The Brazilian Agency of Petroleum, Natural Gas, and Biofuels (ANP) approved a revision to ANP Resolution No. 791/2019 on August 8, 2024. This revision introduces a key change to the individual annual emission reduction targets under the RenovaBio program, offering new flexibility for fuel distributors through long-term contracts with Ethanol Trading Companies (ETCs).
Overview of RenovaBio and Emission Reduction Targets
RenovaBio, established under Brazil’s National Biofuels Policy, aims to reduce greenhouse gas (GHG) emissions in the fuel sector. The policy requires fuel distributors to meet compulsory annual targets for GHG emission reductions, calculated in units of Decarbonization Credits (CBIOs). These targets are based on the distributor’s market share of fossil fuel emissions, as outlined in Resolution ANP No. 791/2019.
The original resolution allowed distributors to reduce their targets by entering into long-term contracts with biofuel producers, incentivizing the use of biofuels. However, until now, this provision did not extend to contracts between distributors and ETCs. The latest revision addresses this gap, aligning with the provisions of Law No. 14.592, enacted on May 30, 2023.
Key Changes in the Revised Resolution
The approved revision broadens the scope of target reductions to include long-term contracts between fuel distributors and ETCs. This change is significant, as ETCs are entities controlled by two or more ethanol producers or producer cooperatives, focusing solely on ethanol trading without involving in its production or processing, as per ANP Resolution No. 944/2023.
Under the revised rules, distributors can now reduce their annual emission reduction targets by securing long-term ethanol supply contracts with ETCs. These contracts must be registered with the ANP and comply with specific criteria to be eligible for target reductions. The reductions can be applied incrementally based on the contract’s duration—50% for the first year, 75% for the second year, and 100% from the third year onwards.
This flexibility is expected to encourage more stable and long-term partnerships between distributors and ethanol producers, promoting the use of renewable fuels and supporting Brazil’s broader environmental goals.
Legal and Regulatory Framework
The revision process involved a 45-day public consultation, followed by a public hearing, where stakeholders provided input. After consolidating these contributions, the draft resolution underwent legal review before being approved by the ANP’s board. The new resolution will be published in the Official Gazette, making it legally binding.
These changes reflect ongoing efforts to refine Brazil’s biofuels policy, ensuring it remains responsive to market needs while continuing to drive significant reductions in GHG emissions.
Implications for the Biofuels Market
The inclusion of ETCs in the mechanism for reducing emission targets is expected to have a positive impact on the biofuels market. By providing an additional avenue for target reductions, the revised resolution could increase demand for ethanol, supporting the growth of the ethanol production industry. Furthermore, it enhances the attractiveness of long-term contracts, which can offer price stability and secure supply for both distributors and producers.
The revision aligns with Brazil’s broader energy and environmental strategies, reinforcing the country’s leadership in renewable energy and its commitment to meeting international climate targets.