The pros and cons of ethanol production are set to dominate an energy summit of eight Latin American nations which has got under way in Venezuela.
Presidents Chavez and Lula were all smiles but differences remain
Venezuelan President Hugo Chavez is at odds with Brazilian counterpart Luiz Inacio Lula da Silva over the scale of ethanol output in developing countries.
Venezuela is the region's only member of the oil-producers' cartel Opec and Mr Chavez opposes the use of ethanol.
Brazil recently signed an alliance with the US to promote ethanol production.
'South American homeland'
President Lula has rejected criticism from President Chavez and others that the use of ethanol as a biofuel would use up valuable arable land and increase food prices.
Brazil is a pioneer in the use of ethanol made from sugar cane to power cars.
"All South American countries and Africa can easily produce oil seeds for biodiesel, sugar cane for ethanol and food at the same time," Mr Lula said on his weekly radio programme.
Welcoming the leaders to Venezuela, Mr Chavez said increased economic co-operation was needed as a counterweight to US power in the region.
"We are above all South Americans," he said. "We should put all efforts into creating the great homeland that is South America."
Also on the agenda for the two-day meeting are a proposed continental bank, to rival institutions like the International Monetary Fund, and plans to build a 5,000-mile natural gas pipeline between Venezuela and Colombia.
Venezuelan Energy Minister Rafael Ramirez said the plan would involve investing $10m (£5m) on improving the quality of life in villages along the route of the pipeline.
The gathering is taking place on the island of Margarita.