Brazil Promotes a Freer Global Biofuels Market

by Mario Osava (Inter Press Service News Agency) Holding this year’s presidency of the Group of 20 (G20) large industrial and emerging economies is allowing Brazil to push forward the dream of creating a global biofuels market without the current trade barriers.

Brazil is trying, at least since the beginning of this century, to free up global trade in ethanol, but so far without success. The scenario is more favourable now, with the worsening of the climate crisis and other countries joining the production and consumption of bioenergy.

Presiding the G20 this year, Brazil is in charge of the issues and projects to be discussed, creating working groups and promoting agreements, which will crystallise at the group’s annual summit to be held on 18-19 November in Rio de Janeiro.

Luiz Inácio Lula da Silva’s government has promoted social issues and included biofuels as a central aspect of the energy transition. Several of its proposals were approved in sectoral working groups or meetings of ministers, experts and civil society throughout 2024.

“The current context, driven by Brazil’s more active leadership in the G20 and regulatory progress on alternative fuels, offers a more optimistic outlook for the country’s success in expanding its biofuels market,” summarised Rafaela Guedes, senior fellow at the Brazilian Centre for International Relations (Cebri).

“The focus is no longer limited to ethanol,” she said in an interview with IPS in Rio de Janeiro. New products, such as sustainable aviation fuel (SAF) and bio-bunker for maritime transport, open up multiple markets and reduce the risk of dominant suppliers.

These are joined by biodiesel and green diesel, both derived from animal and vegetable inputs but different in their production process and properties, the latter being chemically identical to fossil diesel.

Then there is ethanol, already produced on a large scale, and biomethane, equivalent to natural gas and the product of refining biogas extracted from animal manure, and agricultural, urban and industrial waste.

All these products gained new regulations and incentives in Brazil through the so-called Future Fuels Law, passed by the legislative National Congress in September and effective from 8 October 2024.

The new legislation should attract investment and reduce trade barriers by defining rules and standards in a country that leads biofuel production and presents itself as “a supplier and also a strategic partner for innovation and energy security”, said Guedes, an economist specialising in energy transition.

But now India, previously reluctant, has joined ethanol production, as have other countries, since its consumption, blended with gasoline, has spread to more than 70 countries. Investment in biofuels has increased in order to reduce greenhouse gas emissions.

“This diversification of producers reduces the possibility of monopolies” and thus the fears of dependency, according to Guedes, who says growth in the production capacity of emerging countries and the consequent expansion of global supply are favourable factors for a freer global market for biofuels.

In Brazil, Raizen, a large sugar and bioenergy producer with the participation of the British oil consortium Shell, has been operating its first 2G ethanol plants since 2015 and estimates that this technology can produce 50% more ethanol than a similar area planted with sugarcane.

Guedes also adds that the International Energy Agency has defined sustainable agricultural practices, such as crop-livestock-forest integration, which is expanding in Brazil, traceability in production chains and criteria for defining sustainable energy, which strengthen confidence in biofuels that benefit the climate.

These are policies that promote so-called low-carbon agriculture, preserve soil quality and ensure that Brazil’s agricultural frontiers can expand sustainably and without affecting food security, she said.

He (Pedro de Camargo Neto, a cattle rancher) criticizes the intention of Petrobras, the national oil company, to drill near the mouth of the Amazon River in search of oil deposits.

Large oil deposits are believed to exist in the Equatorial Margin in northern Brazil, an extension of the sea basin that already produces oil in Guyana and Suriname.

New and abundant stocks would make oil and gas cheaper, to the detriment of biofuels, argued Camargo, who has previously chaired the Brazilian Rural Society, a key farmers’ group, and held top positions in the agriculture ministry.

This is because it promotes a free and global market for biofuels, for economic and environmental reasons, and at the same time wants to become an oil producer, to the detriment of the climate and its own strategy.

The country should advocate international measures to make fossil fuels more expensive.

Oil exploration near the mouth of the Amazon is blocked by demands from the Brazilian Institute of Environment and Renewable Natural Resources, which considered Petrobras’ evaluations and guarantees insufficient.

An authorisation or denial of exploratory drilling will be ‘technical’, based on local environmental impacts, according to Environment Minister Marina Silva.

This is a mistake, according to Camargo, who calls for a broader assessment, not because of the local consequences, but due to the global climatic effects, i.e. greenhouse gas emissions, and because of the economic strategy of prioritising biofuels, which also favours the country’s foreign policy. READ MORE