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Last-minute EU concession to Mercosur a blow to European ethanol – ePURE

Last-minute changes to the EU-Mercosur agreement, offering even more access to EU markets for Brazilian sugarcane ethanol, have made a bad deal even worse. The agreement essentially trades away Europe’s ethanol industry unless the EU can act quickly and grow the European ethanol market to accommodate a flood of imports says the European Renewable Ethanol Association (ePURE).

According to ePURE, last-minute changes to the EU-Mercosur agreement, offering even more access to EU markets for Brazilian sugarcane ethanol, essentially trades away Europe’s ethanol industry unless the EU can act quickly and grow the European ethanol market to accommodate a flood of imports.

According to ePURE, the “desperate offer” to secure a trade deal is a blow to Europe’s farmers and ethanol industry; now it is up to policymakers to better align economic and environmental goals. That means aligning trade policy with environmental and renewable energy policy by, for example, ensuring that the EU’s long-term decarbonisation strategy includes a stronger push for sustainable biofuels such as ethanol.

It also means that during the implementation phase of the agreement Member States and the European Parliament fight to give EU farmers the tools to absorb the negative impact of imports originating in Mercosur. The deal makes concessions to Mercosur countries on ethanol that essentially sacrifice the EU agriculture sector – and domestic production of a renewable energy source – in exchange for gains elsewhere.

In agreeing to open its markets to Brazilian ethanol, the EU is contradicting its own efforts to increase domestic renewable energy sources in transport, killing incentives to invest in advanced ethanol, and making life even tougher for Europe’s already struggling farmers. As Member States and the European Parliament consider ratifying the deal, they should be aware of these consequences. The Commission has spent several years trying to shrink the market for a fuel that helps decarbonise its transport sector and reduces engine pollutants in today’s vehicle fleet, and with this deal it is offering what’s left of that market to Brazilian producers and sugarcane farmers. Now it will be important for the EU to grow its ethanol market for fuel and biobased applications and make sure European farmers continue to play a vital role in the fight against climate change and in the transition to the bioeconomy, said Emmanuel Desplechin, Secretary-General of ePURE.

ePURE point out that the ethanol portion of the EU-Mercosur deal is disproportionate as an offer of reduced tariffs on a yearly quota of 600 000 tonnes of Mercosur ethanol was first made in 2004, based on market forecast relying on a stable and well managed EU biofuels policy, which has not materialised.

Even if that offer had not been increased it was already a better deal for Mercosur countries today than it was 15 years ago, and represented 12 percent of the European ethanol market which the EU has increasingly opened to other third countries.

With the last-minute decision to increase both the offer and the access conditions, the impact is even more devastating ePURE says.

UNICA positive over EU-Mercosur

UNICA, the Brazilian sugarcane industry association, was more upbeat on the “successful conclusion” of the EU-Mercosur trade negotiations noting that both parties will “benefit substantially” from this trade agreement as it opens up new trading possibilities for industries and consumers.

A fair and balanced deal such as this can only strengthen our long-standing positive relationship and sends a clear signal of the benefits of free and fair trade. Although we regret that the negotiations were not ambitious enough to comprehensively address sugar and ethanol, especially considering the European sugar demand and the remarkable potential for ethanol consumption in the framework of the bioeconomy, we recognize that the agreement stroke today represents the best deal possible based on the limitations imposed by the EU. We very much look forward to reinforced cooperation and investment ties between Mercosur and the EU following the agreement of this deal, UNICA said in a statement.

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