Treasury Secretary Lauds Biofuel Push

US Treasury Secretary Henry Paulsen speaks during a press conference at the 48th Annual Meeting of the Board of Governors of the Inter-American Development Bank, in Guatemala City, Monday, March 19, 2007. (AP Photo/Alexandre Meneghini) (Alexandre Meneghini - AP)

GUATEMALA CITY, Guatemala -- U.S. Treasury Secretary Henry Paulson on Monday applauded the Inter-American Development Bank's backing of alternative fuels and expressed support for China's request to join the financial institution.

Paulson's visit comes on the heels of President Bush's recent swing through Latin America to improve relations, promote trade and push for the region to seize the opportunities of the booming biofuel industry.

Bank president Luis Alberto Moreno on Monday announced the financial institution will give credits to countries that reduce their carbon emissions and promote the use and production of renewable energy, such as biofuels.

Paulson said the bank's program supports the ethanol accord Bush and Brazilian President Luiz Inacio Lula da Silva signed earlier this month.

"This initiative will help countries reduce their dependence on imported oil, create jobs and improve economic growth," Paulson told Latin American finance ministers at the bank's annual meeting, which ends Tuesday.

U.S. and other foreign investors have expressed interest in using Guatemala as a base for exporting ethanol to North America, Guatemalan Finance Minister Hugo Eduardo Beteta said.

While Brazil is the No. 1 ethanol exporter, the country's exports to the U.S. are restricted by a 54-cent-per-gallon U.S. tariff on its sugar-based ethanol. As a result, many are exploring Central American and Caribbean countries, which are large sugarcane producers and enjoy preferential trade quotas and a certain amount of tariff-free trade in ethanol with the U.S.

To secure its role in the ethanol boom, Guatemala has been upgrading its largest port, Santo Tomas de Castillo, on the Caribbean coast, and carrying out certification procedures, Beteta said.

A top Brazilian sugar and ethanol group, Unialco, recently announced it was considering a joint venture in an ethanol dehydration plant to be based in Guatemala.

U.S. company Tampa Energy and partners also are looking to invest roughly $50 million in an ethanol dehydration plant to be based in the Dominican Republic, slated to begin operating in 2009.

On China's bid to join the development bank, Paulson said, "China obviously is a big player, a global economic player, and that's obviously a good thing for Latin America."

The U.S. has been keeping a close eye on China's moves into the region over concerns the country could undercut U.S. commercial links. China's trade with Latin America has boomed over the past decade to more than $40 billion, although this is still only a tenth the size of U.S. trade with the region.

China is interested in Latin America as a reliable source of raw materials and investment possibilities. The development bank has agreed to formal talks with Beijing over its request to become a member.

If approved, China would become the third Asian country to join the 47-member bank, after Japan and South Korea. The bank provided $6 billion in loans last year to Latin American countries.