be instrumental in the 
transition to more advanced technologies (hydrogen, hybrid, fuel 
cells etc).  However, he noted that these new technologies would 
likely not completely replace automotive fuels, rather they will 
work in concert with biofuels, which he believes will continue to 
play an important role. 
 
¶9.   (U)  Deputy Gomes also said that Energy Minister Edison Lobao 
would soon meet with U.S. Energy Secretary Steven Chu. (Note: Lobao 
and Chu have spoken about possible visits in the future but have not 
set any dates. End note)  Gomes praised the United States as a 
leader in renewable energies like wind and said that Brazil has not 
fully embraced these opportunities, focusing instead on hydropower. 
He added, however, that Brazil is expanding the electric 
transmission grid - adding 8,000 kilometers - creating more links to 
Argentina and Venezuela and expanding into the Amazon. 
 
¶10.   (U)  Deputy Ilderlei Cordeiro (Socialist People's Party, 
PPS-Acre), the only legislator present from the Amazon region, 
raised the subject of deforestation and sustainable development.  He 
said that the intense global focus on protecting forests 
inappropriately gives "humans less value than standing trees."  The 
challenge is to create sustainable economic opportunities, "not more 
monitoring and supervising."  He noted that it is forbidden to plant 
crops for biofuels in the Amazon region and called the prohibition 
absurd.  Cordeiro also pointed out that while Brazilians are told 
not to clear their trees, neighboring countries with forests - Peru, 
Bolivia, Colombia, and Venezuela - are not held to the same 
standards.  Deputy Antonio Carlos de Mendes Thame (PSDB-Sao Paulo) 
called the Amazon "an air conditioner" for the world and opined that 
the world should pay for that service.  Majority Leader Hoyer agreed 
that the world should compensate Brazil for the global benefits 
derived from the Amazon.  He said he expects U.S. climate change 
legislation to include offsets for forests. 
 
¶11.   (U)  Deputy Martins discussed the status of women and children 
in Brazil, touching on the role of women in government and various 
professions as well as pending legislation to combat child 
 
BRASILIA 00000497  003 OF 005 
 
 
pornography.  Deputy Mendes Thame discussed labor concerns 
(particularly in the sugar cane sector), including child labor. 
While Mendes Thame defended Brazilian labor laws and their efficient 
enforcement, he lamented that people working in the grey market are 
vulnerable to abusive practices. 
 
¶12.   (U)  Majority Leader Hoyer emphasized the importance of the 
U.S.-Brazil relationship.  Referring to the meeting with President 
Lula, Hoyer said he would relay Lula's suggestion of legislative 
exchanges to Speaker of the House Nancy Pelosi and take steps to 
facilitate it.  Such a joint effort should focus on economics, 
environment, and security, he added.  With respect to international 
climate change negotiations, Hoyer emphasized that the United States 
cannot resolve problems without engagement from emerging countries - 
especially China and India.  Since emerging countries will not 
accept emission targets and mandates that could limit their economic 
growth, Majority Leader Hoyer said, the development of clean, energy 
efficient technologies will be critical. 
 
¶13.   (U) Deputy Mendes Thame proposed bilateral congressional 
seminars on biofuels to facilitate the exchange of views and 
information between the two congresses.  In a similar vein, Deputy 
Rodrigo Rocha Loures (PMDB-Parana), Chairman of the Special 
Committee on Renewable Energy, recommended swift bilateral 
congressional cooperation to determine the areas in which Brazil and 
the U.S. can gain synergy, and stressed the need to act quickly due 
to the December 2009 UN Climate Change Conference (COP-15) in 
Copenhagen. Majority Leader Hoyer replied that the Administration 
and the Congress are very focused on Copenhagen and that there has 
been a significant change in views on the magnitude of the global 
warming problem.  He agreed on the importance of moving quickly. 
 
------------------------------------ 
Meeting with Mayor of Rio de Janeiro 
------------------------------------ 
 
¶14.   (U)  Rio de Janeiro Mayor Eduardo Paes was enthusiastic about 
the future of U.S.-South American relations, in particular the 
relationship between the U.S. and Brazil.  He noted that the 
apparent personal connection between Presidents Obama and Lula will 
bring the U.S. and Brazil even closer.  The delegation was very 
interested in discussing the social challenges facing Rio de Janeiro 
and hearing the Mayor's plans for tackling them. 
 
¶15.   (U)  Mayor Paes stated that his top priorities are providing 
access to adequate public health care and implementing an ambitious 
urban development strategy which is supported by the federal 
government.  Rio's favelas (slums) were built primarily because the 
city's public transportation system was poor and people wanted to 
live near where they worked, Mayor Paes explained.  In response to a 
concern raised by Mr. Hoyer about the city's plans to build walls 
around its favelas, Mayor Paes clarified that the objective is 
primarily environmental, to prevent people from building beyond a 
certain point rather than to keep people in or hide them.  Paes 
noted that Rio has the largest urban forest area in the word and 
that sprawling favelas have endangered them.  He called the walls 
"eco-limits" and said that they were supported by favela residents. 
 
 
¶16.   (U)  Regarding public security and drug trafficking, Mayor 
Paes acknowledged that years of unchecked drug trafficking led to 
the government's loss of control in some favelas.  However, he 
noted, the city is undertaking various anti-drug programs targeted 
at youth in response.  He also explained that education was a key 
element of the government's plan to combat poverty and at-risk 
behavior.  Rio de Janeiro has the largest network of public schools 
in Brazil, Mayor Paes explained, and the federal government's Bolsa 
Familia program provides conditional cash payments to lower income 
families as long as they keep their children in school. 
 
----------- 
Oil and Gas 
----------- 
 
-Working Dinner with U.S. Oil and Gas Executives 
 
¶17.   (U)  Several U.S. oil and gas companies (Exxon, Chevron, 
 
BRASILIA 00000497  004 OF 005 
 
 
Devon) briefed the CODEL during a no-host dinner, sharing their 
perspectives on the challenges and potential of the oil and gas 
industry in Brazil and the role of the government in the petroleum 
sector.  Executives are eager to explore commercial opportunities 
associated with the new finds off the coast, and emphasized their 
viewpoint that whatever new model Brazil adopts to manage these 
resources should be transparent and in line with market principles. 
 
-Petrobras Briefing 
 
¶18.   (U)  The CODEL continued their discussions on the petroleum 
industry the next morning in a meeting with Petrobras, Brazil's 
government-controlled energy company.  Samir Awad, Petrobras 
Executive Manager for International Operations, briefed the CODEL on 
the company's history and transition from state-owned monopoly to 
publicly traded international oil company (IOC).  He explained that 
when the government decided to open up the petroleum sector to 
competition in 1997, Petrobras had to adjust its business strategy 
in order to compete with other IOC's that were entering Brazil. 
 
¶19.   (U)  Awad stated that the significant pre-salt oil and gas 
finds announced by Petrobras starting in 2007 may more than double 
Petrobras' known reserves of 40 billion barrels, adding that the 
company is refocusing on domestic operations as a result.  Of 
Petrobras' USD 175 billion budget for strategic investment and 
infrastructure over the next five years, USD 90 billion has been 
allocated to the pre-salt area.  In response to a question by the 
CODEL on how the pre-salt finds could affect Petrobras oil exports 
to the United States, Awad noted that Brazil currently exports 
little oil to the U.S. because its crude is typically very heavy and 
requires special refining (most Brazilian oil exports are currently 
destined for China).  Though the pre-salt oil is thought to be 
lighter, that classification is in respect to what is normally found 
in Brazil and cannot compare to the light oil from the Middle East. 
Even pre-salt oil will require significant refining before it is 
compatible with U.S. standards. 
 
¶20.   (U)  Petrobras is currently building a new refinery in a 50-50 
joint venture with Venezuela PDVSA in Recife, Brazil - a partnership 
that Awad admitted is "not going very well."  In response to a 
question by the CODEL, Awad clarified Petrobras' position in Iran. 
He said that Petrobras has completed its one existing service 
contract with Iran to drill two wells in the Persian Gulf, a venture 
which did not yield any commercial success.  Awad flatly denied 
Iranian government and media statements that Petrobras is in 
negotiations for additional contracts and said that the company is 
not contemplating any future business in Iran at the moment. 
 
------- 
Ethanol 
------- 
 
¶21.   (U)  The Brazil Sugarcane Industry Association (UNICA) briefed 
the CODEL on the country's sugarcane and ethanol production.  Alfred 
Szwarc, UNICA Senior International Advisor, explained that ethanol 
accounts for almost 16 percent of the energy matrix in Brazil.  The 
growth of Brazil's ethanol production is mainly driven by the 
increase of the flex-fuel vehicles market in Brazil and rising 
global interest in ethanol as an alternative fuel, he said.  Szwarc 
addressed concerns expressed by the CODEL about the effects of 
increased sugarcane farming on the Amazon rainforest by explaining 
that sugarcane is grown in the southeast and northeast regions of 
Brazil, over 2500 km away from the Amazon region.  He further noted 
that conditions in the Amazon rainforest are not suitable for 
growing sugarcane. 
 
¶22.   (U)  Szwarc highlighted initiatives under the 2007 United 
States-Brazil Memorandum of Understanding (MOU) on Biofuels 
Cooperation.  On the global level, the MOU outlines cooperation 
between Brazil, the United States and the European Union on fuel 
quality harmonization.  UNICA expressed concern over recent feedback 
that the United States and the EU may not want to continue this 
effort, noting that standards are very close to being developed 
(Note: this may be a reference to discussions at a March technical 
working group meeting of the tri-party group, during which the 
possibility of allowing the next steps identified by the group to be 
carried forward under other, already operational, auspices.  End 
 
BRASILIA 00000497  005 OF 005 
 
 
note.)  With regards to third countries, the MOU sets forth a plan 
to develop markets in Central America and the Caribbean.  Finally, 
on a bilateral level, the MOU calls for joint research between the 
United States and Brazil on next generation biofuels.  Noting that a 
few scientists' exchange visits have taken place, UNICA urged that 
more can be done to further this initiative. 
 
¶23.   (U)  This message was coordinated with Consulate Rio de 
Janeiro. 
 
¶24.   (U)  The Hoyer delegation has cleared this message. 
 
SOBEL