Brazilian Biofuels Programmes from the WEL Nexus Perspective

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Brazil’s biofuel programmes viewed from the WEL-nexus perspective Establishment of several dedicated policies to push ethanol-based car productionIn the case of PNPB, the intervention was much less incisive due to the different politicalcontext in which the programme was created and implemented, i.e. under a democratic regimerather than a military dictatorship. The industrial bio-diesel producers and importers benefitfrom tax breaks as well as from the ability to participate in public auctions administered by theANP through the Social Fuel Stamp. Tax reductions depend on the region where the rawmaterial is produced, the type of raw material and the kind of farm involved in the producingit.PNPB also provides research incentives for projects by promoting technology developmentthroughout the 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 the case of Proalcool were the sugar cane industry, carmanufacturers, public companies (e.g. Petrobras) and existing government institutions(including research institutions, financial institutions such as Banco do Brasil and the BrazilianNational 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 the agribusiness sector, with special attention to family farmers, atleast at the outset. These groups were expected to act in ways that would contribute to theoutcomes.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 thecase of Proalcool, a National Alcohol Commission (CNAL) was created to develop andcoordinate the programme. Other organisations had a very important role such as Banco doBrasil, BNDES, Petrobras, among other state companies and institutions. Following theexample of Proalcool, PNPB created an Inter-Ministry Executive Commission (CEIB) comprising13 ministries and coordinated by the Civil House. There is also a Managerial Group responsiblefor conducting actions related to the operation and administration of the programme. TheCNPE, which decides the blend bio-diesel/diesel, and the ANP, which is responsible forconducting the auctions for the bio-diesel supply, are also important organisations in theimplementation of PNPB.Of all the institutions involved in the implementation of the 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 the oil crises in the middle andlate 1970s, when oil prices reached a record high, and fuel demand in Brazil was increasing asthe economy was growing rapidly.During that time, sugar cane activities, one of the country’s main economic activities, were incrisis due to the low sugar prices on the international market. These factors led groups withstrong interests in these activities to pressure the government for alternatives to avoidwidespread bankruptcy in the 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 from the WEL-nexus perspectiverapidly than in a democratic regime. On the other hand, PNPB was created in a democraticcontext, during the government of the PT, in the context of international negotiations toreduce GHG emissions.Institutional frameworkThe institutional framework also needs to be analysed. As mentioned earlier, the decree thatcreated Proalcool also created the CNAL, which was responsible for the coordination andimplementation of the programme. The existence of a strong state company like Petrobras,which was involved in the programme, was crucial for the development and success ofProalcool. Regarding rules and norms, the most important was the 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 the relevantgovernment institutions. An important law was also promulgated in order to establish the legalframework of the programme (Law n. 11.097-05).3.3 Comparison between PNPB and Proalcool change and action modelAs mentioned, the main objective of Proalcool was to reduce the impact of the first and second‘oil shocks’ of the 1970s on Brazil’s balance of payments, which threatened the country’s‘economic miracle’. Given the country's dependence on imported oil, the increase in oil pricescaused the deficit in public accounts, which meant that resources destined for investment hadto be used to shore up the deficit. Given that economic growth was based mainly on capitaland labour-intensive segments, there was widespread support for increasing ethanolproduction.As distinct from Proalcool, the main reason behind the requirement to blend bio-diesel withdiesel was the potential to generate jobs and income in poor rural areas with the use of a widerange of oilseeds (particularly castor beans) (MAPA, 2006; Pousa et al., 2007). Other reasonswere: (a) the potential improvement in the country's trade balance, since Brazil is a netimporter of diesel; (b) the availability of many oilseed plants suitable for bio-diesel productionwithout affecting food security; (c) the perfect substitutability between bio-diesel and regulardiesel; (d) the energy efficiency of the bio-diesel production cycle; and (e) the CO 2 mitigationpotential associated with the use of bio-diesel as a replacement for regular diesel (MAPA,2006; Hall et al., 2009). PNPB aimed to address these issues simultaneously, and at a globallevel.The focus of PNPB on rural development is based on the assumption that benefits can accrueto the poor by organising small-scale producers to meet the volume and reliability needs ofconversion facilities (MAPA, 2006). The programme was designed to promote regionaldevelopment, especially through greater market insertion of family farms in the Northeast(MAPA, 2006; Hall et al., 2009). At the end of 2003, this region accounted for 49.6% of familyfarmers in the country. It is also the country’s poorest region, with only 25% of the per capitagross domestic product (GDP) of the South and Southeast regions (MAPA, 2006).In this respect, MAPA (2006) estimated that for each 1% increase in the participation of familyfarmers in the bio-diesel market, it would be possible to generate about 45,000 direct and180,000 indirect jobs. Moreover, the 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. Furthermore, the Bio-diesel Production CapacityReport produced by the Inter-Ministerial Commission, on which the implementation of thePNPB in 2005 was based, indicated that if all the oilseed produced in the Northeast for biodieselcame from family farmers, the 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, the average monthly per capita income of familyfarmers would rise from US$53.00 to US$233.30, or a total of US$130 million in extra incomegenerated in the Northeast in 2013 (ibid.).15
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Brazilian Biofuels Programmes from the WEL Nexus Perspective

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