Fuel Distributors Will Have Extended Deadlines to Prove CBIO Targets Under RenovaBio Following Decree Approved by Bolsonaro

President Jair Bolsonaro Has Just Approved a Decree Recommended by the MME That Establishes Longer Deadlines for Fuel Distributors to Prove Their CBIO Goals from the RenovaBio Program and Guarantees a Longer Annual Grace Period.

During last Friday, (07/22), the president of the republic Jair Bolsonaro approved decree 11.141/202, which extends the deadlines for fuel distributors to prove their individual targets for the purchase of decarbonization credits (CBIOs) for the RenovaBio program. This is another move by the Federal Government to seek a reduction in fuel prices, amidst accusations from distribution companies regarding the supply of biofuels in Brazil.

Bolsonaro Approves Decree That Flexibilizes Deadlines for Proving the Purchase of CBIOs by Fuel Distributors of the RenovaBio Project in Brazil

The Federal Government has just taken another step towards gaining popular approval in an election year, with the approval of the decree that flexibilizes the deadlines for proving the purchase of CBIOs by fuel distributors under the RenovaBio project. President Jair Bolsonaro signed the approval of the document and, with that, seeks to reduce fuel prices in Brazil, attracting positive attention from the public towards his administration. 

Now, companies will have until September 30, 2023 — no longer the end of this year — to prove the purchase of CBIOs for 2022, a highly favorable deadline for fuel distributors, who will be able to catch up on their individual goals of the RenovaBio project by the end of the proof period.

In addition, the decree signed by President Jair Bolsonaro also alters the annual deadlines for this proof. Thus, the proof of annual targets must occur by March 31 of the following year and fuel distributors will have an additional three-month grace period for proving their targets.

The extension of the final deadlines for proving the goals of the RenovaBio program by fuel distributors in Brazil was requested by the project’s committee, coordinated by the Ministry of Mines and Energy, and was accepted by the president.

The main reason behind the suggestion for the extension of deadlines was a possible speculative move in the negotiation of CBIOs, as distributors accused biofuel producers of withholding credits, thus causing inflation in the certificates.

CBIO Prices Are Significantly Elevated and Approval of the Decree to Extend Deadlines Aims to Mitigate Impacts of the Current Scenario

The Ministry of Mines and Energy commented on the unstable scenario in the fuel sector in Brazil and stated that the approval of the decree corresponds with the “current state of emergency in Brazil, resulting from the extraordinary and unpredictable rise in oil prices, fuels, and their derivatives and the social impacts thereof. The stipulated date… aims to enhance the effective fulfillment of the main objective of the public policy: to promote the reduction of the average carbon intensity of the fuel matrix by expanding the production and use of biofuels in the transportation sector.”

Furthermore, CBIOs have also shown a significant price increase, ending June at R$ 202, double the value recorded at the beginning of March, when the decarbonization credit had already hit a record high, in nominal value.

And, with the recommendation of the decree for the flexibilization of deadlines for proving the goals of the RenovaBio program, the price plummeted and recently approached R$ 100, and although Bolsonaro’s decree goes against the terms of decree no. 9.888/2019, which deals with the definitions of the goals of the National Biofuels Policy, the decision will fall to the National Energy Policy Council (CNPE), and it will bring favorable views for the president’s term.