ANNOUNCEMENT 25 Sep 2014

In September 2014, the government of Brazil announced a change in the required local inputs to serve domestic customers.

NUMBER OF INTERVENTIONS

1

  • 0 harmful
  • 1 neutral
  • 0 liberalising

SOURCE



Law no. 13.033 of 24 September 2014, published in the Official Gazette of 25 September 2014: http://www.planalto.gov.br/ccivil_03/_Ato2011-2014/2014/Lei/L13033.htm

Avulso da mat?ria of 6 August 2014, see EMI no. 00015/2014 on pp. 7-9: http://www25.senado.leg.br/web/atividade/materias/-/materia/117939


Law 13263 of 23 March 2016: http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2016/lei/L13263.htm

Ministry of Mines and Energy. "Percentual obrigatório de biodiesel passa para 10%": http://www.mme.gov.br/web/guest/pagina-inicial/outras-noticas/-/asset_publisher/32hLrOzMKwWb/content/percentual-obrigatorio-de-biodiesel-passa-para-10-

Inception date: 25 Sep 2014 | Removal date: open ended
Still in force

Local sourcing

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.

Update
On 23 March 2016, the Brazilian National Congress adopted Law 13263 increasing the mandatory biodiesel blending in the composition of diesel fuel as it follows:
  • to 8% within twelve months after the date of enactment of this Law;
  • to 9% up to twenty-four months after the date of enactment of this Law; and
  • to 10% up to thirty-six months after the date of enactment of this Law.

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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