SAO PAULO, Brazil –- With so much emphasis these days on alternative fuels like ethanol, investments are pouring into ethanol production in Brazil, the number one exporter of ethanol in the world. But billionaire investor George Soros said the situation could create an oversupply of the gasoline alternative unless potential customers like the U.S. and Europe significantly reduce tariffs on imported ethanol.
Soros is investing in Brazilian operations that turn sugarcane into ethanol.
Brazil is the second largest producer of ethanol in the world behind the U.S. But, said sources, experts agree the Latin American nation could become the world’s undisputed ethanol superpower because its sugarcane is a better raw material than the corn used in the U.S.
Sources reported that Soros believes politicians in the U.S. and Europe will eventually reduce or eliminate the tariffs that make imported Brazilian ethanol expensive.
Story Continues Below
The U.S. levies a tariff of 54 cents per gallon on Brazilian ethanol. The European tariff is about 98 cents per gallon.
He’s already joined Brazilian investors in a $900 million plan to buy sugarcane land and build ethanol distilleries in western Brazil.
But despite the market risks of ethanol, Soros said the alternative fuel is "competitive with gasoline” and that he plans to continue investing in its production.
Soros also told news sources that countries need to use less coal for energy and replace it with alternatives like biofuels to reduce global warming. He reportedly called for the creation of a carbon tax to fund alternative fuels development.
Brazil’s Agriculture Ministry said the country is harvesting a sugarcane crop that’s estimated to produce a record 5.3 billion gallons of ethanol. Brazil this year is expected to equal or surpass last year’s ethanol export record of 898 million gallons.
Editor's note:
The Nine Best Energy and Precious Metals Stocks
4 Foreign Currency Plays to Beat the Falling Dollar.
Buffett, Soros, Templeton, Rogers: Learn Their Money-Making Secrets
