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On 25 September 2014, Brazil published Law no. 13033 which increases the required amount of biodiesel in diesel blends. The threshold was lifted from 5 to 6 percent from 1 July 2014 and to 7 percent from 1 November 2014 on. The policy is based on Provisional Measure no. 647 of 28 May 2014 which was then transformed into Law no. 13.033 on 24 September 2014.
The trade-distorting nature of this measure is embedded in a national preference clause. Article 3 of Law no. 13.033 states that the biodiesel used in the blend should preferably be produced with commodities of Brazilian origin. In order to enforce this, the executive power shall establish mechanisms to ensure the preferential treatment of those commodities.
Besides the national content clause, the policy also aims at substituting Petroleum imports with biodiesel from national production. The law does not explicitly state that, but the ministerial arguments do so. The Exposition of Motives (EMI) no. 00015/2014 states that currently the national demand for diesel is met by imports. The EMI argues that each percent increase in biofuel could stop the importation of approximately 600 million liters of diesel a year, representing nearly USD 500 million.
On December 2017, the National Energy Policy Council of Brazil set a new starting date for the increase to 10% of the biodiesel blend. The new date was set on April 1, 2018.
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