Brazil’s biofuel programmes viewed <strong>from</strong> <strong>the</strong> <strong>WEL</strong>-nexus perspective Establishment of several dedicated policies to push ethanol-based car productionIn <strong>the</strong> case of PNPB, <strong>the</strong> intervention was much less incisive due to <strong>the</strong> different politicalcontext in which <strong>the</strong> programme was created and implemented, i.e. under a democratic regimera<strong>the</strong>r than a military dictatorship. The industrial bio-diesel producers and importers benefit<strong>from</strong> tax breaks as well as <strong>from</strong> <strong>the</strong> ability to participate in public auctions administered by <strong>the</strong>ANP through <strong>the</strong> Social Fuel Stamp. Tax reductions depend on <strong>the</strong> region where <strong>the</strong> rawmaterial is produced, <strong>the</strong> type of raw material and <strong>the</strong> kind of farm involved in <strong>the</strong> producingit.PNPB also provides research incentives for projects by promoting technology developmentthroughout <strong>the</strong> production chain and motivating scientific research networks (Hall et al.,2009).3.2 Action modelThe action model consists of a systematic plan for arranging institutions, resources, legalframeworks, and support mechanisms to reach a target population and deliver services (Linnéret al., 2010).Target populationThe principal target groups in <strong>the</strong> case of Proalcool were <strong>the</strong> sugar cane industry, carmanufacturers, public companies (e.g. Petrobras) and existing government institutions(including research institutions, financial institutions such as Banco do Brasil and <strong>the</strong> <strong>Brazilian</strong>National Development Bank (BNDES)), academia, and car owners. The target groups related toPNPB were also public companies, financial institutions and academia. The industries targetedby PNPB were basically <strong>the</strong> agribusiness sector, with special attention to family farmers, atleast at <strong>the</strong> outset. These groups were expected to act in ways that would contribute to <strong>the</strong>outcomes.Implementing organisationsAny intervention relies on one or several organisations providing resources, coordinatingactivities as well as recruiting, training and supervising staff (Linnér et al., 2010). In <strong>the</strong>case of Proalcool, a National Alcohol Commission (CNAL) was created to develop andcoordinate <strong>the</strong> programme. O<strong>the</strong>r organisations had a very important role such as Banco doBrasil, BNDES, Petrobras, among o<strong>the</strong>r state companies and institutions. Following <strong>the</strong>example of Proalcool, PNPB created an Inter-Ministry Executive Commission (CEIB) comprising13 ministries and coordinated by <strong>the</strong> Civil House. There is also a Managerial Group responsiblefor conducting actions related to <strong>the</strong> operation and administration of <strong>the</strong> programme. TheCNPE, which decides <strong>the</strong> blend bio-diesel/diesel, and <strong>the</strong> ANP, which is responsible forconducting <strong>the</strong> auctions for <strong>the</strong> bio-diesel supply, are also important organisations in <strong>the</strong>implementation of PNPB.Of all <strong>the</strong> institutions involved in <strong>the</strong> implementation of <strong>the</strong> two programmes, special attentionshould be given to Petrobras, which was engaged in various efforts to support both Proalcooland PNPB.ContextAs already mentioned, Proalcool was primarily a response to <strong>the</strong> oil crises in <strong>the</strong> middle andlate 1970s, when oil prices reached a record high, and fuel demand in Brazil was increasing as<strong>the</strong> economy was growing rapidly.During that time, sugar cane activities, one of <strong>the</strong> country’s main economic activities, were incrisis due to <strong>the</strong> low sugar prices on <strong>the</strong> international market. These factors led groups withstrong interests in <strong>the</strong>se activities to pressure <strong>the</strong> government for alternatives to avoidwidespread bankruptcy in <strong>the</strong> sector. At that time, Brazil’s nationalist military government(between 1964 and 1985) saw energy-related issues as a matter of national security. In amilitary dictatorship all decisions and interventions are centralised and implemented far more14
Brazil’s biofuel programmes viewed <strong>from</strong> <strong>the</strong> <strong>WEL</strong>-nexus perspectiverapidly than in a democratic regime. On <strong>the</strong> o<strong>the</strong>r hand, PNPB was created in a democraticcontext, during <strong>the</strong> government of <strong>the</strong> PT, in <strong>the</strong> context of international negotiations toreduce GHG emissions.Institutional frameworkThe institutional framework also needs to be analysed. As mentioned earlier, <strong>the</strong> decree thatcreated Proalcool also created <strong>the</strong> CNAL, which was responsible for <strong>the</strong> coordination andimplementation of <strong>the</strong> programme. The existence of a strong state company like Petrobras,which was involved in <strong>the</strong> programme, was crucial for <strong>the</strong> development and success ofProalcool. Regarding rules and norms, <strong>the</strong> most important was <strong>the</strong> establishment of minimumethanol–gasoline fuel blends (progressively increased to 25% ethanol and 75% gasoline).The CEIB was also created to coordinate PNPB, as well as a Managerial Group. The CEIBdeveloped a work plan for PNPB implementation including specific roles for <strong>the</strong> relevantgovernment institutions. An important law was also promulgated in order to establish <strong>the</strong> legalframework of <strong>the</strong> programme (Law n. 11.097-05).3.3 Comparison between PNPB and Proalcool change and action modelAs mentioned, <strong>the</strong> main objective of Proalcool was to reduce <strong>the</strong> impact of <strong>the</strong> first and second‘oil shocks’ of <strong>the</strong> 1970s on Brazil’s balance of payments, which threatened <strong>the</strong> country’s‘economic miracle’. Given <strong>the</strong> country's dependence on imported oil, <strong>the</strong> increase in oil pricescaused <strong>the</strong> deficit in public accounts, which meant that resources destined for investment hadto be used to shore up <strong>the</strong> deficit. Given that economic growth was based mainly on capitaland labour-intensive segments, <strong>the</strong>re was widespread support for increasing ethanolproduction.As distinct <strong>from</strong> Proalcool, <strong>the</strong> main reason behind <strong>the</strong> requirement to blend bio-diesel withdiesel was <strong>the</strong> potential to generate jobs and income in poor rural areas with <strong>the</strong> use of a widerange of oilseeds (particularly castor beans) (MAPA, 2006; Pousa et al., 2007). O<strong>the</strong>r reasonswere: (a) <strong>the</strong> potential improvement in <strong>the</strong> country's trade balance, since Brazil is a netimporter of diesel; (b) <strong>the</strong> availability of many oilseed plants suitable for bio-diesel productionwithout affecting food security; (c) <strong>the</strong> perfect substitutability between bio-diesel and regulardiesel; (d) <strong>the</strong> energy efficiency of <strong>the</strong> bio-diesel production cycle; and (e) <strong>the</strong> CO 2 mitigationpotential associated with <strong>the</strong> use of bio-diesel as a replacement for regular diesel (MAPA,2006; Hall et al., 2009). PNPB aimed to address <strong>the</strong>se issues simultaneously, and at a globallevel.The focus of PNPB on rural development is based on <strong>the</strong> assumption that benefits can accrueto <strong>the</strong> poor by organising small-scale producers to meet <strong>the</strong> volume and reliability needs ofconversion facilities (MAPA, 2006). The programme was designed to promote regionaldevelopment, especially through greater market insertion of family farms in <strong>the</strong> Nor<strong>the</strong>ast(MAPA, 2006; Hall et al., 2009). At <strong>the</strong> end of 2003, this region accounted for 49.6% of familyfarmers in <strong>the</strong> country. It is also <strong>the</strong> country’s poorest region, with only 25% of <strong>the</strong> per capitagross domestic product (GDP) of <strong>the</strong> South and Sou<strong>the</strong>ast regions (MAPA, 2006).In this respect, MAPA (2006) estimated that for each 1% increase in <strong>the</strong> participation of familyfarmers in <strong>the</strong> bio-diesel market, it would be possible to generate about 45,000 direct and180,000 indirect jobs. Moreover, <strong>the</strong> focus on family farmers was supposedly beneficialbecause while large-scale agriculture employs an average of one worker for every 100 ha,family farming employs one for every 10 ha. Fur<strong>the</strong>rmore, <strong>the</strong> Bio-diesel Production CapacityReport produced by <strong>the</strong> Inter-Ministerial Commission, on which <strong>the</strong> implementation of <strong>the</strong>PNPB in 2005 was based, indicated that if all <strong>the</strong> oilseed produced in <strong>the</strong> Nor<strong>the</strong>ast for biodieselcame <strong>from</strong> family farmers, <strong>the</strong> introduction of B5 would create 1.3 million farm jobs.This level of employment would be reached mainly by growing alternative crops, such asjatropha and castor beans. In this case, <strong>the</strong> average monthly per capita income of familyfarmers would rise <strong>from</strong> US$53.00 to US$233.30, or a total of US$130 million in extra incomegenerated in <strong>the</strong> Nor<strong>the</strong>ast in 2013 (ibid.).15