United States-Brazil Energy Cooperation Pact of 2007

Bill Number:

S.1007

Bill Status:

Bill introduced in Committee

Bill Location:

Senate

Date of Last Action:

Wednesday, March 28, 2007

Link to entire bill at the Library of Congress site.

Relevant Text:

S 1007 IS

110th CONGRESS

1st Session

S. 1007

To direct the Secretary of State to work with the Government of Brazil and other foreign governments to develop partnerships that will strengthen diplomatic relations and energy security by accelerating the development of biofuels production, research, and infrastructure; to alleviate poverty, create jobs, and increase income, while improving energy security and protecting the environment.

IN THE SENATE OF THE UNITED STATES

March 28, 2007

Mr. LUGAR introduced the following bill; which was read twice and referred to the Committee on Foreign Relations

A BILL

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `United States-Brazil Energy Cooperation Pact of 2007'.

(b) Table of Contents- The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Definitions.

Sec. 4. Western Hemisphere Energy Cooperation Forum.

Sec. 5. United States-Brazil biofuels partnership.

Sec. 6. Biofuels feasibility studies.

Sec. 7. United States-Brazil bilateral tax treaty.

Sec. 8. Multilateral development banks.

Sec. 9. Carbon credit trading mechanisms.

Sec. 10. Energy crisis response mechanism.

Sec. 11. Energy foreign assistance.

Sec. 12. Energy public diplomacy.

Sec. 13. Energy trade.

Sec. 14. Western Hemisphere hydrocarbon production.

Sec. 15. Report.

SEC. 2. FINDINGS.

Congress makes the following findings:

(1) The engagement of the United States Government with the Government of Brazil and the governments of willing countries in the Western Hemisphere and throughout the world is a strategic priority for reducing the potential for tension over energy resources, maintaining and expanding reliable energy supplies, expanding use of renewable energy, and reducing the detrimental effects of energy import dependence. Current energy dialogues and agreements should be expanded and refocused, as needed, to meet this challenge.

(2) Countries in the Western Hemisphere can most effectively meet their common needs for energy security and sustainability through partnership and cooperation. Cooperation between governments on energy issues will enhance bilateral and regional relationships among countries in the Western Hemisphere. The Western Hemisphere is rich in natural resources, including biomass, oil, natural gas, and coal, and has significant opportunities for the production of renewable energy, including hydro, solar, and wind. Countries in the Western Hemisphere can provide convenient and reliable markets for their own energy needs and for foreign trade in energy goods and services.

(3) Development of sustainable energy alternatives in countries in the Western Hemisphere can improve energy security, balance of trade, and environmental quality, and can provide markets for energy technology and agricultural products.

(4) The Government of the United States has actively worked with the Government of Brazil to develop a strong biofuels partnership and to increase the production and use of biofuels. On March 9, 2007, the Memorandum of Understanding Between the United States and Brazil to Advance Cooperation on Biofuels, was signed in Sa.AE6o Paulo, Brazil.

(5) Brazil and the United States have led the world in the production of ethanol. Deeper cooperation on biofuels with other countries of the hemisphere would extend economic, security, and political benefits.

(6) The United States is committed to developing a biofuels partnership with the Government of Brazil that benefits the welfare of the people of the Western Hemisphere. According to the Latin American Energy Organization, the percentage of total energy consumption in each of the following countries in the Western Hemisphere that originated from imported crude oil and oil products in 2005 was--

(A) 2 percent in Argentina;

(B) 93 percent in Barbados;

(D) 13 percent in Brazil;

(E) 55 percent in Chile;

(F) 4 percent in Colombia;

(G) 56 percent in Costa Rica;

(H) 77 percent in the Dominican Republic;

(I) 20 percent in Ecuador;

(J) 76 percent in El Salvador;

(K) 85 percent in Grenada;

(L) 72 percent in Guatemala;

(M) 100 percent in Guyana;

(N) 93 percent in Haiti;

(O) 81 percent in Honduras;

(P) 91 percent in Jamaica;

(Q) 10 percent in Mexico;

(R) 98 percent in Nicaragua;

(S) 100 percent in Panama;

(T) 46 percent in Paraguay;

(U) 39 percent in Peru;

(V) 34 percent in Suriname;

(W) 45 percent in Trinidad and Tobago;

(X) 79 percent in Uruguay; and

(Y) 0 percent in Venezuela.

(7) Private sector partnership and investment in all sources of energy is critical to providing energy security in the Western Hemisphere. Several countries in the Western Hemisphere have acted to endanger the rule of law necessary for such investment. Other countries in the Western Hemisphere have been unable to make reforms necessary to create sufficient investment climates for increased domestic production of energy.

SEC. 3. DEFINITIONS.

In this Act:

(1) BIOFUEL- The term `biofuel' means any liquid fuel that is derived from biomass.

(2) BIOMASS- The term `biomass' means any organic matter that is available on a renewable or recurring basis, including agricultural crops, trees, wood, wood wastes and residues, plants (including aquatic plants), grasses, residues, fibers, animal wastes, municipal wastes, and other waste materials.

(3) PARTNER COUNTRY- The term `partner country' means a country that has agreed to conduct a biofuels feasibility study under section 6.

(4) REGIONAL DEVELOPMENT BANKS- The term `regional development banks' means the African Development Bank, the Inter-American Development Bank, the Andean Development Corporation, the European Bank for Reconstruction and Development, and the Asian Development Bank.

SEC. 4. WESTERN HEMISPHERE ENERGY COOPERATION FORUM.

(a) Establishment- The Secretary of State, in coordination with the Secretary of Energy, shall establish a regional-based ministerial forum to be known as the Western Hemisphere Energy Cooperation Forum (referred to in this subsection as the `Energy Forum').

(b) Purposes- The Energy Forum should seek--

(1) to strengthen relationships between the United States and other countries of the Western Hemisphere through cooperation on energy issues;

(2) to enhance cooperation between major energy producers and major energy consumers in the Western Hemisphere, particularly among the Governments of Brazil, Canada, Mexico, the United States, and Venezuela;

(3) to explore possibilities to work with countries in the Western Hemisphere to promote renewable energy production (particularly in biofuels) and to lessen dependence on oil imports without reducing food availability (particularly in Mexico and Central American countries);

(4) to ensure that energy contributes to the economic, social, and environmental enhancement of the countries of the Western Hemisphere;

(5) to provide an opportunity for open dialogue and joint commitments among Energy Forum countries and with private industry; and

(6) to provide participating countries the flexibility necessary to cooperatively address broad challenges posed to the energy supply of the Western Hemisphere to find solutions that are politically acceptable and practical in policy terms.

(1) an energy crisis initiative that will promote national and regional measures to respond to temporary energy supply disruptions, including participating in a Western Hemisphere energy crisis response mechanism in accordance with section 10(b);

(2) an energy sustainability initiative to facilitate long-term supply security by fostering reliable supply sources of fuels, including--

(A) developing, deploying, and commercializing technologies for sustainable renewable fuels within the region;

(B) promoting production and trade in sustainable energy, including energy from biomass;

(C) facilitating investment, trade, and technology cooperation in energy infrastructure, petroleum products, natural gas (including liquefied natural gas), energy efficiency (including automotive efficiency), clean fossil energy, renewable energy, and carbon sequestration;

(D) promoting regional infrastructure and market integration;

(E) developing effective and stable regulatory frameworks;

(F) developing renewable fuels standards and renewable portfolio standards;

(G) establishing educational training and exchange programs between Energy Forum countries; and

(H) identifying and removing barriers to trade in technology, services, and commodities; and

(3) an energy for development initiative to promote energy access for underdeveloped areas through energy policy and infrastructure development, including--

(A) increasing access to energy services for the poor;

(B) improving energy sector market conditions;

(D) increasing transparency of, and participation in, energy infrastructure projects;

(E) promoting development and deployment of technology for clean and sustainable energy development, including biofuel and clean coal technologies; and

(F) facilitating the use of carbon sequestration methods in agriculture and forestry and linking greenhouse gas emissions reduction programs to international carbon markets.

(d) Implementation- It is the sense of Congress that the Energy Forum--

(1) should meet at least once every 2 years;

(2) may meet on a subregional basis; and

(3) shall be co-chaired by an official of the Department of State and an official of the Department of Energy.

(e) Western Hemisphere Energy Industry Group-

(1) AUTHORITY- The Secretary of State, in coordination with the Secretary of Commerce and the Secretary of Energy, shall approach the governments of other countries in the Western Hemisphere to seek cooperation in establishing a Western Hemisphere Energy Industry Group (referred to in this subsection as the `Energy Group'). The Energy Group should be coordinated by the United States Government and should include representatives from industries and governments in the Western Hemisphere.

(2) PURPOSE- The purpose of the Energy Group should be to--

(A) increase public-private partnerships;

(B) foster private investment; and

(C) enable countries in the Western Hemisphere to devise energy agendas compatible with industry capacity and cognizant of industry goals.

(3) DISCUSSION TOPICS- The Energy Group should discuss--

(A) promoting a secure investment climate;

(B) developing and deploying biofuels and other alternative fuels and clean electrical production facilities, including clean coal and carbon sequestration;

(C) developing and deploying energy efficient technologies and practices in the industrial, residential, and transportation sectors;

(D) investing in oil and natural gas production and distribution;

(E) maintaining transparency of energy production and reserves data;

(F) promoting biofuels research; and

(G) training and education exchange programs.

(f) Oil and Gas Working Group-

(1) ESTABLISHMENT- The Secretary of Energy, in cooperation with the Secretary of State, shall facilitate the establishment of the Oil and Gas Working Group.

(2) PURPOSES- The Oil and Gas Working Group should strengthen dialogue between international oil companies, national oil companies, and civil society groups on issues related to international standards on transparency, social responsibility, and best practices in leasing and management of oil and natural gas projects.

(g) Appropriation- There are authorized to be appropriated $3,000,000 to carry out this section.

SEC. 5. UNITED STATES-BRAZIL BIOFUELS PARTNERSHIP.

(a) In General- The Secretary of State, in coordination with the Secretary of Energy, shall work with the Government of Brazil to--

(1) coordinate efforts to promote the production and use of biofuels among all interested countries, giving preference to the countries in the Western Hemisphere that are among the poorest and most dependent on foreign sources of fuel (particularly oil), including--

(A) coordinating the biofuels feasibility studies described in section 6;

(B) collaborating on policy and regulatory measures to--

(i) promote domestic biofuels production and use, including related agricultural and environmental measures;

(ii) reform automotive sectors to incorporate biofuels use including increased efficiency, reduced emissions, and integration with high-efficiency advanced technologies; and

(iii) reform fueling infrastructure to allow for use of biofuels and other alternative fuels;

(2) develop a global strategy to work with the European Union, China, India, South Africa, Japan, and other interested countries to create global biofuels markets and promote biofuels production and use in developing countries;

(3) assess the feasibility of working with the World Bank and relevant regional development banks regarding--

(A) biofuels production capabilities; and

(B) infrastructure, research, and training related to such capabilities; and

(4) develop a joint and coordinated strategy regarding the construction and retrofitting of pipelines and terminals near major fuel distribution centers, coastal harbors, and railroads.

(b) International Agricultural Extension Programs- The Secretary of Agriculture shall work with the Government of Brazil to facilitate joint agricultural extension activities related to biofuels crop production, biofuels production, and environmental and greenhouse gas emissions reduction practices.

(c) Educational Grants- The Secretary of Energy, in coordination with the Secretary of State, and in collaboration with the Government of Brazil, shall establish a grant program to finance advanced biofuels research and collaboration between academic and research institutions in the United States and Brazil.

(d) Funding Sources-

(1) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated for fiscal year 2008--

(A) $3,000,000 to carry out subsection (a);

(B) $5,000,000 to carry out subsection (b); and

(2) SUPPLEMENTAL FUNDING SOURCES- The Secretary of State shall work with the Government of Brazil, the governments of partner countries, regional development banks, the Organization of American States, and other interested parties to identify supplemental funding sources for the biofuels feasibility studies described in section 6.

SEC. 6. BIOFUELS FEASIBILITY STUDIES.

(a) In General- Each partner country shall participate in a study to determine the feasibility of increasing the production and use of biofuels in such country.

(b) Analysis of the Energy Policy Framework- The study conducted under subsection (a) shall analyze--

(1) the energy policy of the partner country, particularly the impact of such policy on the promotion of biofuels; and

(2) the status and impacts of any existing biofuel programs of the country.

(1) the quantitative and qualitative demand for energy by families, villages, industries, public transportation infrastructure, and other energy consumers;

(2) the current and projected future energy consumption by the heat, electricity, and transportation sectors;

(3) the demand for high-quality transportation fuel;

(4) the local market prices for various energy sources; and

(5) the employment, income generation, and rural development opportunities from biofuel industry.

(d) Assessment of Resources- The study under subsection (a) shall--

(1) assess the present and future biomass resources that are available in each geographic region of the participating country to meet the demand assessed under subsection (c);

(2) include a plan for increasing the availability of existing biomass resources in the country; and

(3) include a plan for developing new, sustainable biomass resources in the country, including wood, manure, agricultural residues, sewage, and organic waste.

(e) Analysis of Available Technologies and Systems- Building upon the results of the assessments described in subsections (c) and (d), the study shall--

(1) analyze available technologies and systems for utilizing biofuels in the country, including--

(A) technologies for the conversion of biomass crops and agroforestry residues in pellets and briquettes;

(B) low-pollution stoves;

(D) charcoal and activated coal production;

(E) biofuel production;

(F) combustion and co-combustion technologies;

(G) the availability of biofuels technologies in various geographic regions; and

(H) the economic viability of biomass technologies; and

(2) compare such technologies and systems to conventional energy supplies with respect to cost-effectiveness, maintenance, social acceptability, and the impact on development.

(f) Environmental Assessment- The study under subsection (a) shall assess--

(1) the likely impacts of increased biomass harvesting and production, and biofuels production and use on environmental sustainability, including effects on carbon emissions; and

(2) the availability of financing from global carbon credit trading mechanisms.

(g) Food Security Assessment- The study under subsection (a) shall assess the likely impacts on food stocks and prices in partner countries.

(h) Development of Policy Options To Promote Biofuel Production and Use-

(1) IN GENERAL- The study under subsection (a) shall identify and evaluate policy options to promote biofuel production and use, after taking into account--

(A) the existing energy policy of the country; and

(B) the technologies available to convert local biomass resources into biofuels.

(2) COORDINATION- In conducting the evaluation under paragraph (1), the participating country shall involve local, national, and international public and private institutions with responsibility or expertise in biofuel production and use.

(3) PRINCIPAL ISSUES- The study shall address--

(A) potential biomass in the country and barriers for the production of biofuels from such biomass products;

(B) strategies for creating a market for biomass products in the country;

(D) environmental sustainability issues and the mitigating effect of increased biofuel production and use on carbon emissions;

(E) the potential contribution of biofuels to economic development, poverty reduction, and sustainability of energy resources;

(F) programs for the use of biofuels in the transportation sector;

(G) economic cooperation across international borders to increase biofuel production and use;

(H) technology collaboration and joint ventures and technological, cultural, and legal barriers that may impede such technological cooperation; and

(I) the economic aspects of the promotion of biofuels, including job creation, financing and loan mechanisms, credit mobilization, investment capital, and market penetration.

(i) Authorization of Appropriations- There are authorized to be appropriated $20,000,000 for fiscal year 2008 to carry out this section.

SEC. 7. UNITED STATES-BRAZIL BILATERAL TAX TREATY.

The Secretary of State, in coordination with the Secretary of the Treasury, shall renew negotiations on a bilateral tax treaty with Brazil.

SEC. 8. MULTILATERAL DEVELOPMENT BANKS.

The Secretary of the Treasury shall inform the managements of the international financial institutions and the public that it is the policy of the United States that assistance by such institutions should encourage development of renewable energy sources, including energy derived from biomass.

SEC. 9. CARBON CREDIT TRADING MECHANISMS.

(a) In General- The Secretary of State shall work with interested governments in the Western Hemisphere and other countries to organize regional and hemispheric carbon trading mechanisms under the United Nations Framework Convention on Climate Change and existing trade and financial agreements to--

(1) establish special carbon credits for the preservation of tropical rain forests;

(2) use greenhouse gas-reducing farming practices;

(3) jointly fund greenhouse gas sequestration studies and experiments in various geological formations; and

(4) jointly fund climate mitigation studies in vulnerable areas in the Western Hemisphere.

(b) Authorization of Appropriations- There are authorized to be appropriated $5,000,000 for fiscal year 2008 to carry out this section.

SEC. 10. ENERGY CRISIS RESPONSE MECHANISM.

(a) Findings- Congress makes the following findings:

(1) Cooperation between the United States Government and governments of other countries during energy crises promotes the national security of the United States and of the cooperating countries.

(2) Credible contingency plans to respond to energy shortages may serve as deterrents to the manipulation of energy supplies by export and transit countries.

(3) The vulnerability of most countries in the Western Hemisphere to supply disruptions from political, natural, or terrorism causes may introduce instability in the Western Hemisphere and can be a source of conflict, despite the existence of major energy resources in the Western Hemisphere. The United States and Canada are the only members of the International Energy Program in the Western Hemisphere.

(4) Integrating countries in the Western Hemisphere into regional and international agreements for the management of energy emergencies will benefit market stability and encourage development in participating countries.

(b) Establishment of an Energy Crisis Response Mechanism for the Western Hemisphere-

(1) AUTHORITY- The Secretary of State, in coordination with the Secretary of Energy and the Secretary of Defense, shall immediately seek to establish a Western Hemisphere energy crisis response mechanism.

(2) SCOPE- The mechanism established under paragraph (1) should include--

(A) a real-time information sharing and coordinating mechanism to respond to energy supply emergencies;

(B) technical assistance in the development and management of national and regional strategic reserves within the Western Hemisphere;

(C) technical assistance in developing national programs to meet the requirements of membership in the international energy application procedure described in subsection (c);

(D) emergency demand restraint measures;

(E) energy switching preparedness and alternative energy production capacity;

(F) ongoing demand intensity reduction programs; and

(G) measures to strengthen sea lane and infrastructure security.

(3) MEMBERSHIP- The Secretary shall seek to include in the Western Hemisphere energy crisis response mechanism membership for each major energy producer and major energy consumer in the Western Hemisphere and other members of the Western Hemisphere Energy Cooperation Forum established pursuant to section 4(a).

(4) STUDIES-

(A) SUPPLY VULNERABILITY STUDY- The Secretary of Energy shall--

(i) conduct a study of supply vulnerabilities for natural gas in the Western Hemisphere; and

(ii) submit a report to Congress that includes recommendations for infrastructure and regulatory needs for reducing supply disruption vulnerability and international coordination.

(B) COORDINATION MECHANISM ASSESSMENT- The Secretary of Energy shall assess the feasibility of developing coordination mechanisms to ensure a consistent supply of biofuels, especially in the event of an interruption of the oil supply.

(1) AUTHORITY- The President should place on the agenda for discussion at the Governing Board of the International Energy Agency, as soon as practicable, the merits of establishing an international energy program application procedure.

(2) PURPOSE- The purpose of the procedure described in paragraph (1) is to allow countries that are not members of the International Energy Program to apply to the Governing Board of the International Energy Agency for allocation of petroleum reserve stocks in times of emergency on a grant or loan basis. Such countries should also receive technical assistance for, and be subject to, conditions requiring development and management of national programs for energy emergency preparedness, including demand restraint, fuel switching preparedness, and development of alternative fuels production capacity.

(d) Authorization of Appropriations- There are authorized to be appropriated $5,000,000 for fiscal year 2008 to carry out this section.

SEC. 11. ENERGY FOREIGN ASSISTANCE.

(a) In General- The Administrator of the United States Agency for International Development (referred to in this section as the `Administrator') shall seek to increase United States foreign assistance programming in renewable energy, including in activities to reduce energy import dependence through the use of biofuels.

(b) Development Strategy Review- The Administrator shall review country assistance strategies to increase assistance for renewable energy activities. Results of this review shall be reported to Congress no later than 180 days following passage of this act.

(1) AUTHORIZATION- The Administrator is authorized to award grants to nongovernmental organizations for sustainable energy and job creation projects in at-risk nations, such as Haiti. Grant funds shall be provided to grantees on an expedited basis upon approval of the eligible project.

(2) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $5,000,000 to the United States Agency for International Development for grants under this subsection.

SEC. 12. ENERGY PUBLIC DIPLOMACY.

(a) Authorization of Appropriations- There are authorized to be appropriated $5,000,000 to the Department of State for public education activities on renewable energy in the Western Hemisphere.

(b) Limitation- Not less than 50 percent of any amount appropriated pursuant to paragraph (1) shall be used for education activities implemented through civil society organizations.

SEC. 13. ENERGY TRADE.

(a) Findings- Congress makes the following findings:

(1) It is the policy of the United States to promote free trade in energy among countries in the Western Hemisphere, which would--

(A) help support a growing energy industry;

(B) create jobs that benefit development and alleviate poverty;

(D) strengthen relations among countries in the Western Hemisphere through closer cooperation and understanding.

(2) Several countries in the Western Hemisphere, including the United States, have protective tariffs and duties that limit the benefits that would accrue from free trade in energy. The United States Government should work with foreign governments to remove trade barriers in energy.

(3) The United States should implement a plan to open its markets to trade in biofuels. This plan should--

(A) encourage expanded investment and innovation in the biofuels industry in the United States; and

(B) revise Federal incentives for the domestic production of biofuels so they do not finance biofuels investment abroad.

(b) Ethanol Tariff Study- The Secretary of Commerce, in cooperation with the Secretary of State, shall conduct a study that evaluates--

(1) tariffs, duties, and other restrictions on trade in biofuels in the Western Hemisphere, including the United States;

(2) the economic impacts resulting from the restrictions referred to in paragraph (1);

(3) the impacts on United States foreign policy resulting from the restrictions referred to in paragraph (1);

(4) the effect of restrictions referred to in paragraph (1) on United States obligations to the World Trade Organization;

(5) the probable impacts on the economy and biofuels industry of the United States of--

(A) removing all duties and tariffs on biofuels imports, beginning on January 1, 2009;

(B) removing all duties and tariffs on biofuels imports and making various revisions to the tax credits for ethanol production in the United States, including shifting the blend credit to be a producers credit and replacement of the current credit with a variable credit scheme;

(C) removing all duties and tariffs and increasing the renewable fuels standard mandate to 30,000,000,000 gallons by 2020 and 60,000,000,000 gallons by 2030, including extending the renewable fuels standard, with revisions favoring the use of next generation biofuels and domestic production; and

(D) gradually removing the duties and tariffs over a 5- and 10-year period; and

(6) the probable impacts of removing United States tariffs and duties under the conditions described in paragraph (5) on biofuels production, economic development, and poverty alleviation in countries in the Western Hemisphere.

(1) introducing a new, duty-free quota for biofuels that is imported from countries receiving normal trade relations treatment from the United States that is equal to 15 percent of the biofuels consumed annually in the United States;

(2) increasing the quota in ethanol imports to the United States from 7 percent to 15 percent over the next several years and expanding the scope of the quota beyond countries participating in the Caribbean Basin Initiative to other least developed countries and to all countries who have received a Millennium Challenge grant; and

(3) creating a separate quota for any other country receiving normal trade relations treatment from the United States.

SEC. 14. WESTERN HEMISPHERE HYDROCARBON PRODUCTION.

(a) Study Partnership With Mexico- The Secretary of Energy shall seek to work with the Government of Mexico to conduct a technical analysis of the status of Mexican oil and gas production, future technological and investment needs, and recommendations for maintaining and increasing hydrocarbon production consistent with the priorities of the Government of Mexico.

(b) Natural Gas Study-

(1) STUDY- The Secretary of Commerce, in consultation with the Secretary of Energy, shall conduct a study of--

(A) the current state of natural gas production in the Western Hemisphere; and

(B) future natural gas demand and supply projections.

(2) REPORT- The Secretary of Commerce shall submit a report to Congress that contains recommendations for the integration of the natural gas sector, including developing a liquefied natural gas infrastructure.

(c) Authorization of Appropriations- There are authorized to be appropriated $1,000,000 for fiscal year 2008 to carry out this section.

SEC. 15. REPORT.

The Secretary of State, in consultation with the Secretary of Energy, shall submit an annual report to Congress on the activities carried out to implement this Act.

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United States-Brazil Energy Cooperation Pact of 2007