Cablegate: Brazil: Third Meeting of Usg Gob Biofuels Steering

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UNCLAS SECTION 01 OF 04 BRASILIA 001366

SENSITIVE
SIPDIS

DOE FOR GARY WARD CAROLYN GAY RHIA DAVIS AMY CHIANG

E.O. 12958: N/A
TAGS: ECON ENRG EAGR BR
SUBJECT: BRAZIL: THIRD MEETING OF USG GOB BIOFUELS STEERING
COMMITTEE, OCTOBER 3, 2008

SENSITIVE BUT UNCLASSIFIED

1. (SBU) SUMMARY. Under Secretary for Economic, Energy and
Agricultural Affairs Reuben Jeffery III, Special Advisor Greg Manuel
and PDAS Craig Kelly participated in the third USG-GOB Biofuels
Steering Committee meeting on October 3. The Ministry of External
Relations' (MRE) new Under Secretary for Energy and Science and
Technology, Ambassador Andre Amado, and MRE's Director of the Energy
Department, Andre do Lago, led the Brazilian delegation (full del
list para 13). In a productive session noteworthy for the new
Brazilian Under Secretary's energetic and enthusiastic engagement,
the two sides preliminarily agreed on a second tranche of five
countries for U.S.-Brazil biofuels cooperation: Guatemala,
Guinea-Bissau, Senegal, Honduras and Jamaica. Joint biofuels
research efforts are entering a new phase with the signing of a
Memorandum of Understanding (MOU) between the Energy Department's
National Renewable Energy Laboratory (NREL) and the Brazilian
energy-company Petrobras' research center (CENPES) for work on the
next generation of biofuels. Both these initiatives will be
announced publicly for the first time at Brazil's November 17-21
Biofuels Conference in Sao Paulo. The Steering Group highlighted
the positive significant progress being made in developing
international standards for biofuels, and both sides agreed to try
to persuade India, China and South Africa to engage more
significantly. The two sides also noted progress in developing
science-based sustainability criteria. END SUMMARY.

2. (SBU) MRE U/S Amado set the tone for a productive
forward-looking discussion at the third meeting of the Biofuels
Steering Group on October 3. Amado opened by declaring, "We can go
at a bureaucratic pace, or we can be daring. Let's be daring." U/S
Jeffery agreed.

THIRD COUNTRIES

3. (SBU) Do Lago reported that GOB is arranging a business group
visit to the four first-tranche countries. Manuel noted cooperation
under the March 2007 Biofuels MOU included 11 projects already
disbursing funds and 10 others with funds obligated. IDB is now
willing to commit USD 10 million in biofuels investment in these
countries. Do Lago confirmed that Brazil supports a second tranche
of countries consisting of Guatemala, Guinea-Bissau, Senegal,
Honduras and Jamaica. The two sides agreed that the rollout would
be similar to the first tranche, with a briefing on the same day in
both Washington and Brasilia with the two Ambassadors and the
ambassadors of the five countries. Both sides agreed that this
announcement could be an important part of the November biofuels
conference, inviting the new countries as well as representatives
from the first tranche.

JOINT BIOFUELS RESEARCH

4. (SBU) Amado enthusiastically pushed for more joint action,
saying the two countries either could simply claim credit for
progress made by scientists or could help the scientists to bring
deals forward. Adriano Duarte from the Ministry of Science and
Technology (MCT) reported that there were already two concrete
projects coming out of the exchange of visits by biofuels scientists
and he expected more. Manuel noted that there was now a report on
areas of shared interest. Manuel highlighted the Memorandum of
Understanding between the U.S. Energy Department's National
Renewable Energy Laboratory (NREL) and the Brazilian energy-company
Petrobras' research center (CENPES) for work on next generation of
biofuels. Both sides agreed that the MOU should be announced at the
upcoming biofuels conference in November to help call attention to
these joint efforts.

5. (SBU) Amado suggested including biofuels research in the October
30-31 joint science and technology technical meeting. The
Ambassador noted the proposal at the last meeting of the Biofuels
Steering Group on August 20 to create a database of universities
interested in biofuels. FAS rep reported USDA would be sending a
group of leaders from the sugar ethanol industry on a policy trip to
the United States in November in order to help build industry
linkages.

INTERNATIONAL COOPERATION

BRASILIA 00001366 002 OF 004

6. (SBU) Do Lago admitted having been surprised by the level of
attacks by other countries, including possible expansion partners,
against biofuels. At the recent International Biofuel Forum (IBF)
and Global Biofuel Energy Partnership (GBEP) conferences in Rome on
biofuels standards, China, India and South Africa chose not to
participate and this reluctance is affecting our work on technical
standards, do Lago declared. He said he hoped for improved
participation at the IBF meeting on the margins of the November
17-21 biofuels conference in Sao Paulo. (NOTE: Recently, the
International Affairs Advisor for the Energy Ministry, Amb. Rubem
Barbosa, told EmbOffs that the GOB was surprised by the virulence of
the opposition to biofuels coming from its South American neighbors,
which he attributed in significant part to anti-Americanism. END
NOTE.)

7. (SBU) Manuel replied that the situation was brighter than
depicted by Do Lago. He said that China, India and South Africa are
currently marginal actors and China and India use American Society
for Testing and Materials (ASTM) International Standards, which is
what the USG and GOB are helping to shape now. Manuel reported that
soon reference materials will be distributed to over 200
laboratories in the United States, Brazil and Europe. This is a
necessary precondition to making biofuels an international
commodity. Manuel offered to encourage India and China to adopt the
standards we have developed. Do Lago added Brazil could try to work
through the IBSA process (India-Brazil-South Africa) to bring them
on board.

SUSTAINABILITY

8. (SBU) Manuel commented that at the Rome conference in June, U.S.
and Gob delegations successfully kept the focus on scientific
issues, fending off efforts - especially by some Europeans - to
inject political factors and to use sustainability as a trade
barrier. He expected that there would be sustainability criteria
ready for the Spring 2009 meeting of the G-8. Do Lago stressed that
Brazil remains concerned about efforts to use sustainability
criteria to erect new trade barriers but thought the USG and GOB had
neutralized that risk for now. Ricardo Dornelles from the Energy
Ministry added that the Europeans were seeking to protect their
agriculture markets; they didn't see it as an issue of energy
security. Manuel noted his concern that, despite the bilateral
agreement to pursue the sustainability issue via GBEP, the Brazilian
technical norms institute ABNT had entered into its own
sustainability discussions with Germany. The Brazilian side took
note.

9. (SBU) Brazil's domestic sustainability efforts include the
intention to create a zoning plan to prohibit planting of sugar cane
in sensitive areas (e.g., the Amazon Forest and the Pantanal) and
identify ideal cultivation zones that would be eligible for special
financing through the national development bank (BNDES), according
to AgMin's Alexandre Strapasson. Rodrigo Rodrigues from the
President's Office (Casa Civil) said GOB is also developing rules to
address the social and labor impact of the sugar cane sector,
including ensuring fair treatment of workers impacted by increased
harvesting mechanization. Casa Civil's Carlos Teixeira discussed
possible development of a "green seal" for biofuels, which could
assure purchasers that the biofuels were produced in a manner
consistent with good environmental, labor and social standards.

PRIVATE SECTOR

10. (SBU) The Ambassador stressed the importance of continuing to
involve the private sector in biofuels efforts and particularly
urged according business a primary role in the November conference.
Manuel asked if Amado was prepared to move forward with the proposal
presented by Brazil's ethanol industry association, UNICA, at the
August meeting. The proposal would fast track certain key
certifications for U.S. firms seeking to bring operations to Brazil.
Amado responded that having just arrived on the job that week he
required more time to study the proposal and then would respond.
Amado also noted that, for now, he was not interested in bringing
more academic and NGO involvement into the private sector advisory
board. While consulting the private sector is an obligation, Amado
recommended outreach rather than consultation with the NGO and
academic community to encourage a more positive view of biofuels.

BRASILIA 00001366 003 OF 004

INTERNATIONAL BIOFUELS CONFERENCE, NOVEMBER 17-21, SAO PAULO

11. (SBU) The Brazilians briefed the U.S. delegation on the
International Biofuels Conference they will be hosting in Sao Paulo,
November 17-21. They proposed having another meeting of the
Biofuels Steering Committee during that week, with top USG and GOB
officials as observers. Do Lago said that the GOB wanted the
private sector, as well as the NGO and academic community, and
legislatures from around the world present and participating through
side events. Do Lago noted that APEX would host a trade fair on
biofuels during the conference. Do Lago also indicated that
currently 24 countries had confirmed Minister-level participation
and GOB expected Head of State participation from at a minimum
Philippines and Australia. One hundred countries are expected to
participate overall. President Lula will speak and President Bush
has been invited to speak.

COMMENT

12. (SBU) The new point person for the GOB on biofuels, U/S Andre
Amado, showed that he and his team have the political will to step
up the pace on biofuels cooperation. The Steering Group identified
progress in all three pillars. The agreement on the second tranche
of countries for U.S.-Brazil cooperative work, the signing of the
NREL-CENPES MOU, and the soon to be distributed reference materials
are all concrete actions we can highlight as MOU-related
achievements. Amado also demonstrated his willingness to be "bold
and daring." After a year of resistance to the idea of reaching out
to involve other larger countries in our efforts, Amado was quick to
recommend that we should begin reaching out jointly to countries
like India, South Africa, and China. MRE sources tell us Amado is
widely known for his vigor and exacting standards. The November
biofuels conference will provide additional impetus for cooperation.
The conference offers not only an opportunity to highlight MOU
achievements and the bilateral relationship, but also to help chart
the course for international development of the biofuels industry.
END COMMENT

13. (U) DELEGATION LISTS:

Brazil
- - - -
Brazilian Ministry of External Relations' (MRE) Under Secretary for
Energy and Science and Technology, Ambassador Andre Amado

MRE's Director of the Energy Department, Andre do Lago

Claudia Viera Santos, MRE

Joao Tabajara, MRE (US Desk)

Roberto Sadao Shiraishi, Ministry of Commerce

Eduardo Caldas, Brazil's Trade Promotion agency, APEX

Alexandre Strapasson, Ministry of Agriculture

Adriano Duarte Filho, Ministry of Science and Technology

Ricardo Dornelles, Ministry of Mines and Energy

Carlos Teixeira, Presidential Office (Casa Civil)

Rodrigo Rodriguez, Casa Civil

Carlos Abreu, Deputy Chief of Mission, Brazilian Embassy in
Washington

UNITED STATES
- - - - - - -
Under Secretary for Economic, Energy and Agricultural Affairs Reuben
Jeffery III

WHA Principal Deputy Assistant Secretary Craig Kelly

Special Advisor Greg Manuel

Ambassador Clifford Sobel

BRASILIA 00001366 004 OF 004

Lisa Kubiske, Deputy Chief of Mission

Thomas Hastings, Advisor to U/S Jeffery

Morgan Perkins, Foreign Agriculture Service

Rhiannon Davis, U.S. Department of Energy

Richard Driscoll, Science Counselor

Katherine Dueholm, Economic Deputy

SOBEL

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