WorldCity Business Magazine

It's the e10, stupid

by Ian McCluskey

Why ethanol is key to South Florida’s economic future

OK, we are addicted to oil. Got it. We are at the mercy of tyrannical oil regimes. Check. Biofuels are kinder to the environment. Right. So, what’s not to like about ethanol, especially if you are a corn farmer in Iowa?

Ah, but for Florida, especially South Florida, there is even more to ethanol than the enticing triple treat of energy security, cleaner air and kicking the fossil fuel habit.

For South Florida, ethanol is a lynchpin for regional economic integration and the key to Miamis continued leadership as the capital of the Americas. And a lot of people are starting to get it, including (former Florida Governor) Jeb Bush who launched the Inter-American Ethanol Commission in Miami last December. (See column “Ethanol Fuel for Hemispheric Partnership,” page 36).

Ethanol has turned a lukewarm relationship between the U.S. and Brazil, the world leader in sugar-based ethanol production, into a rapidly flourishing partnership. Donna Hrinak, former U.S. ambassador to Brazil and now at Kraft Latin America, says “Ethanol provides the most positive opportunity in a generation to advance the Brazil-U.S. relationship.”

So when presidents Bush and Lula meet in Brasilia on March 8 and again in D.C. on March 31, biofuels will be top of the agenda.

But where does South Florida fit in?

Brazil is our No.1 trading partner with $9 billion in bilateral trade in 2006 (see cover story page 18). And, while the U.S. is now a larger ethanol producer than Brazil, corn-based fuel made in the Midwest cannot be transported efficiently to the East Coast. Importing sugar-based ethanol from Brazil, or from the Caribbean where Brazilian know-how and investment is swiftly spreading, is simpler and cheaper.

South Florida is a natural hub of the ethanol trade. But it risks losing that advantage unless the State of Florida gets with the “e10” program and mandates the mixing of biofuels with gasoline, as other states have done.

New York and Pennsylvania passed laws requiring gasoline to include 10 percent biofuels. The result: Last year imports of Brazilian ethanol in New York increased twenty-fold to $500 million and, in Philadelphia, went from zero to $250 million in spite of the massive 54 cents-per-gallon import duty.

The pro-ethanol lobbyists are mobilizing in Tallahassee. May the e-force be with them.
Contact:?imccluskey@worldcityweb.com