COSTA RICA, Brazil – The other side of ethanol, vilified as a cause of soaring food prices and hunger, can be seen in Brazil, where farmers are pushing down energy costs – both at the pump and the electricity meter.

Twenty thousand acres of sugar cane are sprouting through the red soil around this small town, destined for fuel tanks across the world. It's the start of a $2.7 billion ethanol project put together by Brazil Renewable Energy Co., or Brenco, a private venture financed by U.S. and Brazilian investors.

They plan to export a billion gallons of ethanol a year by 2015 – enough fuel to offset demand for 65,000 barrels a day of oil.

About 350 miles to the east, in fields surrounding the town of Flores de Goiás, a firm from Irving, TruEnergy Renewable Fuels, is putting together a $523 million ethanol project that could offset 8,700 barrels a day of oil demand.

With world oil consumption running at 86 million barrels a day, the ethanol produced by these two private companies will amount to a modest alternative contribution.

Global ethanol production, however, is already greater than the yearly increase in world oil demand. Without ethanol, high oil prices would be higher still.

"Demand for oil is increasing every year, but reserves are more and more difficult to find," said Brenco founder Henri Philippe Reichstul, a former head of Brazil's Petrobras oil company.

"We have an alternative that is also the fastest way of reducing your emissions from cars without changing anything," he said. "To me, it looks like a no-brainer."

Still, others say ethanol advocates are driving drunk. Biofuels – especially corn-based ethanol made in the United States – are under attack for inflating food prices, destroying rain forests, depleting water supplies and increasing pollution.

"We felt there was good reason to investigate this avenue for generating a sustainable fuel away from oil," said Ken Cook, president of the farm-oriented Environmental Working Group in Washington. But "we are replacing oil insecurity with food insecurity."

Gov. Rick Perry and Sen. Kay Bailey Hutchison, R-Texas, have urged the Bush administration to ease up on ethanol mandates for gasoline because of rising food costs.

Seventeen countries now require refiners to add ethanol to gasoline. Last year, Congress ordered the use of enough biofuels to equal 20 percent of U.S. transportation needs – 35 billion gallons – by 2022.

One-fourth of the U.S. corn crop now goes to ethanol, and corn prices are so high that ethanol producers are struggling to make money as rising feedstock costs eat into profits.

"The corn price spike has scared a lot of investors," said Paul Ho of Credit Suisse's Renewable Energy Group.

Investors in Brazil are turning to sugar cane. Brenco and TruEnergy are planting in Brazilian cattle pastures and say they aren't crowding out grain producers.

The two companies' sugar cane plantations are more than 1,000 miles south of the Amazon forest, where high rainfall makes sugar cane an uneconomical crop. (Plant stress creates the sugar, so a period of drought makes for the best sugar cane.)

"Ethanol in the U.S. has struggled a lot because the high price of corn creates a lot of food vs. fuel pressures," said Tim Lavender, president of TruEnergy. "Sugar cane doesn't have that."

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Field workers toss sugar cane stalks into a plowed field to be chopped into seedlings at a farm in Costa Rica, Brazil, owned by Brenco.

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Ethanol from sugar cane could lower food prices, Mr. Lavender said.

Federal Reserve Chairman Ben Bernanke says foreign ethanol can take the pressure off the U.S. corn crop and has recommended that Congress drop a 54-cents-a-gallon tariff on Brazilian ethanol.

Brazil is expecting global demand for its ethanol to surge. Companies have announced plans for 75 ethanol plants. International investors are soon expected to account for more than 15 percent of Brazil's ethanol production.

Starting in September, TruEnergy plans to build three ethanol plants in the Brazilian state of Goiás. They will be fed by farmers promising to grow 148,000 acres of sugar cane.

Mr. Lavender said he has lined up engineering and operations companies, a farmers' co-op and a prospective client – the commodities trading arm of Gazprom, Russia's giant energy company.

He still needs capital. TruEnergy's principals have $4 million invested in the deal and hope to find Brazilian investors willing to put in $150 million, Mr. Lavender said. The total cost of the project is estimated at $523 million.

Mr. Reichstul's partners include Sun Microsystems founder Vinod Khosla, AOL founder Steve Case and California supermarket magnate Ronald Burkle, who has an investment partnership with Bill and Hillary Clinton. (Brenco says the Clintons are not direct investors in the company.)

The Brenco investors have assembled $200 million for their project. They plan to cultivate 988,000 acres of sugar cane at three plantations, including one outside the town of Costa Rica.

Brenco and TruEnergy say they can generate all the electricity they will need by burning the sugar cane leaves and depleted stalks, with enough left over for a profitable side business selling power to Brazil's utilities.

The international ethanol market is tiny compared with that for oil and gasoline.

With pretty much only a domestic market, Brazilian producers typically depress ethanol prices whenever they bring a plant into operation, said Marcos Jank, president of the Brazil Sugar Cane Industry Association.

Brazil produces 5.8 billion gallons a year of ethanol but exports a mere 960 million gallons. A university study done last year for the Ministry of Science and Technology found that Brazil would be capable of supplying the world with 52 billion gallons a year – 1.4 million barrels a day – if an additional $9.5 billion were invested in pipelines, terminals and new plants.

More than 100 countries could turn sugar cane into fuel for the international market, Mr. Jank said. About 20 nations dominate the often shaky international oil market.