Production of sugar-based ethanol in Brazil is expected to increase by 5 percent, and two-thirds of all sugar produced would go toward the creation of the fuel, Platts reported Tuesday, citing sources in the country's ethanol sector. Brazil is the world's largest producer of the fuel.

Sugar prices have remained steady in recent months, around 12.5 cents per pound, an incentive for Brazilian ethanol producers to capitalize on the demand for alternative fuels.

The protected increased output comes at a time when Brazil is calling on the United States and the Obama administration to put an end to the 53 cent-per-gallon import tariff on its ethanol.

Last month, Brazilian President Luiz Inacio Lula da Silva traveled to Washington to meet with President Obama to discuss relations and the contentious ethanol issue.

As the first Latin American leader to meet with Obama, Lula voiced his country's concern over the treatment Brazilian ethanol receives when entering the United States and asked the U.S. president to reconsider dropping the tariff.

Ethanol tariffs have long been seen as a means of protecting American corn producers and corn-based ethanol manufacturers from foreign imports, especially Brazilian ethanol, which is cheaper to produce and more fuel-efficient than the corn-based biofuel.

Lula, who during his seven years in office has become one of the world's most vocal proponents of ethanol use, pointed to the success of its use in Brazil in reducing that country's reliance on petroleum. By law, all new cars in Brazil must be flex-fuel vehicles capable of running on either ethanol or a mixture of ethanol and gasoline.

The Brazilian leader also noted that "many countries still don't place any tariff on polluting fuels" and that a White House that professes to be environmentally conscious should break from the Bush administration's long-held policy of maintaining the tax.

Lula's recent pleas for an end to ethanol tariffs have not been ignored in Washington, as they often were during the Bush presidency, said Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Center for Scholars.

"There is a growing constituency in the United States to allow for more space for biofuels, like sugarcane ethanol," Sotero told United Press International, noting the renewed interest in reducing fossil fuel dependency.

"If people are serious about climate change, it makes no sense to continue a policy that allows for free trade of fossil fuels and regulates and limits trade on biofuels."

Ending the ethanol tariff would prove particularly unpopular with the Midwestern corn-producing states like Indiana and Iowa that Obama successfully courted on his way to winning the presidency.

While touted by Lula as the leading alternative to fossil fuels, Brazil's ethanol sector has also come under some harsh criticism at home for allegedly contributing to the deforestation of the Amazon.

For years, Brazilian energy experts have refuted claims that the ethanol sector was a contributor to Amazon destruction, noting that the climate of the forest region is not ideal for cane growth. Much of Brazil's ethanol production comes from the more temperate clime of the Sao Paulo state in the country's southeast.

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