Brazil’s ethanol industry rebounds for Q3

 

Brazil lowered RenovaBio’s 2020 target 50% due to the impact of COVID-19 on fuel markets

 

By Gabriel Miranda, EcoEngineers

 

Brazil’s ethanol industry had a great Q3. On September 10, Brazil’s Ministry of Mines and Energy released the revised decarbonization credit (CBIO) target for 2020 and 2021 under RenovaBio, Brazil’s national biofuel policy. The revised target for 2020 is 50% lower than the previous target due the impact of COVID-19 on fuel markets, and the 2021 target had a 41% reduction compared to initial goals set for the program.

The effect of the target revision was immediate. The volume of transactions skyrocketed after the new target was published, and the volume of transactions in September surpassed the accumulated transactions from the previous four months. The CBIO prices followed the same growth trend. Both statistics can be seen in Figure 1.

Renovabio Firgure 1

Figure 1

With this growth trend, UNICA, the Brazilian sugarcane industry association, believes there will be enough CBIOs to meet 2019 and 2020 emission targets by the beginning of December.

The Brazilian import quota renewal also garnered some attention in September. U.S. ethanol’s 750-million liter tax-free quota was about to expire. After tense negotiations, a 90-day extension of the 2019 import quota was granted by Brazilian authorities.

Although a final resolution has not been reached, the U.S. Grains Council, Growth Energy, and the Renewable Fuels Association are actively seeking a favorable outcome for the U.S. ethanol industry.

At EcoEngineers, we believe global ethanol trade will increase over time as more countries incorporate clean fuel policies. Our commentary on the RenovaBio program requirements, provides an overview of this opportunity for U.S. ethanol. We are positioned to help U.S. ethanol producers harness carbon credits from the RenovaBio program.

EcoEngineers ofrece un enfoque exclusivo e integral, diseñado para el emergente mercado bajo en carbono. Evaluamos los recursos disponibles y las necesidades de cada cliente en cada área, y les ofrecemos soluciones personalizadas para que logren buenos resultados en sus proyectos. Nuestro enfoque ha evolucionado a través de la experiencia que hemos adquirido con mucho esfuerzo en consultoría en energía renovable, gestión de cumplimiento normativo y auditoría. Según nuestra experiencia, en todos los proyectos de energía limpia y los programas de sostenibilidad que obtienen grandes resultados se invierte en las siguientes seis áreas: 1) EcoUniversity , 2) Participación Regulatoria, 3) Análisis del Ciclo de Vida del carbono, 4) Consultoría en Desarrollo de Activos, 5) Gestión de Cumplimiento Normativoy 6) Auditoría.

Gabriel Miranda

Gabriel Miranda is a Regulatory Consultant for EcoEngineers, specializing in carbon modeling and RenovaBio. Miranda holds a master’s degree in agricultural engineering from Purdue University and bachelor’s degree in industrial engineering from Universidade Federal do Rio Grande do Norte in Brazil. He is fluent in English and Portuguese. You can reach him at gmiranda@eceoengineers.us or 515.985.1287.

 

 


 

References

Bonanomi, A. M. (2020, October 1). UNICA – RenovaBio chega a 10 milhões de CBIOs emitidos. Retrieved from https://unica.com.br/noticias/10-milhoes-de-cbios-emitidos/

Bonanomi, A. M. (2020, October 1). UNICA – RenovaBio chega a 10 milhões de CBIOs emitidos. Retrieved from https://unica.com.br/noticias/10-milhoes-de-cbios-emitidos/

Ramos, C. S. (2020, September 16). Venda de CBios cresce após governo oficializar metas do RenovaBio. Retrieved from https://valorinveste.globo.com/google/amp/mercados/renda-variavel/empresas/noticia/2020/09/16/comercializao-de-cbios-cresce-aps-oficializao-de-metas-do-renovabio-pelo-governo.ghtml