Energy Biz - July/August 2008 - (Page 24) » FinAnciAl Front coal and uranium are rejected. The overall result is that the vulnerability of the European energy system is increasing. This trend can be reversed by creating more trust in the mechanisms of the market and by explaining to the public the urgent need for new energy investments. Johannes Teyssen is World Energy Council vice chair of Europe. Dateline latin aMerica By nOrBErTO DE FrancO MEDEirOs hroughout Brazil’s history, there occurred waves of price increases interspersed with long periods of stability. During the first phase of these waves, prices rise slowly. There are changes in relative prices, and food and fuel Norberto de Franco Medeiros are in the lead for these increases. The reason was always a greater demand resulting from an improved standard of living of the population. The recent and shocking worldwide price increases for natural resources in proportion to salaries is a reaction to the entry into the job market of three billion Eurasians and, consequently, into energy, food and basic input markets in the new world economy. The world media is searching for the culprit in the latest explosion in food prices. There are no mysteries involved. The culprits are the billions of newcomers with restrained salaries who NewsFlash cause prices of natural coal rates cut resources to spiral. The fights for arable land to Union Pacific must slash rates it charges produce food or biofuel kansas City Power & on a global scale are Light for coal shipped to Missouri, according to merely manifestations of the Associated Press. this tremendous pressure The new rate will apply to coal shipped on natural resources. since 2006 and through The use of fertile land 2015. The Surface to produce biofuel is Transportation Board ruling will cost the thought to be the main railroad about factor responsible for $30 million. 24 E n E rgyB i z T the rise in the price of food. This is the opinion of the president of the World Bank, the director general of the International Monetary Fund, and of other less high-ranking individuals. A large section of the media in the developed world accepted this reasoning and Brazil is cited as one of the main culprits. Brazil only uses 1 percent of its arable land to produce ethanol, and only 20 percent for agriculture in general. In no way can it be said that we forsake the production of food to produce ethanol. It is particularly ironic that, in Brazil, the expansion of sugarcane plantations actually helps to produce food. That is because sugarcane plantations require a rotation of crops. Thus, 15 percent of the sugarcane plantation areas are replanted with other crops such as beans and soybeans. When the sugarcane crop areas advance into cattle grazing, the supply of food increases, it does not diminish. This year, the grain crop will attain a volume of 140 million tons, a new record. The entry of Eurasians, mainly from China, in the consumer market, gives buyers a more difficult time. That explains part of the reactions cited. Brazil is slowly changing from being a “price taker” to become a “price maker.” Our country has a clean energy matrix of 47.5 percent. About 85 percent of electricity is hydroelectric in origin, and ethanol is either used undiluted, or in a 25 percent mixture with petrol in Brazil’s entire fleet of motorcars. In Brazil, all new vehicles run on flex-fuel. The Brazilian ethanol program is close to 30 years old; it is successful because sugarcane produces 7,500 liters of ethanol per planted hectare, whereas maize, for example, only produces 3,000 liters. The biodiesel program is progressing as planned. These two biofuel programs have nothing in common with, for example, the fires set in the Amazon region which are so rightly criticized by defenders of the environment. No sugarcane is planted in that region. We suggest that the rich American and European nations gradually cut down on the huge subsidies they grant their local agriculture since these, although only indirectly, lead to raising the price of food. It would be more logical to use these resources in partnership with African, Latin American and Caribbean countries to produce food and, with sugarcane, the part of clean fuel that America and Europe need to help reduce the climate change. Norberto de Franco Medeiros is World Energy Council vice chair for Latin America and the Caribbean. July/August 2008 http://www.energycentral.com
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