Germany, Brazil sign biofuels pact; $140 million in development funds for R&D, rainforests

May 16, 2008

In Brazil, German Chancellor Angela Merkel and Brazilian President Lula da Silva signed a biofuels cooperation agreement. The partnership establishes sustainability criteria for biofuels, and provides more than $140 million in financing for a renewable energy R&D partnership between the two countries, as well as rainforest preservation efforts in the Amazon.

Chancellor Angela Merkel recently told Bloomberg that “Millions of people are becoming wealthy, and when 100 million Chinese start drinking milk then that’s going to have an impact on food prices…rising global food prices have nothing to do biofuels.”

Recently, the CEO of the VDB, a biofuel trade association, called on the German government to prevent cheap Brazilian ethanol from entering the German market, saying that German firms could not compete and that their existence was threatened. Germany mandates an E2 blend in all gasoline, but grain prices have made German ethanol uncompetitive with Brazil’s sugarcane-based product. According to the Guardian, Germany produced 310,000 tonnes of bioethanol last year, down 10 percent from 2006.