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Brazil’s biofuels reform bill clears congress

29 Nov 2017, 5.14 pm GMT

Brazil's biofuels reform bill clears congress

Sao Paulo, 29 November (Argus) — Brazil's lower house of congress approved sweeping biofuels legislation that is expected to lead to a doubling of ethanol production by 2030.

The ground-breaking bill, the biggest stimulus package for Brazilian biofuels since the "Pro-Alcool" program was launched in the mid-1970s, was widely debated before lawmakers gave it fast-track status last week to avoid lengthy debates in committee.

The bill approved today already went through weeks of public hearings in the first quarter of this year and was then approved by the national energy policy council (CNPE) in June.

The legislation will establish a system of carbon credits (CBios) that will be issued to biofuels producers and traded on the local stock exchange. Some economists have questioned the practicality of creating such a system from scratch when the government could simply raise the Cide fuel tax, which would boost revenue and create value for biofuels.

According to the head of Brazil's biodiesel producers' association (Ubrabio), Donizete Tokarski, the bill will enhance the value of biofuels without using subsidies.

The bill is expected to lower carbon emissions in the transport sector, helping Brazil to meet its goal of reducing CO2 emissions by 43pc by 2030, as it pledged at global climate talks in Paris in November 2015.

Shortly before the vote in the lower house, the bill's rapporteur in congress, deputy Joao Fernando Coutinho, decided to alter the original draft to remove requirements that called for aggressive long-term mandatory blend increases for ethanol and biodiesel.

Originally, the bill had stipulated that the mandatory biodiesel blend would rise to 15pc by January 2022 and to 20pc by 2030. The current 8pc mandate will increase to 10pc on 1 March 2018. The legislation had also previously included a schedule increasing the ethanol mandate to 30pc by 2022 and to 40pc by 2030. The mandatory ethanol blend is currently 27pc.

The ambitious bill is expected to spark investments in biofuels capacity upward of $40bn, and also stipulates blends for bio jet fuel and targets for biogas.

Once the bill passes the senate and is signed into law by president Michel Temer, it will take effect in 180 days.

Brazilian state-controlled oil company Petrobras issued a statement supporting the initiative, calling it important for the development of biofuels production in Brazil and for the reduction of emissions.

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