Brazil’s ethanol problems – KFI 640 AM Los Angeles

Brazil GDP and energy

John Batchelor, host of the John Batchelor show and Lou Ann Hammond talk about Brazil’s problems in producing ethanol.

As emerging markets become more profitable, so do their employees. When employees have more money, they want nicer things, such as living conditions.

In Brazil the GDP per person has gone from $3,600 in 2004 to $6,700 in 2007.

In Brazil the sugar cane is burned before the cutters cut it. Burning it gets rid of the snakes, rats and scorpions, and makes cutting the cane easier. There is a group, Brazilian Renewable Energy Co. (BRENCO), that says they will only plant on flat fields, so that machines can be used to cut the cane instead of workers.

Ethanol

Ethanol has helped Brazil become independent of foreign oil. Philippe Reichstul, CEO of Brenco and former President of Petrobras, believes there is still a good deal of growth in ethanol in Brazil. “We will not only produce ethanol, but will produce the cleanest ethanol we can. Currently, some sugar cane fields are in hills and the cane has to be burned before people can cut it down. Brenco has made a commitment to produce sugar cane on flat land, so that machines can cut the cane.”

Brenco is still a privately held company with investors such as former CEO of Sun Microsystems and well-known environmentalist Vinod Khosla, President Clinton, and Steve Case, AOL founder. The company is expected to have a public IPO offering the second half of 2008 and begin production in May, 2009.