There is a paradigm shift coming in the energy geopolitics of the Western Hemisphere, and Canada, the self-proclaimed energy superpower and the United States' largest energy provider, has decided to sit on the sidelines. And it wasn't for lack of invitations: the Americans tried, as early as last October, to convince Canada to join them in seeking co-operation from Brazil on a new biofuels initiative, only to be given the cold shoulder.

At that stage, Canadian mandarins didn't even suggest a parallel initiative for the development of clean coal and carbon-sequestration technologies, both part of a 21st-century energy agenda.

While Canada sleeps, others have had no trouble seizing the moment. Last week U.S. President George W. Bush met with Brazilian President Luiz Inacio Lula da Silva and officially launched discussions for a Brazil- U.S. co-operation agreement on the development of biofuels, ethanol in particular, as an alternative energy source for the Americas. The Brazilian president is following up with a courtesy call to Mr. Bush on March 31. This unprecedented move of two leaders seeing each other twice in the same month is an indication that the White House is very serious about this
opportunity.

Driving this agenda is the United States' heightened concern with energy security. Until recently, most of the focus has been on the Middle East. However, as of late, the U.S. administration has turned its attention to the instability Venezuela's Hugo Chavez is bringing to the region. Mr. Chavez is using his petro-dollars to influence governments to adopt his
vision of development, which translates to government control in all areas and a vitriolic dislike for all ideas espoused by open-market economies. Oil importers in the Caribbean and Central America have suffered the most, as they have no alternatives to mitigate the detrimental economic impacts of high oil prices, and are reluctantly acceding to Mr. Chavez's demands.

But high oil prices are exactly what led Brazil, a country without easily accessible oil reserves, but with plenty of land to plant sugar cane, to develop ethanol as an alternative fuel. It took 30 years of trial and error, but today Brazil is self-sufficient in oil production, chiefly because ethanol accounts for 40% of the domestic transportation market. A wide transportation and distribution system delivers the product to consumers, who, thanks to flex-fuel vehicles, can choose what fuel to use at the pump.

If this experience can be duplicated in other potential sugarcane- growing regions -- from Haiti, to Dominican Republic, to Cuba, to Mexico -- one could envision countries escaping hydrocarbon domination and having a much greater degree of control over their economy and, consequently, their development agenda. That in itself would be reason enough for Canada to support the implementation of ethanol production in the region. It would help stabilize the region by reshaping the energy mix. However, the Brazil-U.S. cooperation agreement has the potential to go much further.

Currently, the United States is experiencing an explosion in ethanol production, in spite of the fact that its corn-based ethanol is neither as economical nor as environmentally friendly as Brazil's sugar-cane product. The surge in production is a result of generous subsidies, mandated use, and import barriers. The effects these measures have had on domestic and international agriculture and food markets have been so intense that billions will be spent by both the public and private sectors to make cellulosic ethanol production viable as soon as possible.

That is at the core of the Brazil-U.S. co-operation agreement. Brazilians want to make sure some of these funds are applied to developing cellulosic ethanol using their existing sugar-cane-ethanol production facilities as a base. Early indications are that Indiana Senator Richard Lugar will introduce legislation to facilitate multi-investor, multi-national technology development, application, and commercialization.

Joining Mr. Lugar's initiative is the best chance for Canada to get back in the picture. Aside from the great opportunity it offers for Canadian companies, it would ensure that Canada keeps its lead as a technology developer in face of what will be tremendous competition from the United States.

It would also give notice that we can see beyond our borders, that we are a player in the hemispheric energy game for the long term. But if all Canadians care about is their own narrow domestic agenda, can we please drop the pretense of being a superpower?

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.