Brazil, Chile to Develop Biofuels

SANTIAGO, Chile -- Chile, which imports more than 95 percent of its natural gas and oil supplies, enlisted the help of Brazil on Thursday to help it develop alternative fuels.

During a visit by Brazilian President Luiz Inacio Lula da Silva, the two governments signed a pact to develop biofuels projects as early as 2008.

Details of the accord were not immediately made available, but Silva and Chilean President Michelle Bachelet said in a joint communique they encouraged "the development of renewable energy sources and recognized the potential of biofuels to diversify the South American energy supplies."

Brazil is one of the world's biggest producers of ethanol - the alcohol-based fuel made from crops such as sugarcane or corn.

Silva also visited the regional office of the U.N. Food and Agriculture Organization, which gave him a report biofuels' impact on food production.

The FAO report concluded that biofuel production could jump from currently representing just 1 percent of world demand for fuel for land transportation to 3.8 percent "without affecting in a considerable manner the forest resources or the world's food security."

Ethanol critics, including Presidents Hugo Chavez of Venezuela and Fidel Castro of Cuba, say it would affect food production and push food prices up.

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