Biofuel holds promise for Caribbean

By Jim Loney

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.

"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.