President Luiz Inacio Lula da Silva’s call for Brazil to become a “green Saudi Arabia” over the next few years has investors giddy and environmental activists and workers organizations panicked.
Lula is a guest at the G8 summit this week in Germany. He recently returned from a three-day trip to India, which resulted in announcements that the two countries plan “to quadruple trade to $10 billion by 2010 and boost India’s use of biofuels.”
While dismissing claims that biofuel production is wreaking environmental havoc in Brazil, Lula proposed that wealthy countries should fund both biofuel production and environmental conservation in developing countries. "Rich countries have to pay for the poor countries to avoid deforestation so they can adopt clean models for development that don’t cause pollution or greenhouse gas emissions," Lula said. He also said that rich countries should "start to help African countries to start to produce biodiesel and ethanol so that we can create jobs in Africa and wealth.” At the same time, a variety of government entities are predicting that climate change will have a significant impact on Brazil’s agroindustries in the coming years.
Environmental groups such as ActionAid Brazil warn that the ethanol industry could repeat the mistakes of the soy industry, which turned 7 million acres of Amazon jungle into monoculture soy in 5 years. Many also question the sustainability of biofuels. Minnesota researchers published in the July 25th edition of the Proceedings of the National Academy of Sciences concluded that the production of biofuels creates a net energy loss, and that forested land absorbs more carbon dioxide from the atmosphere than the use of biofuels saves.
The Brazilian Landless Workers Movement (MST) shares the above environmental concerns, and warns that the expansion of sugar cane plantations is both concentrating land ownership and creating slave labor working conditions. "The social cost of this policy is the over-exploitation of labour with an army of seasonal workers who cut one ton of sugar cane for 2.50 reals (1.28 dollars) in precarious conditions which have already caused the deaths of hundreds of workers," Pernambuco state MST leader Alexandre Conceicao told IPS.
The US and European international investment funds who are buying up large tracts of land for ethanol production show little concern for environmental or labor repercussions. IPS reports that “more than 15 billion dollars are being funnelled into the construction of 77 new ethanol plants that should be functioning by 2012, and the expansion of some of the 300 existing plants in Brazil. The investors include companies from the United States, Japan and China.”
In recent weeks, the biofuel gold rush has been eventful. The Sao Paulo Sugar Cane Agroindustry Union (UNICA) held the first "ethanol summit" on Monday and Tuesday of this week. Also of note was investor George Soros’ announcement that he has invested $900 million in 3 ethanol factories in Brazil. Soros called himself a “speculator,” and called for lower tariffs on biodiesel. His company Adeco already owns 150,000 hectares of sugar cane fields in Brazil. Large US corporations such as Archer Daniels Midland (ADM) and Cargill are looking for their slice of the pie, and many are pursuing investment opportunities in Brazil.
Brazil already produces 17 billions liters of ethanol a year, and sugarcane crops have expanded 13% in the last 3 years, to cover six million hectares of Brazilian land. The industry says that they will have to double production in the next 7 years to meet demand.