Brokering the Brazil Ethanol Deal

Pushkin Hello, Tim Harford here briefly stepping aside from my usual role of documenting failures of the past, to point you towards someone who's uncovering spectacular failures as they happen Her name is Amy Westervelt. And her show is called Drilled It's an investigative podcast about climate change, not the science of it The politics and the money and the spin This season, Carbon Cowboys. follows a new type of clean energy project in Brazil one that promises to turn the country into The Saudi Arabia of sustainable aviation Fuels. possibly go wrong It's the kind of story cautionary tales listeners will recognize powerful people pelling vision. and some uncomfortable questions lurking just beneath the surface Enjoy the episode, and if you want to hear more, find Drilled wherever you get your podcasts And here episodes early and ad free with Pushkin plus. available on Drilled's Apple Podcast showpage or pushkin. f slash plus This is an IiHart podcast Guaranteed human If you run a business, you know how hard it is to get your customers's attention. Yet eighty five percent of consumers say radio is the last thing they hear before shopping. Let iHart Radio help you reach your next customer today at eight four four eight four four iHart When you own your own business, you own every decision. Now own the card that rewards you for it Chase Sapphire Reserve for Business is a pay andful card that elevates your travel experience and offers premium benefits that will take your business to the next level Sapphire Reserve for Business offers eight X points on all purchases through chase travel, three X points on social media and search engine advertising, airport lounge access, and more. J Sapphire reseserve for businessusiness. It's the card that gives back all you put in Learn more at chase dot com forward slash reserve business. Chase for business, make more of what's yours. Acounts subject to credit approval, restrictions and limitations apply, cards are issued by JP Morgan, Chase Bank, NA, member FDIC. My name is Jessa. One of the things I love the most about working for United Healthcare is that everybody matters every moment matters. There's a person behind every problem. I care because it's what I was put on this earth to do. I'm Ben and I work at United Healthcaare I am just one piece, a larger puzzle, but every piece matters. It's more than just work. We want to make the healthcare system better for everyone. I care because I want to make a difference. That's what committed to care means to me In early september twenty twenty five, a handful of Brazilian government officials headed to North Dakota on a mission. It was a technical mission. They were there to see a shiny new green technology in action. The idea behind this new technology was simple When you turn corn into ethanol, it generates carbon dioxide. And that's a problem if you're trying to be a green fuel But now people from Iowa to North Dakota were capturing that carbon dioxide, storing it, and selling it. Never mind that they were selling it to people who would inject it underground to get more oil out. Some of it would surely still stay underground. and if you tilted your head and squinted a bit, that made it a climate solution The American company selling the Brazilians on this idea, had a lot writing on these officials believing that carbon capture connected to ethanol was a great green success story. win win for industry and the environment, an American dream they could take home to Brazil. But had the visiting bureaucrats scanned the local newspapers, they might have found a different story If you live in Iowa, your land, your water, and your voice could all be at risk thanks to a man named Bruce Rastetter u, you know, essentially paying him to capapture CO two at ethanol plants and then shipping it across Llant. public land and then disposing of it somewhere many states away Noepptember second, the Brazilian contingent met with an Iowa company called Summit Carbon Solutions. Summit has been trying for years to build a carbon capture pipeline to connect dozens of ethanol plants from Iowa to North Dakota It's called the Midwest Carbon Express Project Haralold Ham, who controls many of North Dakota's oil fields and is an energy advisor to President Trump is a major investor in the company Bruce Rastedter is the company's co founder He's also a founder and executive chairman of its parent company Summit Agricultural Group Fr the cheerleading of the project to visitors, the summit pipeline is years behind schedule and facing multiple political and legal roadblocks. In fact, it's managed to do what almost no politician, issue or campaign has been able to do in the US for years, united far left and far right populace P from both sides hate this pipeline For Rastutter, it's not the first time he's faced opposition, especially in his home state of Iowa Anyone who remotely follows politics or agriculture You say Ras said or you're going to get a response. Jess Mzer is the consonservation coordinator for the Sierra Club, Iowa For Jess, the carbon pipeline was not the first time she'd dealt with Bruce Rastutter. They know who it is and they go, Oh, you know that guy did this or that guy put a factory farm near my house or G the one that You know, got Ia state in trouble So I think everyone's God an opinion of him And he's really, really good at being able to avoid ever having to be in the public He doesn't get interviewed, he doesn't take media requests And secret if he lives out in the middle of nowhere in Harden County, Iowa Rasslutter got his start as a big hog farmer. From there, it wasn't a big leap to growing corn. and then like a lot of corn growers, that led quickly to getting into the corn ethanol business As a longime climate reporter, I keep waiting for people to stop calling corn ethanol green Its carbon footprint is similar to regular old gas. It requires around thirty times as much land as solar, plus lots of water and chemical pesticides and fertilizers. But industrial agriculture gets loads of subsidies from it, so they're always finding a way to keep it alive And in twenty twenty two, Congress handed it its latest lifeline Inflation Reduction Act contains some really incredible things for our shareholders. It contains sustainable aviation fuel. We think that's an incredible part of decarbonizing the planet The Inflation Reduction Act, Biden's big climate policy, created a whole new revenue stream for the corn ethanol guys Now, they could sell to airlines, but only if they embraced carbon capture Bruce Rasetter to the Rcue. So I think without continuing to attain new markets the ethanol industry is in jeopardy T nots whatood. Lorory Cbon scores, this project on the pipeline is about with thirty four ethanol plants across the upper Midwest and in particular, Iowa. Summit Carbon Solutions still talks about the project today as a way to open up new markets for Iowa corn farmers. So the company was caught off guard when people across multiple states began organizing against the Midwest Carbon Express quickly became a big problem because Rastetter was not just the ethanol kingpin of Iowa. His company was also the majority owner of a Brazilian ag company, FS fueling sustainability. and he'd helped to make corn ethanol a thing in Brazil too Now, Summit is trying to make carbon capture happen there too Welcome to dririlled seeason fifteen, Carbon Cowboys. I'm Amy Westerwalt, and this season we've partnered with the amazing reporters at the Intercept Brazil to learn more about what Rasstutter is doing down there I'm Fhilippi Sabarina with the Interseceptor Brazil I will be hosting the Portuguese version of this season over on the Intercept Brazil feed This is a story about how the ethanol kingpin of Iowa became the king of corn in Brazil, and how a bunch of ideas that are great for the oil and ag industries got rebranded as climate solutions and created a carbon gold rush Magaling think port, which you can see a few weeks A few months ago, Philippi started telling me about this giant pig statue that greets people near Bruce Rastutter's home base in Brazil, because yes, his partners in Brazil also started out as pig farmers These guys are all still in the pig business and boy do they love pigs When Phelippi sent me a picture of this pig statue, I was kind of shook. If you're imagining some sort of tasteful bronze statue, think again. this is a massive workky pig looking thing wearing Later hosen and a bright green hat Holding a corn cob And it even has a name, Lukinia or little Lucas because the town is called Lucas de Hiovergi It tells you actually a lot about this place It was proposed by one of the largest landowners in the area Big agriculture business guy It comes from a German family, which is why the pig is wearing a German outfit Around fifty years ago, the Brazilian agriculture industry came to this place looking for a cheap and easy land grab Today, the American agriculture industry is doing the same thing Fse star in Luas Duo Vergi, Aidagi Goportunidagis . This audio you're listening to with the epic background music is from a promotional video by the Lucaorio Verge City Government, highlighting the wonders of the city The video mixes images of macaws, forests in the sunset and large cotton, soybean and cornfields The city government wants you to know that Lucas is the city of opportunities. It has more than ninety five thousand inhabitants and produces more than two million tons of green per year The narrator of the video says, We are one of the fastest growing cities in Brazil And then the screen fills with a mix of smiling children, crops, and grain pouring out of machines Lucas Rio Vverge is all money, growth and ses of corn and soybeans as far as the eye can see. The first time I visited, it shocked me to see massive crops right next to people's homes But the more I learned about Lucas, the more it made sense Town is a fiction designed and built by the government to impose development on this region. Lucas was entirely created to serve agriculture and its owners The wide avenues are lined with silos, agricultural machinery stores, supply stores, credit banks and real estate agencies Trucks over twenty meters long, loaded with soybeans or corn. Plenty of space to drive around or park on the curb Walking in Lucas, on the other hand, is a challenge because of the distances between the long avenues The heat and the lack of trees to provide shade The city is obsessed with imperial palm trees. There are hundreds of them in the town center. and on the sides of the roads with nothing but monoculture crops and imported palm trees There is no vegetation in the area to insulate it from extreme temperature changes Lucas can go from freezing cold to unbelievably hot from one moment to the next It was weird for me But the people I spoke with here didn't seem to mind. The image of abundant harvests has drawn people from all over the country to lookas My husband was unemployed for two years. Then we saw reports about the city, which is a very good place to live to raise children even in terms of violence. We pack our bags Isabella is from Minaster Eis, a Brazilian state southeast of Lucas. But since twenty twenty one, she's been living here with her husband and children She sells Asaibles in front of the parking lot of a multinational grain company Asay is a fruit typical of the Amazon Isabella buys it from suppliers and sells it to truck drivers who load and unload grain here passasses small bowls of Asai cream through the fence and the truckers pass back cash Isabella said Lucas is great Not least, because when she needs to take her kids to a public hospital, she never waits more than an hour to be seen Me in the city, I don't think anyone can complain about healthcare She says the Lucas D Rio Vverge Hospital saw Lucas in particular is especially nice It's run today by a partnership between the city and agribusiness entrepreneurs They've opened a really nice water that too whole hostel has been renovated do assumji Sumnge heI was speit thousand some Luas Craachuma Nova Aller, aucentrum morney Fu, who pass to by prop aristensia inte groundarasmin as he hasinaudos In fact, the new Maternity ward at the Saucas Hospital has a promotional video too. And a few seconds into it, listeners might recognize a not so Brazilian sounding name Wh American, Bruing has tatered Bruce Rastetter, the ethanol Kingpan of Iowa. She wields a lot there, but outside the state, he's not exactly a household name Now suddenly a new wing in the hospital in this Brazilian farm town was being named after this guy That happen? hospital cancellled my tour just before I arrived So our producer, Masa Herdz and I just showed up to see what we could see We talked to a hospital worker in the hallway . It's a little hard to hear there because Felipppe and Marcia were trying to tape with their phone. and of course she's speaking in Portuguese too. But when they asked her about the name of the ward, the Bruce Rastutter wing She said it was named after Bruce, a doctor from Ohio. We're still not sure where she got that idea Funding big public projects, especially around hospitals and healthcare is really common in Brazil You just heard how when telling Pelippe about what she likes about Lucas, Isabella mentioned healthcare People think of hospitals as an example of how nice a city is or how well it's working. So if Lucas has a good hospital, no one can say that the politicians or the businessmen running things here are bad B goes double for anything that's focused on women and children. So a maternity award checks a lot of boxes. And then we found out that the hospital is run by a foundation led by one of Rastutter's Brazilian business partners, Marino Frz. Marino's brother Pallo was the one that proposed that giant pig statue that looks out over Lucas. And to understand how Rastutter, the American farmer, ended up with a Brazilian rural maternity ward named after him, we had to figure out how the Franz brothers fit into it and what brought Bruce to Brazil in the first place. That's gonnaia afterfter the break If you run a business, consider this. seventy seven percent of Americans say our nation's two hundred fiftieth birthday is an appropriate time to celebrate. That gives you the green light to advertise. Let IHart help you advertise around America two hundred fifty. Call eight hundred forty four eight four four Hart today to get started When you own your own business, you own every decision. Now own the card that rewards you for it The Chase Sapphire Reserve for Business Card brings the best Sapphire Reserve benefits to business owners who expect hard working rewards. 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Try for free today at odoo. com slash iheart radio That's Odoo d. com slash iheart radio Thisistorio Vverde is in the Brazilian state of Mato Grosso, a state that is almost exactly half agriculture and half Amazon rainforest It used to be even more Amazon For decades, the state was considered the frontier in Brazil The forest were preserved and was home to even more indigenous people than it is today But in the nineteen sixties and nineteen seventies, Brazil's military government deployed a new strategy. It was called the National Integration Plan. And the idea was to eliminate indigenous communities that were seen as anti development and integrate the North and midwest of Brazil into the national economy I will shake our sever. But arbyombber is c you might st a by Santi dusk Boiro a terrible This propaganda film from the seventies celebrates the quote revolution reaching the jungle, toppling trees in favor of roads The goal was to develop the Amazon by building infrastructure in the wilderness, displacing indigenous residents, and encouraging people from outside the region to move there to be Pioneers and go to this frontier entamement The main farm towns in Moto Grosso today were deliberate colonization projects, many of them built and funded by the Brazilian government The government offered people lotots of land, housing, and sometimes even credit to move there. They even funded research to figure out how crops like soybeans and cotton could be grown in the tropical climate there That's what brought the Franz brothers there decades ago. And according to Pao, it's the Franz brothers who brought Bruce to the area Pallows's telling, it all happened because of an internship he did in Iowa. importantart contact he made there Kig is talking about it on a Brazilian podcast. B gency bequestquadon Well, normally that'sen that Terry Brand'sad Terry Branstad, the governor of Iowa at the time, and eventually U. S. ammbassador to China during Trump's first presidency Pa says they all went to soccer games together a lot. Pella says it was Branstad who introduced him to Bruce Raststadter. Rusk CEO the emoyees of Fador. Bruce is the CEO of the company, the founder. He has a huge passion for pigs and has been involved with pigs his whole life. He was a pig farmer until he started getting into ethanol which is a very recent thing I don't know whether just to clarify, Americans produce more ethanol from corn than we do from sugar canane. There, the philosophy, the culture is producing ethanol from corn. So as president, I met with his Terry Brndstad, who was the governor of Iowa. We met and he wanted to buy some land here in Brazil. Bruce doesn't mention any of this when he's asked about how he wound up in Brazil Here's how we talked about it on a farming podcast a couple of years ago So when we sold Hawkeye to Coke Iustries, that was one of his ethanol companies That freed me up for the first time to do other things outside of being responsible for a larger company. and started traveling to Brazil. This is how Bruce talks about it in other interviews too. He was interested in Brazil because it's the main agricultural competitor to the US, or because other US companies had done well there etceter, etc. It was when we were trying to verify Bruce and Paolo's differing versions of this story that our Brazil editor, Alisi DeSuza found a guy with yet another version Is this professal Al need three hunkers. Are you looking at this from a negative standpoint Or are you looking at it from a neutral standpoint? I don't mind being neutral. I can be critical of this too. Yeah. But because clients of mine have invested in hundredwards of a billion dollars now in my progosal, I don't want to fuck this up That's Coreory Melby, an agriculture consultant in Brazil. I came from Northwest Minnesota, developing land. So of course, when in the early two thousands, when Mapa Brosso and all of this soybeian expansion was taking place, I was going to be the land guy for a group from some of the first guys I went down with You're going to be your quy, pick up the language, pick up the contacts. You can be the real estate guy. So that's where I started was from that perspective full disclosure, we paid Corey Melody to be a fixer for us on the ground in Mato Grosso. The idea was that he would take us around and ideally arrange a meeting with the brothers' Fs at their farm. None of ended up panning out, but he did talk to Felippe and I and he told us a lot about how Bruce started out in Brazil He also added me to his newsletter list, which is a wealth of acknowledge about Brazil. Although it comes out so many times a week, I still have about five hundred unread emails in a folder marked Gory So I've been on every farm in my proso. I wrote the The boom times and the bus and the boom times and the bus again with all my friends. So I have that twenty five year ar of experience now of the good bad and ugly of microgrosa. And believe me, there's plenty of all of it. He knows a lot about Bruce and the Frunz brothers because he did for Bruce what he's done for the past twenty five years for other Americans looking to get into the ag business in Monte Grosso. He tred them around looking for land. S twenty eleven I was visitingb And he was a young dynamic guy. And he would say, Cory, we're looking to develop a corn oil Mill processing and investors are partner in that ere it works. Corn oil. So I was writing about this PS in my newsletters at the time and also visiting in Lucas D of ourirday at the elevators at the time, Dct to Carmers. Oh, corn hanol, Cn hanol. We gott to get corn hanol or we're going to bury ourselves Because of his newsletter and his ties to various American ad folks Cy has kind of become known as the guy to call if you're an American who wants to get a sense of Mato Grosso. So when people started talking about corn ethanol there It was only a matter of time before you got a call from You know Who. Summit from Iowa, which I'm sure you are very familiar with. Bruce Rastter and Eric at the whole club. I get a call from Bruce's letter or email. Hey, we would like a tour of Mel Crosso Uh we're gonna to be down there For another reason, could we do something all a cart with you, Burie They didn't want to take one of Corey's pre packaged ag tours. Okay So this is twenty eleven We do a little quick hour tour. They go home. I figured just another tour I We were looking at land. We love the good one I some land y C he carried on, thinking nothing of it. But six months or so later, he got a call from some friends in Mato Grosso My work friend, the Franzis, you know, they were Cory, we want to get an ethanol m going out here. but we need help. We need America. We need capital, ten ten percent. So I was telling Buce and the guy You know, I've got friends I in the thousand after I According to Corey, at the time, Bruce and the guys weren't quite ready to get into the ethanol business in Brazil. They were just looking for some farmland But then they came back for another trip, and as Cory tells it, this is when they met the Franzes All of a sudden, you know Brazilianans being in Brazilian don't we Cy helped broker the deal between Bruce and the Franzes, and it kept them all talking