WEBVTT - The Brazilian Midwest 0:00:17.242 --> 0:00:28.682 Pushkin. Last summer, we went to the Brazilian state of 0:00:28.802 --> 0:00:32.162 Manto Grosso to get a better feel for Bruce Rastetter's 0:00:32.282 --> 0:00:37.082 Brazilian partners. One of the first things we wanted to understand, 0:00:37.202 --> 0:00:40.482 because it's at the center of their US operations too, 0:00:41.362 --> 0:00:45.002 is how they're handling land in Brazil. 0:00:47.282 --> 0:00:50.042 So there were the friends brothers Marino Franz and Palo 0:00:50.082 --> 0:00:54.082 France here as we can see, and Miguel Vaz Hibero. 0:00:55.242 --> 0:00:59.082 Ricardo da Costa Carvallo is an indigenous rights activist with 0:00:59.162 --> 0:01:05.362 the NGO Opera Sau Amazonia Nativa or UPAN. They recently 0:01:05.362 --> 0:01:08.562 did a survey in Manto Grosso identifying those who are 0:01:08.642 --> 0:01:14.722 illegally occupying indigenous lands. When we visited opan's offices, he 0:01:14.882 --> 0:01:17.642 showed us a map. On the map, he pointed out 0:01:17.682 --> 0:01:22.242 the names of the people who illegally own private properties 0:01:22.282 --> 0:01:27.201 that overlap with the Batelau indigenous territory, including the ones 0:01:27.241 --> 0:01:31.281 you heard there, Miguel vas Ribero and Marino Franz, Bruce 0:01:31.362 --> 0:01:38.521 Rastutter's Brazilian business partners. Batalao belongs to the Kaiawahuete people, 0:01:39.042 --> 0:01:42.362 also known as the Kayabe. The Kayabi were expelled from 0:01:42.362 --> 0:01:46.042 the region during the government's colonization processes between the nineteen 0:01:46.081 --> 0:01:49.802 forties and nineteen sixties. It was part of that Westport 0:01:49.882 --> 0:01:53.122 expansion that we talked about in the first episode. Much 0:01:53.162 --> 0:01:56.082 of this land was sold at low prices or just 0:01:56.202 --> 0:01:59.522 invaded by farmers from the south and southeast. There are 0:01:59.642 --> 0:02:05.122 many farms officially registered on Batalau indigenous land. The Kayabi 0:02:05.162 --> 0:02:08.561 are now trying to get that land back, and landowners 0:02:08.602 --> 0:02:11.802 like Miguel Vaz Rubero and Marino franz are making that 0:02:12.002 --> 0:02:16.002 especially difficult because they're not just wealthy farmers. They also 0:02:16.282 --> 0:02:16.681 work in. 0:02:16.682 --> 0:02:20.482 Government pocasinguin cemit di san Polite who is dahs. 0:02:20.762 --> 0:02:23.922 They are politicians in the region, which we see as 0:02:23.922 --> 0:02:26.322 a major obstacle for the Kyabe to win this fight 0:02:26.402 --> 0:02:27.122 for territory. 0:02:27.882 --> 0:02:30.602 As an American, it would have been easy for Bruce 0:02:30.762 --> 0:02:34.122 to start talking to the Franzis and Miguel las Robero, 0:02:34.682 --> 0:02:37.122 even to buy some land from them without doing a 0:02:37.122 --> 0:02:41.002 background check. But he didn't just buy land from them, 0:02:41.322 --> 0:02:45.122 He went into business with them. Their finances are co mingled, 0:02:45.322 --> 0:02:48.642 they've taken on debt together, and these guys are well 0:02:48.682 --> 0:02:52.762 known in Monto Grosso not just for their businesses, but 0:02:52.802 --> 0:02:59.322 for their involvement in various entanglements with the legal system. 0:02:59.722 --> 0:03:02.802 I'm in me Westervelt, and you're listening to Carbon Cowboys, 0:03:03.282 --> 0:03:06.282 the story of how the ethanol kingpin of Iowa became 0:03:06.322 --> 0:03:09.202 the king of corn in Brazil and what it tells 0:03:09.282 --> 0:03:12.722 us about the limits of technology and markets to solve 0:03:12.762 --> 0:03:16.402 the climate crisis. This season is a collaboration between the 0:03:16.482 --> 0:03:18.042 Intercept Brazil and Drilled. 0:03:25.162 --> 0:03:27.842 What is seventy thousand? What is seventy thousand to Marina man? 0:03:28.042 --> 0:03:30.082 For us, it's money, but for him. 0:03:30.682 --> 0:03:34.202 This audio is from a hidden camera recording supposedly created 0:03:34.282 --> 0:03:39.442 by Lucas de Rio Verge businessman Halio Moraga. He's trying 0:03:39.482 --> 0:03:43.762 to negotiate a bribe from Marino Franz of the Franz Brothers. 0:03:44.042 --> 0:03:47.802 According to Halio, he got the money from Franz and 0:03:47.882 --> 0:03:51.962 recorded a second video of himself thanking Marino Franz for it. 0:03:53.322 --> 0:04:00.042 Morgira, Hey Marino, how's work going? But mister Marino, I 0:04:00.122 --> 0:04:01.842 won't take up too much of your time. I just 0:04:01.882 --> 0:04:03.882 came to thank you because I received the seventy thousand 0:04:03.922 --> 0:04:04.362 from that deal. 0:04:04.402 --> 0:04:10.042 We made twenty four officials from Lucas's administration, including Marino Franz, 0:04:10.202 --> 0:04:14.122 have been charged with administrative misconduct. The video is now 0:04:14.122 --> 0:04:18.921 available online and the Matto Grosso Public Prosecutor's office has 0:04:18.962 --> 0:04:23.402 stated that the case is still pending. Meanwhile, the scandals 0:04:23.442 --> 0:04:27.082 continued at the end of Marino Franz's second term as 0:04:27.162 --> 0:04:30.962 mayor of Lucas. In twenty twelve, he and Miguel vas Ribero, 0:04:31.282 --> 0:04:34.282 his business partner, were accused of issuing more than eight 0:04:34.522 --> 0:04:39.122 hundred false invoices in the names of small rural producers. 0:04:39.722 --> 0:04:43.802 Matto Grosso's Department of Finance has not disclosed the results 0:04:43.842 --> 0:04:49.322 of that investigation. In November twenty fourteen came another scandal. 0:04:49.682 --> 0:04:53.562 Oh bet Ussel Operation Promised Land was launched simultaneously in 0:04:53.602 --> 0:04:58.362 the states of Matto Grosso, Santa Carrarina, Perena and Hio 0:04:58.362 --> 0:05:02.402 Grande do Sol. The federal police are investigating crimes involving 0:05:02.482 --> 0:05:07.802 invasion of federal lands, document fraud and environmental crimes. Fifty 0:05:07.842 --> 0:05:11.562 two arrests warrants were served. Three former mayors and the 0:05:11.562 --> 0:05:14.122 interior of Matto Grosso were arrested. 0:05:15.282 --> 0:05:18.282 By this point, Marino Franz was the former mayor of 0:05:18.362 --> 0:05:21.402 Lucas de Rio Verde. He was accused of being part 0:05:21.442 --> 0:05:24.361 of a scheme that moved around two hundred million dollars 0:05:24.482 --> 0:05:28.122 through the illegal sale of plots of land in Mato Grosso. 0:05:29.082 --> 0:05:32.481 Marino Franz only ever spent a week in jail. He 0:05:32.562 --> 0:05:35.162 was granted a root of Habeas corpus, and eventually the 0:05:35.202 --> 0:05:39.362 federal court decided to close the investigation against him, citing 0:05:39.402 --> 0:05:43.202 a lack of evidence. But the Franz brothers and Miguel's 0:05:43.282 --> 0:05:47.762 problems continued after getting into business with Bruce Io. In 0:05:47.802 --> 0:05:53.122 twenty seventeen, agrose Rado Miguel Vaz's ama Pa company was 0:05:53.162 --> 0:05:57.481 fined a million dollars for deforestation. That final remains active 0:05:57.642 --> 0:06:01.601 awaiting payment or appeal. In twenty twenty five, Vaz was 0:06:01.602 --> 0:06:04.642 fined again, this time almost six hundred thousand dollars for 0:06:04.762 --> 0:06:09.082 planting cotton and corn within the Batelao indigenous land in 0:06:09.202 --> 0:06:13.402 Manto Grosso. None of these scandals ever seem to stick. 0:06:13.682 --> 0:06:17.322 Thinks mostly to the political capital these three, Marino and 0:06:17.362 --> 0:06:21.041 Paulo Franz and Miguel vas Ribero have a mast in 0:06:21.282 --> 0:06:25.242 Lucas for almost twenty five years. The mayor's office there 0:06:25.282 --> 0:06:29.602 has been controlled by these guys. First they built one 0:06:29.602 --> 0:06:33.402 of the original industrial agriculture companies in the state. 0:06:34.402 --> 0:06:36.322 Guander, Fiagrio. 0:06:36.922 --> 0:06:39.442 When I started Fia Grill, I brought my brother in 0:06:39.522 --> 0:06:42.522 law to work with me. He made the best shimahau 0:06:42.562 --> 0:06:45.402 in town, and he liked bars. So in a place 0:06:45.402 --> 0:06:47.962 where there are a lot of young people, where there 0:06:48.002 --> 0:06:51.122 are no phones, no radio, where no one knows anything, 0:06:51.562 --> 0:06:55.722 news spreads through the bars. I would say to Lino, Lino, 0:06:56.082 --> 0:06:59.002 you make the simhons talk about soccer and talk a 0:06:59.002 --> 0:07:01.361 little bit about women and leave the rest to me. 0:07:02.202 --> 0:07:04.082 And that's how we created Fia Grio. 0:07:05.722 --> 0:07:10.082 This quaint family story with the inspirational piano in the background, 0:07:10.362 --> 0:07:14.042 is being told by Marino Franz in a promotional video 0:07:14.442 --> 0:07:18.602 for the company Fiagrill. He started Fiagrill in Lucas to 0:07:18.722 --> 0:07:22.122 Rio Verge in nineteen eighty seven, during a fourth wave 0:07:22.282 --> 0:07:25.482 of wealthier settlers who came to explore the region from 0:07:25.482 --> 0:07:29.682 the south and southeast of the country. Marino was twenty 0:07:29.682 --> 0:07:31.882 four at the time, but had been living in Lucas 0:07:31.882 --> 0:07:35.682 since he was eighteen. Like their counterparts in the US, 0:07:35.922 --> 0:07:39.602 lots of industrial ad guys in Brazil liked to pretend 0:07:39.882 --> 0:07:44.122 to just be folksye farmers down the street. Marino describes 0:07:44.162 --> 0:07:48.602 the creation of Fiagrill, which sells seeds, fertilizers and pasticides 0:07:48.722 --> 0:07:52.202 like an artisanal farm stand at the local farmers market. 0:07:52.682 --> 0:07:56.202 But in twenty twenty four, Fiagrill had gross revenues of 0:07:56.322 --> 0:08:00.162 seven hundred million dollars. It has twenty eight branches in 0:08:00.282 --> 0:08:04.282 four states, four warehouses, more than five hundred employees, and 0:08:04.482 --> 0:08:09.442 Chinese and American shareholders. Palo Franz, Marino's younger brother, arrived 0:08:09.442 --> 0:08:13.122 in Lucas in nineteen ninety five and now together they 0:08:13.162 --> 0:08:16.922 own around forty thousand hectares of land in monte Grosso, 0:08:17.282 --> 0:08:20.202 equivalent to around a quarter of the city of Salpallo. 0:08:21.882 --> 0:08:23.482 Marin Jose Fresquandi. 0:08:23.602 --> 0:08:26.242 I met Marino Jose friends when he was already a businessman. 0:08:26.402 --> 0:08:29.122 Then I became friends with Marino, a business relationship, so 0:08:29.162 --> 0:08:31.682 to speak. And then in nineteen ninety six I decided 0:08:31.722 --> 0:08:33.762 to leave the company I was representing and became a 0:08:33.802 --> 0:08:34.602 partner at Fiagora. 0:08:36.002 --> 0:08:39.761 See this is Miguel Vaz, the current mayor of Lucas. 0:08:39.761 --> 0:08:43.082 In the same promotional video, he and Marino created an 0:08:43.122 --> 0:08:47.122 important alliance at Fiagrill, which would later branch out into 0:08:47.161 --> 0:08:51.201 other businesses, including fas. With the help of their foray 0:08:51.322 --> 0:08:55.761 into local politics, in two thousand and one, Marino Franz 0:08:55.842 --> 0:09:00.521 became deputy mayor of Lucas under Ottaviano Piveta. He graduated 0:09:00.521 --> 0:09:03.562 to mayor in two thousand and five, where he remained 0:09:03.641 --> 0:09:08.161 until twenty twelve. In the twenty twelve election, Fiagrill donated 0:09:08.202 --> 0:09:11.082 more than half a million ray ice around ninety eight 0:09:11.161 --> 0:09:15.282 thousand dollars to the campaign of Otabiano Piveta, who became 0:09:15.401 --> 0:09:18.522 mayor of Lucas for the third time, with none other 0:09:18.561 --> 0:09:22.362 than Miguel Vaz as his deputy. In twenty twenty one, 0:09:22.641 --> 0:09:26.961 it was Vaz's turn to become mayor of Lucas. That's 0:09:27.002 --> 0:09:29.802 when the video of the bribery scandal came to light. 0:09:30.122 --> 0:09:32.562 It didn't seem to make a difference, though Vaz won 0:09:32.681 --> 0:09:36.441 with nearly sixty percent of the vote after the break. 0:09:36.842 --> 0:09:39.521 How they put that political power to work for Bruce. 0:09:48.281 --> 0:09:51.641 Remember when Bruce Rastetter first went to Brazil, he was 0:09:51.681 --> 0:09:54.802 licking his wounds after a big land deal in Tanzania 0:09:55.002 --> 0:09:58.042 went south. He needed a shirt bat and the brothers 0:09:58.082 --> 0:10:00.521 Franz and their pal Miguel could deliver it. 0:10:01.041 --> 0:10:03.521 I've always believed that Brazil will be the other country 0:10:03.561 --> 0:10:06.122 in the world. In particular the supplies the majority of 0:10:06.122 --> 0:10:09.201 the world's food going forward and food production. It's a 0:10:09.281 --> 0:10:13.202 country that most readily accepts US technology outside of the US, 0:10:14.041 --> 0:10:17.602 and so began traveling there four and a half five 0:10:17.681 --> 0:10:21.082 years ago decided that we would form a fund to 0:10:21.122 --> 0:10:23.202 buy a single farm. Take our time. 0:10:23.761 --> 0:10:27.442 That's Bruce speaking at a Brazilian American Chamber of Commerce 0:10:27.482 --> 0:10:29.441 seminar in twenty sixteen. 0:10:30.002 --> 0:10:35.082 Our partner in Brazil is Viagre, a large supply input 0:10:35.161 --> 0:10:37.761 company to farmers. So we continue to look forward to 0:10:37.842 --> 0:10:41.401 kind of walking before we run in Brazil and took 0:10:41.442 --> 0:10:44.242 time to get through that government process, but also looking 0:10:44.281 --> 0:10:46.682 forward to corneathan all which we think will be a 0:10:46.722 --> 0:10:52.842 significant compliment to sugarcane outthanol as biotechnology takes place in Brazil. 0:10:57.842 --> 0:11:01.242 Follo Franz, the young Franz brother, is a big fan 0:11:01.401 --> 0:11:04.562 of the United States and of Bruce in particular. His 0:11:04.801 --> 0:11:09.122 Instagram account currently has ten posts, Three of them feature 0:11:09.161 --> 0:11:12.681 Bruce and other features the US national anthem being played 0:11:12.722 --> 0:11:15.922 during an American football game at Iowa State University, where 0:11:15.962 --> 0:11:19.202 Paulo says he studied and where Rastetter was on the 0:11:19.202 --> 0:11:23.082 board of regents for years. A fifth post features Paolo 0:11:23.202 --> 0:11:26.402 himself with a satisfied smile, holding a pizza and a 0:11:26.442 --> 0:11:30.482 Coca Cola with an Iowa State University baseball cap. Here's 0:11:30.521 --> 0:11:33.201 Paolo talking about his love of the US on an 0:11:33.242 --> 0:11:39.521 agricultural podcast, enthusiastopol. 0:11:40.602 --> 0:11:43.962 I've always been enthusiastic about the United States, right like 0:11:44.041 --> 0:11:46.242 it or not. In college here in Brazil you learned 0:11:46.242 --> 0:11:49.081 about irrigation or free growing, and they use the example 0:11:49.082 --> 0:11:51.962 of California, and there's the influence of music movies. 0:11:52.082 --> 0:11:57.202 Right after buying land from the Franzas, Bruce agreed to 0:11:57.242 --> 0:12:00.122 go into business with them and their partner, Miguel on 0:12:00.202 --> 0:12:02.482 a corn as an all company they called at the 0:12:02.521 --> 0:12:07.521 time fs bi Energia f for fiagril s for Summit. 0:12:08.482 --> 0:12:13.362 In August twenty seventeen, Bruce, the Franz Brothers, and Miguel 0:12:13.442 --> 0:12:17.362 Vas inaugurated their first corn ethnol plant in Lucas do 0:12:17.561 --> 0:12:20.561 Rio Virji. The event was attended by none other than 0:12:20.722 --> 0:12:25.321 then President of Brazil Michel Temer and his Minister of 0:12:25.362 --> 0:12:29.122 Agriculture Leiro Magji, a partner in one of the largest 0:12:29.322 --> 0:12:31.201 soybean producers in Mato. 0:12:31.041 --> 0:12:35.922 Rosso, Fiscus Michelle. I make sure that President Michelle Tamak 0:12:36.041 --> 0:12:37.922 came here so that he could see and help us 0:12:37.921 --> 0:12:41.761 publicize and even lobby official agencies to also start financing 0:12:41.801 --> 0:12:45.842 this type of investment, something that still does not happen today. 0:12:46.761 --> 0:12:50.722 Words and promises from Agricultural Minister Blero Magji during the 0:12:50.761 --> 0:12:56.442 factory's inauguration ceremony in twenty nineteen, things got even better 0:12:56.681 --> 0:13:00.202 for Bruce and his Brazilian business. 0:13:00.362 --> 0:13:03.042 Lagos a Vigos ski Moscaviditch. 0:13:03.242 --> 0:13:05.722 Hello, my friends, I just received an important visit here 0:13:05.761 --> 0:13:08.002 in our office from the FS Group, which is investing 0:13:08.041 --> 0:13:10.282 in ethanol here in the state of Madra Grasso. You're 0:13:10.322 --> 0:13:13.202 with us or Marie Friends, one of the investors in Rafael, 0:13:13.401 --> 0:13:16.521 the company's CEO. Today, they already operated ethanol plant in 0:13:16.561 --> 0:13:19.122 the city of Lucas. They're building another plant scheduled to 0:13:19.122 --> 0:13:21.482 open in January twenty twenty in the city of Soriso, 0:13:21.602 --> 0:13:23.242 and right now they're starting a new plant there in 0:13:23.281 --> 0:13:25.561 the city of Novamutin. We also discussed the tax and 0:13:25.602 --> 0:13:27.521 Center program that will be important for the growth of 0:13:27.561 --> 0:13:30.602 the sector, which will revolutionize agrobusiness here in our state. 0:13:32.202 --> 0:13:35.681 That's former Governor of Monte Grosso Mauro Mendez in a 0:13:35.801 --> 0:13:39.401 video he posted to his Facebook page in July twenty nineteen. 0:13:39.681 --> 0:13:43.921 Marino Franz and fs CEO Rafael abud Are by his side. 0:13:44.521 --> 0:13:47.962 Fs built three more plants in the state after that announcement. 0:13:54.681 --> 0:13:58.562 The Soriizo plant began operating in twenty twenty, followed by 0:13:58.641 --> 0:14:01.442 the prima Vera do Leste plant in twenty twenty three. 0:14:01.921 --> 0:14:04.641 The fourth plant was announced in twenty twenty five and 0:14:04.842 --> 0:14:08.401 is under construction in the city of Campo Novo do Parresis. 0:14:09.041 --> 0:14:13.081 The fifth is planned for the municip of Querencia. The 0:14:13.202 --> 0:14:16.122 Matto Grosso government has given its support to the company 0:14:16.242 --> 0:14:20.321 since at least twenty nineteen. As Governor Morolmndez said in 0:14:20.442 --> 0:14:24.482 his video, f S secured more than three hundred million 0:14:24.602 --> 0:14:28.201 dollars in tax breaks from the state since then. In 0:14:28.322 --> 0:14:31.642 twenty twenty two, Bruce was made an honorary citizen of 0:14:31.762 --> 0:14:34.282 Lucus to Rio Verge and also received one of the 0:14:34.322 --> 0:14:38.202 state's highest honors, the Accommodation of the Order of merit 0:14:38.322 --> 0:14:42.482 of Mato Grosso, but land and political power wasn't enough. 0:14:42.842 --> 0:14:44.882 Bruce and the guys were in the carbon business too. 0:14:45.842 --> 0:14:47.002 Here's Paulo Franz. 0:14:48.882 --> 0:14:51.322 We have studies on our farm, the proof that corn 0:14:51.442 --> 0:14:54.722 going on top of soybean's sequesters more carbon than an 0:14:54.922 --> 0:14:58.362 entire standing forest. This is serious, This is. 0:14:58.522 --> 0:14:59.162 Very near. 0:15:00.762 --> 0:15:04.042 To be clear. Scientists say the exact opposite a mature 0:15:04.122 --> 0:15:07.642 forest stores fifty to one hundred times more carbon than 0:15:07.681 --> 0:15:11.642 a corn soybean field or a soybean corn field. It 0:15:11.882 --> 0:15:14.802 doesn't really matter, though it sounds good, and these guys 0:15:14.882 --> 0:15:18.081 have enough political power that no one really questions them. 0:15:19.242 --> 0:15:23.201 Thanks to Bruce's powerful Brazilian partners, he's been able to 0:15:23.242 --> 0:15:27.002 get things going more easily here than back home. In 0:15:27.082 --> 0:15:31.042 December twenty twenty five, three months after Brazilian government officials 0:15:31.202 --> 0:15:34.961 visited Bruce in the US, the Brazilian Development Bank released 0:15:35.202 --> 0:15:39.762 seventy million dollars to fund fs's carbon storage project in 0:15:39.882 --> 0:15:44.601 Lucas do Rio Verge. The company has now rebranded to 0:15:44.962 --> 0:15:49.762 FS Fueling Sustainability is thumbs plunt thump. 0:15:49.882 --> 0:15:53.482 We are planting a new seed, the seed of the 0:15:53.561 --> 0:15:57.282 fuel of the future. It will generate more than two 0:15:57.442 --> 0:16:01.522 hundred and sixty billion in investments in agriculture and the 0:16:01.681 --> 0:16:06.042 biofuel chain. The Fuel of the Future puts Brazil at 0:16:06.082 --> 0:16:09.762 the forefront of the new economy, the green economy. 0:16:10.522 --> 0:16:14.201 That's more more than forty billion in new investments and 0:16:14.362 --> 0:16:18.321 more than twenty five billion for the creation of sugarcane fields, 0:16:18.602 --> 0:16:20.842 corn fields and transportation. 0:16:22.002 --> 0:16:25.762 This is Brazilian Minister of Minds and Energy Alexander Silvera, 0:16:25.962 --> 0:16:29.201 speaking during the ceremony to sign the Fuels of the 0:16:29.362 --> 0:16:33.922 Future Bill into law in October twenty twenty four. The 0:16:34.042 --> 0:16:36.882 law sets out a set of initiatives to promote low 0:16:36.962 --> 0:16:41.081 carbon transportation as a way to reduce greenhouse gas emissions. 0:16:41.722 --> 0:16:45.441 It incentivizes a gradual increase in the percentage of ethanol 0:16:45.561 --> 0:16:49.282 mixed in with gasoline, provides a legal framework for carbon 0:16:49.322 --> 0:16:53.922 capture and storage, and encourages the research, production and sale 0:16:54.042 --> 0:16:59.802 of so called sustainable aviation fuel. The expansion of ethanol, 0:17:00.002 --> 0:17:03.961 sustainable aviation fuel, and carbon capture and storage are also 0:17:04.122 --> 0:17:07.722 the only things Trump saved from Biden's climate policy, the 0:17:07.962 --> 0:17:12.562 Inflation Reduction Act. The Fuel of the Future Act triggered 0:17:12.642 --> 0:17:17.482 a substantial shift in fs's fortunes with the increase in 0:17:17.561 --> 0:17:21.362 demand for ethanol and gasoline. In the twenty twenty four 0:17:21.482 --> 0:17:24.362 to twenty twenty five crop here, the company saw its 0:17:24.442 --> 0:17:29.202 net revenue grow by thirty two percent after posting a 0:17:29.282 --> 0:17:33.202 loss of almost one hundred million dollars just two years ago. 0:17:33.522 --> 0:17:38.201 Today FS has net profits of over two hundred million dollars. 0:17:38.802 --> 0:17:43.442 No but aszuben fazendun trabado and zuchu Muslim's important insistitution analogy. 0:17:44.682 --> 0:17:47.922 Brazil has been doing important institutional work in recent years 0:17:47.962 --> 0:17:51.881 to promote biofuels and increase blends. Yeah, and now we 0:17:52.042 --> 0:17:55.242 had the Fuel of the Future program that implemented E thirty, 0:17:55.402 --> 0:17:56.841 which further expanded the market. 0:17:56.962 --> 0:17:57.081 Right. 0:17:57.561 --> 0:18:01.682 Hafeil Labud, CEO of FS, is the public face of 0:18:01.802 --> 0:18:05.482 the company in Brazil. He's the one you'll usually see 0:18:05.561 --> 0:18:08.722 being interviewed by the press. In this interview you just 0:18:08.841 --> 0:18:12.002 heard given in twenty twenty five on a business podcast, 0:18:12.642 --> 0:18:15.922 he's talking about the increase in corn ethanol consumption in 0:18:16.002 --> 0:18:20.121 the country. Corn Ethanol already represents about twenty five percent 0:18:20.242 --> 0:18:24.082 of Brazil's ethanol market. The other seventy five percent comes 0:18:24.121 --> 0:18:30.322 from ethanol made from sugarcaneangel. 0:18:27.922 --> 0:18:29.601 If you take what you already have in terms of 0:18:29.762 --> 0:18:32.762 plants and a construction and projects that are really moving 0:18:32.882 --> 0:18:35.601 forward and will start operating the next two or three years. 0:18:35.962 --> 0:18:38.722 By twenty twenty eight, at least forty to forty five 0:18:38.802 --> 0:18:40.642 percent will already be contracted yet. 0:18:40.762 --> 0:18:43.762 In other words, the people watching us don't even know it, 0:18:44.081 --> 0:18:46.321 but they are fueling up or will very soon be 0:18:46.402 --> 0:18:48.002 fielding up with corn ethanol. 0:18:48.282 --> 0:18:48.802 Oh totally. 0:18:49.042 --> 0:18:51.362 Everyone already feels up with corn ethanol in some way. 0:18:51.442 --> 0:18:56.242 Right. To support the ambitions of corn ethanol producers, the 0:18:56.282 --> 0:18:59.482 Brazilian government has approved public funding of more than six 0:18:59.601 --> 0:19:03.682 hundred million dollars into expanding the corn ethanol industry over 0:19:03.722 --> 0:19:07.201 the past six years. FAS alone received more than two 0:19:07.282 --> 0:19:14.401 hundred million dollars during that periods. 0:19:15.242 --> 0:19:19.202 It was before the well you drilled was a success story, 0:19:19.561 --> 0:19:23.202 even a luney experience for the regulatory agency. Please correct 0:19:23.202 --> 0:19:23.841 me if I'm wrong. 0:19:24.802 --> 0:19:28.561 This is Aluisa Borgeses, director of Oil, gas and Biofuel 0:19:28.561 --> 0:19:32.922 Studies at the Energy Research Company linked to the Ministry 0:19:33.002 --> 0:19:36.922 of Minds and Energy in Brazil. She's talking to Daniel Lopez, 0:19:37.042 --> 0:19:41.762 vice president of Sustainability and New Business at FS. They're 0:19:41.841 --> 0:19:44.522 on a panel and they're discussing a carbon capture and 0:19:44.642 --> 0:19:48.242 storage project that FS is building in Lucas to Rio Vergi. 0:19:49.042 --> 0:19:53.002 FS contacted the National Agency of Petroleum, Natural Gas and 0:19:53.081 --> 0:19:58.361 Biofuels initially in twenty twenty two, requesting authorization to conduct 0:19:58.482 --> 0:20:02.641 studies on wells in the Parisis Basin in Lucas for 0:20:02.762 --> 0:20:06.522 the purpose of carbon capture and storage. The license was 0:20:06.601 --> 0:20:10.361 granted just three days after they made their request. However, 0:20:10.682 --> 0:20:15.321 this raise questions within the permitting agency itself, with some 0:20:15.482 --> 0:20:18.841 officials pointing out that the license was very broad and 0:20:19.042 --> 0:20:22.482 did not explicitly state that the company's ultimate goal was 0:20:22.601 --> 0:20:26.042 carbon capture and storage. At the time, there were no 0:20:26.282 --> 0:20:30.881 regulations in the country at all governing carbon capture. There 0:20:31.002 --> 0:20:33.601 still aren't, it's still being figured out. It was the 0:20:33.642 --> 0:20:36.602 Fuel of the Future Act passed in twenty twenty four 0:20:37.442 --> 0:20:42.242 that set the mandate of creating those regulations. So, after 0:20:42.321 --> 0:20:46.122 being quickly approved, fs's initial permit for its carbon capture 0:20:46.162 --> 0:20:50.882 project was suspended. To get around that, a government official 0:20:51.042 --> 0:20:55.762 advised the Legal department of FS to amend the company's 0:20:55.922 --> 0:21:00.962 articles and corporation to align with the proposed activity, and 0:21:01.321 --> 0:21:05.161 it worked. The government reinstated the permit to FS and 0:21:05.402 --> 0:21:08.882 drilling went ahead even without a regulatory framework. 0:21:14.722 --> 0:21:20.162 That's completely absurd. What the civil servant did is totally unacceptable. 0:21:21.162 --> 0:21:23.962 He can say that this is the rule, this is 0:21:24.081 --> 0:21:27.562 how it should be, and you don't meet these requirements, 0:21:29.162 --> 0:21:32.641 but he can suggest that the company does something to 0:21:32.762 --> 0:21:33.762 comply with the rule. 0:21:34.642 --> 0:21:39.081 That's Fabiana Augusta, professor of public law and director of 0:21:39.121 --> 0:21:43.361 the Brazilian Bar Association. The Brazilian agency denied that a 0:21:43.442 --> 0:21:48.321 recommendation was made to FAS to amend its articles of incorporation. However, 0:21:48.561 --> 0:21:53.082 we obtained emails in which three different codes and descriptions 0:21:53.242 --> 0:21:57.641 of economic activity were suggested by the agency to fs 0:21:59.002 --> 0:22:03.242 fs's plans for this project are still underway. In September 0:22:03.321 --> 0:22:07.202 twenty twenty five, some public managers had their travel expenses 0:22:07.282 --> 0:22:11.642 paid by an association of corn ethanol entrepreneurs to visit 0:22:11.762 --> 0:22:15.402 successful carbon capture and storage projects in the United States. 0:22:15.882 --> 0:22:18.122 That was the visit you heard about in episode one. 0:22:19.042 --> 0:22:23.081 Among the projects they visited was Bruce Rastetter's Midwest Carbon 0:22:23.162 --> 0:22:28.002 Express Pipeline project, which hasn't even started construction yet. It 0:22:28.121 --> 0:22:31.401 was supposed to be operational by twenty twenty four and 0:22:31.482 --> 0:22:33.642 they're still waiting to start building. 0:22:37.402 --> 0:22:43.442 Induzu FS is promoting regulation, pioneering, perspecting, and even drawing 0:22:43.522 --> 0:22:46.121 on the experience of its partners in the United States, 0:22:46.922 --> 0:22:50.121 and Summit Carbon Solutions is undertaking a major project to 0:22:50.202 --> 0:22:54.921 become a large CO two concentrator. Summit Carbon Solutions is pioneering. 0:22:55.682 --> 0:22:58.642 The pioneer serves as a model for regulators to act upon, 0:22:59.042 --> 0:23:02.202 and together with these observations and other markets, the anp 0:23:02.442 --> 0:23:04.841 will be able to regulate here in Brazil. 0:23:06.522 --> 0:23:10.962 Afail borrows Arujo is a technical consultant at Brazil's Energy 0:23:11.282 --> 0:23:14.802 Research Office who participated in the trip to the United 0:23:14.841 --> 0:23:17.762 States in September twenty twenty five, the one we heard 0:23:17.762 --> 0:23:21.482 about in episode one. Three months after that visit, FAS 0:23:21.561 --> 0:23:24.361 would receive its seventy eight million dollar loan from the 0:23:24.402 --> 0:23:30.242 Brazilian Development Bank to start burying its carbon in Lucas. Favoritism, 0:23:30.601 --> 0:23:34.441 luck or just a window of opportunity, as business people say. 0:23:35.482 --> 0:23:40.522 Vero he DM, hey, bruci tortisdo so. 0:23:40.561 --> 0:23:43.362 When I come here, Marino and Bruce send everyone. When 0:23:43.402 --> 0:23:45.242 I come here, I actually come with the feeling that 0:23:45.282 --> 0:23:48.482 Brazil is thriving and trusts what we're doing. No one invests. 0:23:48.522 --> 0:23:50.002 If they don't know that later on they will make 0:23:50.042 --> 0:23:53.361 a profit, they'll have more than legitimate financial advantages. 0:23:54.162 --> 0:23:57.321 These words from then Brazilian President Michel Timer at the 0:23:57.442 --> 0:24:00.682 inauguration of Fas and Lucas to Rio Verge in twenty 0:24:00.762 --> 0:24:05.681 seventeen seem prophetic. Brus AND's partners marketed the plant's opening 0:24:05.841 --> 0:24:08.722 as the launch of a sustainable future for the country 0:24:08.962 --> 0:24:12.202 and the world. But in the nearly decades since, all 0:24:12.242 --> 0:24:14.762 they've managed to do is turn Lucas do Rio Verge 0:24:15.361 --> 0:24:20.562 into a testing ground for questionable green solutions and skyrocket 0:24:20.642 --> 0:24:25.602 their profits in the process. Remember what agricultural consultant Corey 0:24:25.682 --> 0:24:28.762 Melby said last episode about what Bruce and his partners 0:24:28.802 --> 0:24:38.802 at FS think about sustainability opportunity. Lucas's future doesn't look 0:24:38.922 --> 0:24:42.242 promising to everyone. For a lot of locals, it's actually 0:24:42.282 --> 0:24:45.841 pretty bleak. And what's protecting this corn ethanol boom in 0:24:45.962 --> 0:24:50.481 Brazil is a thin green veil that separates the habs 0:24:50.561 --> 0:24:54.482 from the have nots. In this next episode, we're going 0:24:54.561 --> 0:24:56.402 to take you on a visit to Lucas do Rio 0:24:56.522 --> 0:24:59.922 Verge and show you the other side of Bruce's business 0:25:00.202 --> 0:25:06.722 in Brazil. We reached out to Bruce Rastetter, Harold Ham, 0:25:07.162 --> 0:25:10.921 the Frownz Brothers, Miguel Vos Ribero, and all Summit Company 0:25:11.282 --> 0:25:14.962 and Brazilian government agencies mentioned in this season for comment 0:25:15.042 --> 0:25:18.681 and have incorporated any responses we received throughout the season. 0:25:19.402 --> 0:25:23.441 Carbon Cowboys Cowboys of the Sejadu is a collaboration between 0:25:23.561 --> 0:25:25.282 Drilled and The Intercept to Brazil. 0:25:25.442 --> 0:25:29.002 The show was reported and written by Philippe Sabrina and 0:25:29.202 --> 0:25:30.522 me Amy Westervelt. 0:25:31.042 --> 0:25:34.762 Our editors are Audrey Queen in the US and Alisi 0:25:34.841 --> 0:25:36.042 Desolza in Brazil. 0:25:36.242 --> 0:25:39.722 Our senior producer and sound designer is Martin saltz Ostwek. 0:25:40.202 --> 0:25:44.242 Audio production and sound design in Brazil by Marcia Heberdoza 0:25:44.442 --> 0:25:45.522 and Philippe MoOx. 0:25:46.601 --> 0:25:49.442 Theme songs and original music by Eric Dna. 0:25:49.642 --> 0:25:54.042 Additional music by Martin saltz Ostwik. Our engineer is Peter Duff. 0:25:54.802 --> 0:25:56.882 Artwork for Drilled is by Matt Fleming. 0:25:57.202 --> 0:26:00.562 US fact checking from Naomi Bar Brazil. 0:26:00.722 --> 0:26:02.682 Fact checking by Studio Fronteta. 0:26:02.882 --> 0:26:06.522 Our first Amendment attorney is James Wheaton the First Amendment Project. 0:26:07.162 --> 0:26:10.762 We are also proud members of Reporter Shield Big. Thanks 0:26:10.802 --> 0:26:14.841