Cane, Carbon, and a Little Cash: Brazil's RenovaBio Is Up and Running

Announced at the end of 2017, Brazil’s RenovaBio program became operational in 2020. The first months saw operational delays affecting registration, sales, and trading plus a dispute about the taxation of certificates of emissions reductions (CBios). However, the real shock in 2020 was the slump in fuel demand associated with the pandemic, which prompted a substantial revision in the program’s targets.

Report Summary

Despite the challenging circumstances, the market for CBios functioned well once revised targets were published. “2020 did, however, highlight some bottlenecks to expansion of CBio emissions by ethanol and biofuel producers, and addressing these issues will be a priority in the short and medium term, in order for the program to meet more demanding targets in the future,” according to Andy Duff, Global Strategist – Sugar.

For 2021 and beyond, there are signs of cautious optimism on the part of biofuel producers. “2020 provided a valuable learning experience for all parties involved in the new market for CBios. Moreover, the learning may be applicable far beyond RenovaBio’s participants in the fuel sector.” The tools and methodology developed for the program could eventually serve as examples for the development of wider markets for carbon that could benefit other agricultural and land-based activities in Brazil.