Brazilian Biofuels Programmes from the WEL Nexus Perspective

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Brazil’s biofuel programmes viewed from the WEL-nexus perspectiveAnother justification for PNPB was to improve the trade balance, since Brazil has historicallyimported diesel (BRASIL, 2011a). In 2009, US$1.67 billion was spent on importing 3.51 billionlitres of diesel, representing about 7.9% of national consumption (MAPA, 2006). Starting withthe mandatory addition of bio-diesel to mineral diesel, there was a fall of 39.7% in demand fordiesel imports between 2008 and 2009 (BRASIL, 2011a).Again, given that Brazil is a net importer of diesel, as well as the focus of the programme onrural development, there was broad support mainly from the agricultural sector, which saw itas an opportunity to make farming more profitable in view of the increasing devaluation of themain agricultural commodities (Hall et al., 2009). On the other hand, the oil industry initiallyopposed the implementation of PNPB. Petrobras has now taken over the governance of PNPB,demonstrating Brazil’s support for the continuation of the programme.Tables 3.1 and 3.2 summarise the Change and the Action Model, which we used to identify thecombination of ‘push and pull’ components in Brazil’s biofuel programmes.Table 3.1 Comparison of PNPB and Proalcool change modelsChange model Proalcool PNPBGoals To increase foreign exchange To implement the production and To reduce income disparitiesamong regions and individuals use of bio-diesel in BrazilTo implement a sustainable To increase national incomethrough deployment ofunderused resourcesprogramme, promoting socialinclusion and regionaldevelopment To increase growth in the To guarantee competitive prices,domestic capital goods sector To avoid bankruptcy of thesugar cane industry To reduce dependence onenergy importsOutcomes Guaranteed market for ethanol Modernisation of existingdistilleries Research and production ofcars which could run on pureethanolA light-duty vehicle (LDV) fleetrunning on pure ethanolOutputs High subsidies for ethanolproduction and consumptionchain Mandatory inclusion of specificpercentage of ethanol in thegasoline sold in BrazilFinancial support for R&DRegulation with incentives tothe private sector to pursueinnovation and invest inethanol-related activitiesIncentives for car owners toshift to ethanol-fuelled carsquality and supplyTo produce bio-diesel fromdifferent oleaginous plants indiverse regionsGuaranteed market for bio-dieselConfiguration andimplementation of a productionchain for bio-diesel involvingdifferent raw materials anddifferent regions of BrazilImplementation of a sustainableprogramme, promoting socialinclusionGuaranteed competitive prices,quality and supplyProduction of bio-diesel fromdifferent oleaginous plants indiverse regionsSubsidies for bio-dieselproduction chainVoluntary and then mandatoryinclusion of a specific percentageof bio-diesel in the diesel sold inBrazilCreation of the Social Fuel Stampto spur social inclusion in the biodieselproduction chain16
Brazil’s biofuel programmes viewed from the WEL-nexus perspectiveChange model Proalcool PNPBDeterminants, Create a market for ethanol Create a market for bio-dieselleverage Increase ethanol production Increase bio-diesel productionmechanism ormediatingvariable Foster technologicaldevelopment in the ethanolsector Foster technologicaldevelopment in the bio-dieselsectorIntervention Guaranteed lower prices forethanol vs. gasoline at thepump Guaranteed minimum price forethanol producers Creation of credit lines for sugarmills to expand capacity Mandatory availability ofethanol at gas stations Maintenance stocks to stabilisesupply Establishment of policies topush ethanol-based carproduction Establishment of higherminimum ethanol fuel blendsBio-diesel producers or importersbenefit from tax reductionsBio-diesel producers or importersable to participate in publicauctions administered by ANPCreation of the Social Fuel StampTax reductions depend on: regionwhere raw material produced;type of raw material; and type offarm involved in producing rawmaterialVoluntary then mandatoryinclusion of a minimumpercentage of bio-diesel in thediesel sold in BrazilTable 3.2 Comparison of PNPB and Proalcool action modelsAction model Proalcool PNPBTarget Sugar cane industry Family farmerspopulation Car manufacturers Agribusiness companies State companies (e.g.Petrobras) Companies using large volumes ofdiesel fuel (e.g. Vale do Rio Doce) Government institutions (e.g. State companies (e.g. Petrobras)BNDES, Bank of Brazil) Government institutions (BNDES, AcademiaBank of Brazil) Car owners AcademiaImplementing CNAL CEIBorganisations Inter-Ministerial Commission Managerial Groupfor Alcohol (CINAL) CNPE Bank of Brazil ANP BNDES Bank of Brazil Petrobras BNDES Other state companies and Petrobrasinstitutions Other state companies andinstitutionsContext Oil crisis in the middle and Democracy contextlate 1970s, when oil prices Government of the PTwere extremely high Social issues are government Fuel demand in Brazilincreasing with rapid economicgrowthpriority Sugar cane activities in crisisdue to the low prices in theinternational market Nationalist militarygovernment which sawenergy-related matters asnational security issues17
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Brazilian Biofuels Programmes from the WEL Nexus Perspective

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