This law provides the legal framework for biofuels in Paraguay. The goal of the law is to contribute to the sustainable growth of Paraguay and to facilitate the implementation of projects under the Clean Development Mechanism as specified in the Kyoto Protocol. The law declares feedstock production, processing and consumption of biofuels a matter of national interest.
The law defines the minimum requirements that must be fulfilled by biofuels to be considered by the Ministry of Industry and Commerce (MIC) under this law.
The minimum criteria are:
- The blending requirement was set at 20% (by volume) of bioethanol which was later changed to 24% (by volume).
- The biodiesel mandate was set at 1% maximum per volume for biofuels.
- The mandate must be fulfilled with local biodiesel unless there is an official declared shortage of biofuel.
- Biofuel producers, obtain tax benefits as presented in laws 60/90 and 2421/04. These benefits include:
- Reduced VAT and exemption from import duties on equipment.
- The government is prohibited from levying any fees to biofuel producers for measurements, production, distribution, sale or other concept.
The Decree 12240 of 2008 regulated the reduced VAT, exempted flexi-fuel cars from import duties and exempted biofuels from an internal fuel tax.
Decree 3667 of 2010, superseded Decree 12240 and eliminated the internal fuel tax exemption. Decree 10761 further reduced VAT for bioethanol.
Initially, the biofuel promotion law exempted any biofuel production from environmental impact assessment, but was later removed by the law 3163 which required the Ministry of Industry and Commerce (MIC) to certify with the usual regulation.