Introduction

Since 2017 Brazil has been developing an environmental public policy which supports a reduction in greenhouse gas emissions. For this purpose, the Ministry of Mines and Energy (MME) instituted the RenovaBio programme, a federal and state programme which seeks to identify and review all types of biofuel in the Brazilian energy sector based on their:

  • predictability;
  • environmental sustainability;
  • economic and social development; and
  • compatibility with the current market.

RenovaBio programme

In June 2017 the National Council for Energy Policy (CNPE) introduced Normative Resolution 14/2017, which sets out the strategic guidelines for the RenovaBio programme. The resolution seeks to identify how to decarbonise Brazilian fuel sources and standardise trading rules based on greenhouse emissions.

This measure aims to encourage a sustainable evolution in the automotive industry and expand the market, thereby making it more competitive as a whole. To do so, Brazil must stimulate the production of fuels that are more environmentally efficient and encourage a diversification of energy sources.

On 5 June 2018 the CNPE issued Normative Resolution 5/2018. This new resolution provides annual compulsory goals for reducing greenhouse gas emissions in the commercialisation of fuels. As a target, by the end of 2028, greenhouse gas emissions must be reduced by 10.1%. All of the fuel sectors should have individual reduction goals beginning in 2019.

When defining the carbonisation targets, the government has indicated that it will seek an increasingly sustainable path by providing lower greenhouse gas emissions per unit of energy. In this sense, the RenovaBio programme intends to regulate the certification mechanisms for producing biofuels and decarbonisation credits.

As a consequence, the ethanol and biodiesel markets will increase. This growth and simultaneous reduction in the commercialisation of petroleum fuel are the main goal of the RenovaBio programme.

Other initiatives

The CNPE is also expected to implement a 10-year plan to ensure an 8.6% reduction in the petroleum market as a whole, with a proportional increase in the ethanol and biodiesel industry.

Moreover, the Brazilian government foresees a decrease in external dependence on fuels from 11.5% to around 7%. This is extremely important to Brazil's national sovereignty, as it will ensure that the country has more protection against international variations in oil prices and currency fluctuations.

In this sense, the May 2018 trucker strike demonstrates the country's dependence on fossil fuel sources and the urgent need to implement programmes that promote alternative fuel sources.

Comment

Although Brazil is attempting to reduce greenhouse gas emissions, the target proposed by Brazil in the Paris Agreement on the United Nations Climate Change Conference was a 43% reduction by 2030.

Nevertheless, the government is clearly trying to balance environmental and economic considerations and its initiatives show that it is aligning itself with current international trends. As such, the prognosis is optimistic, and the world will undoubtedly watch as Brazil seeks to meet its targets.

For further information on this topic please contact Camila Mendes Vianna Cardoso or Luna Jaeger at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email (camila@kincaid.com.br or luna.jaeger@kincaid.com.br). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.

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