Brazil’s Chamber of Deputies approves ‘fuels of the future’ bill

Photo: Mario Agra, Câmara dos Deputados

Brazil’s Chamber of Deputies approved the “fuels of the future” bill in mid-March, which creates national programs for renewable diesel, sustainable aviation fuel and biomethane, in addition to increasing the mixture of ethanol and biodiesel into gasoline and diesel, respectively.  

The proposal will now be sent to the Senate.

For biodiesel, the legislation would raise the required mixture into diesel fuel by 1 percent per year until reaching 20 percent (B20) in March 2030.

The current biodiesel percentage required by law is 14 percent.

The addition must consider the total volume, however, and it will be up to the National Energy Policy Council (CNPE) to evaluate the feasibility of the targets for increasing the mixture, reducing or increasing the biodiesel mixture by up to 2 percentage points.

From 2031, the council will be able to increase the mixture, which should be between 13 percent and 25 percent.

A regulation will define a methodology for adopting a system for tracking diesel fuels in all links of the production chain in order to ensure quality.

The voluntary addition of biodiesel in a percentage higher than that set will be permitted for certain users including rail, marine vessels, captive fleets, mining, power generation and agriculture.

Another aspect of the legislation is that National Petroleum, Natural Gas and Biofuels Agency (ANP) will have the power to regulate and supervise synthetic fuels and the geological storage of carbon dioxide, as well as contracting the activity.

The project also authorizes Petrobras to act in the movement and storage of carbon dioxide, energy transition and low-carbon economy activities.

As for the National Green Diesel Program (PNDV), the CNPE will set each year until 2037 the minimum quantity of renewable diesel to be added to fossil diesel.

This additional amount must be at least 3 percent by volume and will take into account sales throughout Brazil.

To define this minimum volume, the council must analyze the conditions for supplying renewable diesel, including the availability of raw materials, capacity and location of production; the impact of mandatory minimum participation on the price to the final consumer; and the competitiveness in international markets of renewable diesel produced in Brazil.

As the mixture, in terms of volume, must be achieved nationally, the ANP will define the addition percentages for each state and federal district, which may be different.

The project’s rapporteur, deputy Arnaldo Jardim, defended the approval of the proposal.

“It is a strategic project for Brazil to consolidate its agricultural vocation, to deepen the achievement of a clean, renewable and unparalleled energy matrix in the world and for us to have an unparalleled biofuel matrix as well,” he stated.

According to Jardim, biofuels will create a formidable investment chain for different sectors of the Brazilian economy.

“They are a passport for Brazil to be one of the world’s vanguards in the new, low-carbon economy,” he said.

Jardim also defended the gradual addition of sustainable aviation fuel (SAF) to aviation kerosene.

According to the rapporteur, the expectation is that Brazil will be an exporter of SAF.

“I am very enthusiastic, not only about the environmental issue, but about the opportunity to be exporters,” he said. “Brazil will not only supply, but could be a major production platform for [SAF].”

Jardim highlighted that this change will not greatly impact the increase in the price of airline tickets.

Several deputies took to the stand to defend the approval of the proposal, citing the energy transition, environmental protection and decarbonization of the economy.

There were parliamentarians, however, who viewed the changes with trepidation.

According to the government leader, deputy José Guimarães (PT-CE), the text is the result of negotiations between party leaders and the government and represents a great achievement for the country.

“It gives positive signals to the world and Brazil that this Congress and President Lula are working hard for the energy transition and for us to think about measures to decarbonize the Brazilian economy and consolidate the green economy”, he stated.

Rep. Hugo Leal, however, said that the increase in the quantity of biodiesel could be a “wolf in sheep’s clothing” and harm the transport of goods in the country.

“Biodiesel leaves sludge, waste that compromises the truck activity,” Leal said. “We have to be careful. A project that can be interesting, with appeal, can make an impact on people’s daily lives.”

According to deputy Alceu Moreira, the risk of damage to engines by biodiesel is not based on technical reports.

“It does not cause any problems in the engines, according to a technical report from Scania [truck manufacturer],” Moreira said. “This is a socially just, environmentally laudable policy, it is carbon sequestration.”

For deputy Gilson Marques, the project will generate inflation by increasing fuel prices under the banner of protecting the environment.

“We cannot force consumers, the majority of whom are poor, to finance products that they voluntarily do not want,” Marques said. “If the idea was good, it wouldn’t be forced.”

Rep. Bohn Gass contested the talk of a possible price increase.

“I hear prices are going to go up,” Gass said. “But what price are we paying for the pollution we have caused? There is no money that can pay for the destruction of the environment.”