The U.S.-Brazil Energy Partnership. Bolstering Security, Growth, and Job Creation

Transcription

1 The U.S.-Brazil Energy Partnership Bolstering Security, Growth, and Job Creation

2

3 An Energy Partnership On March 19, 2011, President Barack Obama and Brazilian President Dilma Rousseff launched a U.S.-Brazil Strategic Energy Dialogue (SED), one of four presidentiallevel mechanisms between both countries to deepen their political and economic relations. The SED is the only dialogue labeled strategic, reflecting U.S. and Brazilian policymakers vision of a bold bilateral partnership with positive implications for energy security, economic growth, and job creation. The SED, co-chaired by the U.S. Department of Energy (DOE) and the Brazilian Ministry of Mines and Energy (MME), includes other government agencies in both countries. Its first meeting took place on August 17, 2011, in Brasília, Brazil, at the deputy secretary level. The SED is a result of a decade-old effort to institutionalize the energy partnership between the United States and Brazil. In fact, it incorporates a two-track approach to bilateral cooperation. In 2003, the DOE and the MME established an allencompassing mechanism, including oil and gas, coal, nuclear, renewables, efficiency, and R&D. In 2007, a second, separate biofuels-only track was established under the leadership of the U.S. Department of State and the Brazilian Ministry of External Relations (MRE). The SED allows for more synergies between both tracks and greater priority for energy-related issues by both governments. Major U.S.-Brazil Energy-Related Agreements 1995 U.S.-Brazil Common Agenda on Environment 1997 Agreement for Cooperation Concerning Peaceful Uses of Nuclear Energy 1997 Implementing Agreement for Cooperation in the Area of Energy Technology 2003 MOU for the Establishment of a Mechanism for Consultations on Energy Cooperation 2007 MOU to Advance Cooperation on Biofuels 2010 MOU on Cooperation Regarding Climate Change 2010 U.S.-Brazil Binational Energy Working Group Joint Action Plan 2011 Partnership for the Development of Aviation Biofuels 2012 U.S.-Brazil Commercial Dialogue Energy Work Plan Bolstering Security, Growth, and Job Creation 1

4 Energy Partnership Scope Cooperation between the United States and Brazil on energy and energy-related issues has traditionally focused on information exchange, technical assistance, and capacity building. Much of this activity has been through regular workshops between both countries government officials and private sector representatives. However, as the energy sector moves to the forefront of public policy in both countries because of its powerful growth and job-creating potential, additional dimensions have been incorporated into the bilateral energy agenda. These new dimensions include trilateral cooperation in Central America, the Caribbean, and Africa; multilateral cooperation on standards development and clean energy promotion; joint research and development; diplomatic coordination in multilateral fora; regulatory cooperation; and trade and investment promotion. Public policy reform and harmonization, as well as business development, are additional areas in which to further this partnership. U.S.-Brazil Workshops on Energy-Related Areas August 2011 Industrial Energy Efficiency August 2011 Civil Nuclear Energy October 2011 Deepwater Oil and Gas Development November 2011 Building Energy Efficiency December 2011 Commercial Aviation Alternative Fuels February 2012 Dispersant and Disaster Response April 2012 Subsea Well Containment and Contingency Planning May 2012 Unconventional Gas August 2012 Distributed Wind Energy Market Opportunity 2 The U.S.-Brazil Energy Partnership

5 Bilateral Energy Trade U.S. energy production is largely focused on nonrenewable sources, with coal, natural gas, oil, and nuclear energy representing more than 90% of the total energy produced in the United States. In Brazil, oil represents the largest share of energy production in the country, followed closely by biomass and hydropower. In addition, Brazilian power generation is dominated by hydropower, representing more than 80% of all electricity in Brazil. These complementarities, as well as both governments goals toward a clean energy economy, are reflected in bilateral energy trade. In 2001, bilateral energy trade between the United States and Brazil was $1.4 billion. In 2011, it reached more than $13 billion. While total trade between both countries increased during this period and has already surpassed the pre-2008 and 2009 crisis level, trade in energy products increased at a greater rate than bilateral trade as a whole. In 2001, energy products represented only 7% of Brazilian exports to the United States and less than 4% of U.S. exports to Brazil. In 2011, 25% of all Brazilian exports to the United States and 21% of all U.S. exports to Brazil were energy products. Brazil s top energy products exports to the United States in 2011 included oil ($5.8 billion) and ethanol ($567 million). The United States top energy products exports to Brazil in 2011 included oil and oil products, diesel in particular ($4.5 billion); coal ($1.9 billion); and ethanol ($791 million). While these are impressive amounts, they reflect trade in energy products, not in all energy-related goods, such as machinery and equipment. In addition, there is untapped potential in trade of other energy products, such as liquefied natural gas (LNG) and uranium. Bolstering Security, Growth, and Job Creation 3

6 Council Activities The Brazil-U.S. Business Council (BUSBC) has been actively engaged in energy and energy-related activities to deepen the commercial pillar of the U.S.-Brazil partnership, with an emphasis on trade and investment promotion. Below are some of these activities: Implementation of the Export Green trade and policy promotion program. Organization of a high-level energy panel at the U.S.-Brazil Business Summit on the occasion of President Barack Obama s official visit to Brazil in March Support of the SED launching in August 2011 with energy-related private sector events in São Paulo, Brazil, and a private sector roundtable briefing with the DOE in Washington, D.C. Launch of a policy-oriented Oil & Gas Working Group in October Organization of a high-level energy panel at the Brazil-U.S.: Partnership for the 21st Century conference on the occasion of President Dilma Rousseff s official visit to the United States in April Council Policy Achievements The BUSBC has advocated for increased energy and energy-related trade and investment between both countries, including through removing tariffs, nontariff measures, and regulatory barriers. The Council has advocated for the following recent policy accomplishments: Elimination of the U.S. $0.45 per-gallon blender s tax credit subsidy and the $0.54 per-gallon import tariff on foreign ethanol. Suspension of the 20% Brazilian import tariff on foreign ethanol up to December Creation of an Energy Work Plan in the U.S.-Brazil Commercial Dialogue to enable private sector participation in the SED. 4 The U.S.-Brazil Energy Partnership

7 Council Recommendations To deepen the commercial pillar of the energy partnership between the United States and Brazil, the BUSBC offers these recommendations: Support an SED whole-of-government approach to energy cooperation involving all key agencies of both countries. Ensure formal and active participation of the U.S. and Brazilian private sectors in the SED, including through the U.S.-Brazil Commercial Dialogue Energy Work Plan. Increase energy and energy-related trade and investment promotion activities. Sign the U.S.-Brazil Joint Declaration Concerning Industrial and Commercial Cooperation in the Nuclear Energy Sector. Establish a U.S.-Brazil work plan to create a global biofuels market detailing joint efforts at the bilateral, trilateral, regional, and multilateral levels, including joint action at the G-20, the United Nations Food and Agriculture Organization (FAO), and the World Trade Organization (WTO). Jointly pursue the elimination of barriers to Environmental Goods and Services (EGS) trade, including through a potential Sustainable Energy Trade Agreement (SETA). Allow flexibility in Brazilian local content requirement rules related to pre- and post-salt oil and gas fields development. Allow U.S. companies to include education and training-related investment in Brazil in their local content requirement compliance accounting. Allow flexibility in Petrobras sole operatorship rule related to pre-salt oil and gas fields development to foster greater international participation. Organize at least one bidding round of post-salt blocks per year in Brazil. Establish and implement a long-term training program for oil and gas workers in Brazil and adapt labor laws in the oil and gas sector to its unique business cycle. Revise Hire Brazilian quota requirements connected to the hiring of crew and officers in the Brazilian oil and gas market. Bolstering Security, Growth, and Job Creation 5

8 Council Recommendations continued Establish a fast track procedure for issuing visas to highly skilled professionals in Brazil, specifically in the oil and gas sector. Accelerate and broaden the scope of bilateral cooperation on offshore security and safety. Establish oil and gas suppliers certification by company rather than by project. Enforce Brazilian intellectual property laws and rules in the oil and gas sector, particularly through Petrobras purchasing policy. Establish clear, nonduplicative environmental licensing criteria for energy-related projects. Reduce energy prices in Brazil, especially for Brazilian and U.S. energy-intensive manufacturers operating in that country. Improve energy security in Brazil, including by exploring further opportunities to develop Brazil s natural gas and nuclear power markets. Roll back Brazilian restrictions on foreign reinsurance providers that limit intragroup risk ceding operations and negatively impact energy projects. Secure congressional approval and funding for public investment in nuclear power generation in Brazil. Oppose the re-creation of the U.S. $0.45 per-gallon blender s tax credit subsidy and the $0.54 per-gallon import tariff on foreign ethanol. Oppose unilateral U.S. trade sanctions related to energy that could affect Brazil and U.S.-Brazil trade and investment relations. Oppose increased and burdensome requirements for the U.S. Congress to approve agreements for peaceful nuclear cooperation with foreign countries. 6 The U.S.-Brazil Energy Partnership

9 About Us The Brazil-U.S. Business Council (BUSBC) is the premier business advocacy organization dedicated to strengthening the economic and commercial relationship between Brazil and the United States. Established in 1976, the Council is composed of two sections. The U.S. Section of the Council represents major U.S. companies that invest in or have business in Brazil. It operates under the administrative aegis of the U.S. Chamber of Commerce and maintains independent policy formulation and membership. The Brazil Section of the Council is managed by the Brazilian National Confederation of Industry (CNI), composed of the 27 Brazilian state-level Federations of Industries. BUSBC also works in conjunction with the American Chambers of Commerce for Brazil (AmCham Brazil), the U.S.-Brazil CEO Forum, and sectoral associations in both countries. Together, this powerful structure enables the Council to forge consensus between the two private sectors and communicate to both governments with a unique bilateral voice. Vision A barrier-free bilateral trade and investment relationship between Brazil and the United States that contributes to a lasting partnership with decisive influence in world politics and global governance. Bolstering Security, Growth, and Job Creation 7

10 Mission Foster understanding among the private and public sectors in Brazil and the United States to maintain and advance trade and investment between both countries through free trade, free markets, and free enterprise. Objectives Advocate for members interests in Brazil and in the United States. Promote substantive interaction between members and leading policymakers in Brazil and the United States. Deliver timely information to members and facilitate member input into policy formulation and program development. Advance members policy priorities through task forces, working groups, coalitions, and joint programs with government and private sector stakeholders. 8 The U.S.-Brazil Energy Partnership

11

12 Brazil-U.S. Business Council 1615 H Street, NW Washington, DC