| Description |
Rules for introducing biodiesel into the Brazilian fuel market were established in November 2004. The new fuel was authorized for commercial use, for addition to mineral diesel oil in the ratio of 2% by volume (B2). 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 compulsory from 13th of January 2008 on. 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.With this goal in mind, 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 farmer and in the less developed regions of the country, namely the north and northeast regions. 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 certificated biodiesel production will be bought by the National Agency of Oil, Natural Gas and Biofuels (ANP). The National Economic and Social Development Bank (BNDES) is providing financial support and investments in biodiesel. 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.Problems of the Biodiesel: 1) technology is neither well developed nor spread out; 2) Consumers and deliverers are not sure of product quality; 3) The 2% will be compulsory only in January of 2008; 5% in jan/2013 4) deliverers had still not firmed long term contracts producers 5) the viable minimum size of a biodiesel plant has high capital costs, which makes investment difficult for small scale producers. 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 BNDES 3) accomplishment of auction of ANP3) 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 |
