From: By Jim Loney, Reuters
Published December 5, 2007 04:24 PM

Biofuel holds promise for Caribbean

MIAMI (Reuters) - Small Caribbean nations see big biofuel opportunities in ethanol produced from traditional sugar crops and biodiesel from promising African palm and jatropha trees, delegates to a conference in Miami said.

While the push for alternative fuels will probably not revive the failing centuries-old Caribbean sugar industry, countries like El Salvador have room to increase production, delegates to the Miami Conference on the Caribbean Basin said this week.

Regional governments, however, need immediately to pass legislation mandating that gasoline be blended with ethanol so that farmers can feel confident that biofuels are the future, said Julio Arroyo of the Sugar Association of El Salvador.

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"We have 60,000 hectares (148,300 acres) of sugar. We have 300,000 hectares (741,300 acres) that are not being used, so there is a lot of opportunity," he said. "But without legislation, this industry is not going to develop."

The Bush administration's push to increase U.S. use and production of alternative fuels as a way to lessen dependence on foreign oil spurred interest in the Caribbean basin, where shaky economies have struggled to cope with globalization.

Caribbean nations have a sweet incentive to ship ethanol to the growing U.S. market -- exemption from a 54-cent-a-gallon tariff thanks to the 1983 Caribbean Basin Initiative.

But even the tariff exemption and burgeoning ethanol demand from the U.S. market has failed to revive the Caribbean sugar industry, which began when the islands were European colonies and slaves worked the fields.

The industry collapsed when global pressure removed generous European Union trade preferences, and antiquated production methods left Caribbean cane yields at half those of Brazil, the regional sugar and ethanol giant.

INDUSTRIES ABANDONED

St. Kitts and Nevis, Barbados, Trinidad and Tobago and others have given up on their cane industries. In the Dominican Republic, nine of 14 traditional sugar estates lie dormant.

"The Dominican Republic has the potential to reconvert traditional sugar cane land to ethanol production," said Aristides Zucco, president of the National Energy Commission.

Right now, the Caribbean industry is largely confined to a half-dozen plants shipping value-added products made from Brazilian ethanol to the United States to skirt the tariff.

David Lewis, a vice president of business adviser Manchester Trade Ltd., said some Caribbean producers with long experience making alcohol for rum could easily convert that expertise to ethanol, at minimal cost.

"It can go into your internal combustion engine or it can go into your intestines," he said. "As long as oil is at $60 a barrel pretty much anyone in this region can produce ethanol for sale into the U.S. market."

Other Caribbean basin nations are looking at biodiesel, both for export and to safeguard their own energy supplies, delegates said. Honduras, for example, is ramping up production of African palm oil.

"Last year we had 89,000 hectares of African palm planted and by next year we expect 100,000 hectares planted," said Moises Starkman, a government official. "There are big business opportunities locally, even without going into export."

A project run by Biodiesel Haiti aims to establish jatropha, a Central America tree whose seeds can produce up to 40 percent oil, as a staple that could help reforest the desperately poor Caribbean country, where hunger for charcoal cooking fuel has reduced forest cover to less than 2 percent.

But many delegates said governments need to quickly ensure demand and secure investment capital by passing laws to require at least a 10 percent blend of ethanol with gasoline.

Such a mandate in Florida, the fourth most populous U.S. state and a Caribbean business hub, would be a huge boost. Ten percent of Florida's annual motor fuel consumption would amount to about 860 million gallons.

(Editing by Michael Christie and Cynthia Osterman)

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