PROBIODIESEL - Brazilian Program of Technological Development for Biodiesel

Brazil: PROBIODIESEL - Brazilian Program of Technological Development for Biodiesel

The National Association of the Automotive Vehicles Manufacturers (ANFAVEA) has committed itself to maintaining the diesel engines? warranties even with the addition of 2% biodiesel to mineral diesel, which will become compulsory on the 13th of January 2008. With such a measure, the government intends to create a biodiesel demand of 800 million liters/year. From 2012 on, the addition grows up to 5%. The Program also envisions exporting the biodiesel, depending on production levels and on the growth and consolidation of an international market.The government is developing a criteria for the implantation of social incentive instruments. The idea is to encourage the cultivation of castor beans and palm by family farmers and in the less developed regions of the country. Indeed, the government will confer social certificates on producers who encourage the participation of family farmers in the biofuel production process. With these social certificates, producers will be eligible for benefits such as tax incentives. Moreover, the Brazilian government established in August 2005 a resolution through the National Council for Energy Policy (CNPE) determining that the biodiesel production will be bought by the National Agency of Oil, Natural Gas and Biofuels (ANP). One of these measures is a 25% extension in the total loan payoff period for the purchase of machinery that uses at least 20% biodiesel fuel. The Biodiesel Program intends therefore not only to add a new fuel to the country’s energy matrix, but also to do that on the basis of self-sustainable projects that take into account price, quality, supply reliability and social inclusion. Besides its use for transport, biodiesel can also be used to generate electricity in remote communities, which represents a key opportunity for biomass use. Measures of government to induce the formation of the market: 1) creation of the regulatory landmark (Law of January/2005), creating a compulsory demand of at least 800 million liters/ year; 2) Establishment of lower cost financing lines through the National Economic and Social Development Bank (BNDES). 3) accomplishment of auction of ANP 4) Acquisition of 70 million liters in 2006 of biodiesel produced by familiar agriculture (prices within R$ 1,92 and 1,80) aiming to establish a market event before the 2% compulsory demand.

Date Implemented: 2004

Status: In Force; Government Initiative

Funding Information: The Brazilian government planned to spend US$ 2.6 mm in 2003.

Target: The target is adding 5% of biodiesel in all supply of diesel over the country, from 2005 on, as well as the alcohol mixed to gasoline today. Avoids emissions of around 2.5 tonnes CO2/m3 of biodiesel used.