Progress on new biofuel blending mandates and the definition of key parameters for the functioning of the biomethane market are expected to be hot topics in Brazil's energy transition debate after the Carnaval holiday next week.
These issues, addressed in the fuel of the future law, are under discussion within the executive branch of the government, which is expected to move forward with the law's regulation in March. They are also among the priority topics of the new biofuel coalition — a recent initiative launched by the congressional caucuses for agriculture, biodiesel, ethanol and the green economy, aimed at bringing together relevant political and economic forces in the country's energy transition debate.
Congressman Arnaldo Jardim, chosen to coordinate the coalition, told Argus that Brazil is ready to move forward on technical feasibility studies to increase the blend of anhydrous ethanol in gasoline to 35pc from 30pc.
He also advocates for raising the biodiesel blend to 16pc from 15pc "as quickly as possible."
"Our installed production is operating with idle capacity," he said. "In other words, we have the ability to produce and have an adequate price level."
The congressman served as rapporteur of the bill that resulted in the fuel of the future law, one of the key regulatory frameworks for Brazil's sustainable development agenda. He chairs the lower house's energy transition committee and as director for green economy of the competitive Brazil parliamentary caucus.
Biomethane, CGOB decisions soon
National energy policy council CNPE is expected to decide in the coming weeks on the biomethane blend into natural gas, as well as on the characteristics of the origin certificate for biomethane (CGOB). In Jardim's view, discussions on the environmental attribute and the blending target are well established in this case, but the government still hesitates on defining how CGOB will interact with international instruments.
The lawmaker argues that Brazil should pursue bilateral agreements with other countries to ensure international recognition of the CGOB, something many market participants say is essential to expand consumer markets.
Another sensitive point in the biomethane debate involves a potential risk of double counting the environmental attribute in cases where both CGOB certificates and decarbonization credits (Cbios) are issued simultaneously. But Jardim disagrees, arguing that the two instruments have "very distinct characteristics".
For Jardim, the recent experience with the national biofuels policy Renovabio and the creation of the Cbio may also help consolidate the new rules under discussion for the biomethane market. The government's recent victories against legal challenges to the program give momentum to the energy transition agenda, he said.
"[Renovabio] is one of the most interesting international experiences in terms of green economy," he said. "Its experience was heavily incorporated into the design of the CGOB. I think these are instruments that are already being created based on the maturity of the Renovabio experience."
The legal framework built by recent regulations places Brazil at the forefront of biofuels, Jardim said. The next step is to move forward with a concrete proposal for the energy transition roadmap, with initiatives to gradually reduce dependence on fossil fuels and advance decarbonization, he said.
President Luiz Inacio Lula da Silva on 8 December requested that his government draft a resolution to creating a roadmap to phase-out fossil fuels. The draft, which was due in early February, is awaiting CNPE approval, according to the government.
