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Cablegate: Brazil Biofuel Update, March 2007

VZCZCXRO6379
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHBR #0512 0861135
ZNR UUUUU ZZH
P 271135Z MAR 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8436
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 4066
RUEHSO/AMCONSUL SAO PAULO 9461
RUEHRG/AMCONSUL RECIFE 6398
RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS

UNCLAS BRASILIA 000512

SIPDIS

SIPDIS

STATE FOR OES/EGC GTHOMPSON
STATE FOR EB/ESC MMCMANUS AND JIZZO
STATE FOR WHA/ESPC FCORNEILLE AND WHA/BSC WPOPP

E.O. 12958: N/A
TAGS: SENV TNGD TRGY KSCA EAGR BR
SUBJECT: BRAZIL BIOFUEL UPDATE, MARCH 2007

MEXICO SEEKS STRATEGIC PARTNERSHIP WITH BRAZILIAN ETHANOL PRODUCERS
--------------------------------------------- ----
1. The Government of Mexico is sending representatives to Brazil on
March 28, 2007, to propose a partnership on ethanol. According to
media reports, Mexico will offer the Brazilian ethanol producers
fiscal incentives to attract companies to Mexico. The added
benefit, of course, would be the nearly tariff-free access to the
Canadian market.

EUROPEAN UNION ALSO WANTS COMMERCIAL AGREEMENT
--------------------------------------------- --
2. The European Union (EU) is interested in signing a commercial
agreement with the Government of Brazil according to Brazil's
newspaper Folha de Sao Paulo. Negotiations are scheduled for May 2,
2007. The partnership is scheduled to be announced in Brussels,
Belgium on July 5, 2007 at an International Biofuels Conference,
where President Lula will be the keynote speaker.

BRAZIL SIGNS BIOFUEL AGREEMENT WITH JAMAICA
-------------------------------------------
3. The governments of Brazil and Jamaica signed a Memorandum of
Understanding, on February 15, 2007, to provide Brazilian technology
for the production of sugar and ethanol in that nation. According
to sources from the Ministry of Foreign Affairs, this is the first
step for Brazil to advance similar agreements with other Caribbean
nations, taking advantage of their tariff-free trade regime.

ETHANOL RECORD PRODUCTION
-------------------------
4. Agro Energy and Alcohol Director for the Ministry of Agriculture,
Angelo Bressan, said estimates for Brazil's ethanol for the
2007/2008 season are 12% higher than last year. Due to the
optimistic scenario, the Government of Brazil is considering raising
the ethanol mix from 23% to 25% during next season.

BUSES IN SAO PAULO TO RUN ON 30% BIODIESEL MIX
--------------------------------------------- -
5. Over 25% of the fleet of seven thousand buses owned by Viacao
Itaim Paulista in Sao Paulo started running on a new 30% biodiesel
mix in January, 2007. The new mix, B30, is made of biodiesel, oil
diesel and ethanol. The new fuel is a result of a partnership
between Petrobras and the Brazilian National Institute of Technology
(INT), which will be responsible for monitoring the efficiency of
the new fuel during the initial testing period.

USING ETHANOL TO GENERATE ELECTRICITY
-------------------------------------
6. The Institute for Energy and Nuclear Research (IPEN) is
developing a fuel cell that uses ethanol to generate energy without
the need of any other device. The cell is called a Solid Oxide Fuel
Cell (SOFC) and is considered by the Institute as a model for
electricity generation for the future. The Institute has also used
methane gas, emitted into the atmosphere as waste decomposes, to
produce fuel cells. Test results will be presented in June 2007
during an international symposium in Japan.

BRAZIL MAY PRODUCE ETHANOL FROM SWEET POTATOES
--------------------------------------------- -
7. Brazilian Agricultural Research Corporation (EMBRAPA) is
analyzing the viability of producing ethanol from sweet potatoes.
The new technology is still in early testing stages but could
supplement ethanol from sugarcane.

SOBEL

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