BRAZIL: Government will fine fuel distributors not complying with RenovaBio's goals

Published: 03/12/2018, 3:55:54 PM

Brazilian distributors of fossil fuels, such as gasoline and diesel, will have to pay up to BRL50 million (US$15.3 million) in fines if they don't offset greenhouse gas emissions, RenovaBio's regulation draft shows, according to Brazil's Broadcast Agro news service.

RenovaBio, a program approved by the Brazilian government last year to incentivize consumption of ethanol and other biofuels, reducing greenhouse gas emissions, is expected to be regulated this week by a decree to be signed by Brazil's president Michel Temer.

The current version of the document regulating RenovaBio excludes oil producers, such as state-owned Petrobras, from the obligation of complying with greenhouse gas emission targets, according to sources in the sector.

Greenhouse gas emission targets are expected to be defined annually by the federal government. These targets will be quantified in decarbonization credits (CBIOs). Each CBIO will correspond to one tonne of carbon dioxide withdrawn from the atmosphere.

Producers of biofuels, such as ethanol, biodiesel and bio-kerosene will sell CBIOs. Fuel distributors will have to acquire them to achieve individual greenhouse gas reduction targets, corresponding to the share of each company in the fossil fuel market.

Failure to comply with emission reduction targets will be converted into a fine imposed by the National Petroleum, Natural Gas and Biofuels Agency (ANP). The fine will be equivalent to the value of the CBIOs not acquired by the distributors, but not be less than BRL100,000 (US$30,660) or higher than BRL50 million.

The fine cannot exceed 5% of the distributor's annual revenue.

Fuel distributors may also reduce individual emission targets through contracts to supply or long-term contracts to acquire biofuels.

Brazil's National Energy Policy Council will determine by June 15, 2018, the general goals for greenhouse gas emissions until Dec. 31, 2028, following recommendations of Brazil's Inter-ministerial Committee on Climate Change (CIM).

But the individual targets for fuel distributors will be announced only next year, by July 1, and be effective from Dec. 24, 2019.

The Brazilian government expects that the financial resources from the CBIOs will be invested in increasing production of biofuels.

Brazil expects to reduce greenhouse gas emissions by 37%  by 2030, in relation to 2015, according to a goal established during the United Nations Conference on Climate Change (COP21) in Paris in 2015.