Biodiesel Program

Brazil: Biodiesel Program

Drawing on the exerience gained with the Proalcool program, Brazil has instituted a biofuels program as well. This program promotes the manufacture of biodiesel, a biodegradable fuel derived from animal fats and vegitable oils, to be a total or partial substitute for petroleum diesel in standard diesel engines for vehicles or for motors for power or heat generation. A 2% biodiesel blend can be used without the need for any alteration and still maintaining the validity of the factory warranty. The regulatory flexability of the program allows participation by large argobusiness corporations as well as small family farms and businesses. The government is supporting this “Social Fuel” through a differentiated tax regime - in order to qualify for the tax credit, an industrial producer must recieve the seal of “Social Fuel” by purchacing feedstock from family farms and entering an agreement with them establishing income levels, and guaranteeing technical assistance and training.

Date Implemented: 2004

Status: In Force; Government Initiative

Funding Information: In 2004-2005, Brazil’s Ministry of Science and Technology (MCT) was allocated a budget of US$5.7 million to invest in research on biodiesel and industrial processes. The National Economic and Social Development Bank (BNDES) is supporting the program - offering, for example, a 25% extension of the total loan payoff period for the purchase of machinery that uses at least 20% biodiesel fuel.

References: “Biodiesel: the New Fuel from Brazil”, Brazilian government; Brazzil Magazine