20100712
reuters

BRUSSELS (Reuters) - The European Union and Brazil will sign an agreement with Mozambique this week to develop bioelectricity and biofuels projects, officials said on Monday.

The agreement will be signed during a summit of European and Brazilian leaders in Brasilia on Wednesday, they said.

Spurred by surging EU biofuel demand and Brazil's production expansion goals, the deal with Mozambique is seen in Brussels and Brasilia as a first step toward greater cooperation on developing renewable energy projects in Africa.

Under the agreement, the EU and Brazil will start studies on how best to develop bioethanol, biodiesel and bioelectricity projects in Mozambique, which has become a leading African biofuels producer in recent years.

"This agreement will be part of the EU and Brazil's wider cooperation with Africa, which we hope will eventually lead to an agreement with the Africa Union," an EU official said.

The EU needs biofuel to meet its target of sourcing 20 percent of its energy needs from renewable sources by 2020.

Teaming up with global bioethanol leader Brazil would speed up the creation of a new and cheaper supply in Africa.

Unlike Brazilian bioethanol, which is subject to high import tariffs at EU borders, African-produced biofuel would be subject to minimal tariffs.

New production bases in Africa could benefit Brazilian biofuel producers such as Cosan and ethanol and sugarcane group Copersucar, Brazilian diplomats said.