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Brazil ushers in sweeping biofuel reforms

27 Dec 2017 19:44 GMT
Brazil ushers in sweeping biofuel reforms

Sao Paulo, 27 December (Argus) — Brazil's president Michel Temer signed new biofuels legislation aimed at expanding the use of ethanol and biodiesel while helping the country reach its greenhouse gas emissions reduction goals.

Temer vetoed six items of the bill that reached his desk after passing the lower house and the senate overwhelmingly in the past month.

Scrapped from the law is a provision that would have required the government to set mandatory targets for GHG emissions reductions through the use of biofuels that would weigh the positive benefit on air quality, health and fuel security. The original version also said that the targets should include the positive impact of biofuels on logistics and fuel transport infrastructure, trade balance, job creation, income and investment.

Temer justified this veto by arguing that including factors such as the trade balance and fuel transport infrastructure could undermine the goals of the bill.

He also vetoed a provision that would have reduced fuel distributors' requirements for lowering carbon emissions if they purchased carbon credit certificates from biofuels producers in the Amazon, northeast or center-west regions of the country. The administration said that the clause would have limited competition, handicapping Brazil's current ethanol and biodiesel producers, many of which are located in the center-south.

Temer also vetoed a clause that would have benefited distributors for purchasing fossil fuels from local producers, which the administration said could create barriers for fuel imports.

The new legislation establishes a system of carbon credits (CBios) that will be issued to biofuels producers and traded on the local stock exchange, boosting revenue for ethanol producers.

The bill originally stipulated aggressive blend hikes, but these measures were removed from the draft before it was taken to a vote in the lower house of congress in November.

Brazil's main sugar and ethanol producers' association Unica estimates that Renovabio could stimulate as much as $40bn in new investment in the country's ethanol production capacity by 2030.