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Cablegate: G8 Opportunity for Us-Brazil-Indonesia Biofuels

VZCZCXRO3379
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1242/01 1780157
ZNR UUUUU ZZH
R 260157Z JUN 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 9386
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBK/AMEMBASSY BANGKOK 8466
RUEHBR/AMEMBASSY BRASILIA 0211
RUEHSO/AMCONSUL SAO PAULO 0009
RUEHRI/AMCONSUL RIO DE JANEIRO
RUEHKO/AMEMBASSY TOKYO 2140
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHRC/USDA FAS WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 001242

SENSITIVE
SIPDIS

TREASURY FOR U/S MCCORMICK
OES FOR A/S MCMURRAY
DEPT FOR OES/ENRC, EAP/MTS, EAP/RSP
USAID FOR ANE, EGAT
BANGKOK FOR RDM/A
NSC FOR CEQ CONNAUGHTON, VAN DYKE

E.O. 12958: N/A
TAGS: EAGR EAID ENRG KGHG SENV PGOV ID BR
SUBJECT: G8 OPPORTUNITY FOR US-BRAZIL-INDONESIA BIOFUELS
COLLABORATION

1. (SBU) Summary. President Lula of Brazil will be signing a
biofuels Memorandum of Understanding (MOU) with Indonesia on July
12, according to Brazilian Embassy contacts at an informal
discussion hosted by Ambassador Hume. Participants noted that the
upcoming G8 Summit in Japan provides an opportune moment for
Presidents Bush, Yudhoyono, and Lula to discuss the potential for
collaboration on environmental issues, in particular biofuels, and
pointed out that one initial step could be a trilateral
U.S.-Brazil-Indonesia MOU on biofuels. They also agreed on the
importance of the Clean Technology Fund (CTF) for a country like
Indonesia. End Summary.

2. (SBU) Ambassador Hume hosted a meeting on June 23 to informally
discuss possible areas for cooperation between the U.S., Indonesia,
and Brazil on the environment, particularly biofuels. Participants
included Edmundo Fujita, Ambassador of Brazil, Arifin Panigoro,
Chairman of Indonesian power generation company MedcoEnergi, Jatna
Supriatna, Executive Director of Conservation
International-Indonesia, and Agus Sari, EcoSecurities Country
Director.

3. (SBU) Ambassador Fujita confirmed that President Luiz Inacio Lula
da Silva will sign a bilateral MOU on Biofuels when he visits
Jakarta on July 12, following the July 7-9 G8 Summit. During his
visit (as well as at the G8 Summit), President Lula's agenda will
focus on climate change, environment, energy, agriculture, and
sustainable development. Brazil's interest in cooperating with
Indonesia lies in promoting efforts to identify common standards and
codes for a global biofuels market and making ethanol and other
biofuels an internationally-accepted commodity. Brazil views
cooperation with Indonesia as strategically important in this effort
and the MOU will serve as a framework for collaboration. Fujita
also pointed specifically to Brazil's interest in helping Indonesia
improve the efficiency of sugar production from sugarcane and to
produce "clean" electricity from bagasse. He referenced potential
research and training collaboration between Brazilian universities
and research agencies, such as the Brazilian Agricultural Research
Corporation (Embrapa), and Indonesian institutions.

4. (SBU) Arifin Panigoro told the participants that Indonesian
President Yudhoyono and Finance Minister Sri Mulyani, in private
conversations with him, have indicated a strong interest in pursuing
the CTF, in the context of clean energy generation and biofuels
development, at the G8 Summit next month. Ambassador Fujita and the
others agreed on the importance of the CTF for Indonesia. Panigoro
also said that Japanese companies like Mitsubishi and Mitsui are
very interested in biofuels and looking at infrastructure
development opportunities in Indonesia. He cited strong Government
of Japan interest in providing assistance towards biofuels
production and supporting infrastructure. Although there are
differences between biodiesel from palm oil (of which Indonesia is
the world's largest producer) and ethanol from sugarcane, the
attendees saw significant overlap and pointed to domestic Indonesian
interest in increasing sugarcane and ethanol production.

5. (SBU) The participants felt that this conversation was
particularly timely because of the upcoming G8 Summit environment
agenda and President Lula's visit to Indonesia. As the U.S.
increases its contribution to environmental programs in Indonesia
and as Indonesia seeks alternative sources to meet its energy
demands in a greener way, it is important that Indonesia can benefit
from CTF financing. The participants agreed that collaboration
between the three "Major Economies" of Indonesia, Brazil, and the
U.S on areas of common interest and agreement, such as biofuels
development and clean technology, could set a positive example for
international cooperation on climate change. Cooperation would also
illustrate that there are alternatives to a preponderant focus on
China and India in the climate change negotiations arena and, in
fact, might influence China and India in a positive direction.

6. (SBU) The participants concluded that the G8 Summit provides an
opportune moment for Presidents Bush, Yudhoyono, and Lula to discuss
the potential for further cooperation on environmental issues,

JAKARTA 00001242 002 OF 002


particularly biofuels. A potential next step could be a trilateral
U.S.-Brazil-Indonesia MOU on biofuels like our current bilateral MOU
with Brazil, which includes three main pillars of cooperation: 1)
increasing bilateral research cooperation; 2) assisting third
countries to develop domestic biofuels capacity; and 3) cooperating
multilaterally on identifying common standards and codes for a
global biofuels market. The $1 million grant that the U.S.
Department of Energy (DOE) has with Conservation International for
work on biofuels in Brazil and Indonesia provides a further basis to
increased collaboration under a trilateral MOU.

HUME

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