Brazil takes part in the Paris Agreement, a group of 195 countries settled in 2015 at COP21 (21st Conference of the Parties – United Nations), from UNFCCC (United Nations Framework Convention on Climate Change). The agreement, among other proposals, indicates the reduction of carbon dioxide emissions into the atmosphere, aiming to ensure that the increase of the average global temperature by 2100 is 2°C lower than pre-industrial levels and, preferably, smaller than 1.5ºC. In September 2016, the Brazilian Congress ratified the commitment taken in Paris.
At the Intended Nationally Determined Contributions (INDCs), Brazil has committed itself to reduce by 37% greenhouse gas (GHG) emissions from 2020 to 2025 compared to 2005 levels. Besides, in order to ensure predictability to economic players, Brazil has indicated a 43% decrease of the gas emissions for 2030, also in relation to 2005 levels. To reach these goals, it is necessary to involve several sectors in the economy, among them, are renewable fuels. The proposals for GHG reductions are based on the following premises: adoption of the B7 Biodiesel program in 2025 and B10 in 2030; production of 45 billion liters of ethanol by 2025 and of 54 billion liters by 2030, besides the implementation of two nuclear plants until 2030.
The acknowledgement that renewable fuels have great potential to decrease GHG emissions drive the planning to increase their production and consumption. As for ethanol, specifically, besides social gains from the revenue increase in regions where the sugarcane plantation expands, there are important environmental accomplishments. Ethanol production contributes not only to decreasing GHG emissions (more significant now due to the gradual substitution of the manual sugarcane harvesting by the mechanized, which has reached practically 98% of sugarcane crops in São Paulo State), but also to mitigating damages to human health, mainly in urban areas, and reducing expenses from treatment of diseases.
Currently, there is great need to face climate problems; therefore, the program Renova Bio stands out. It is forecast to be implemented until the end of the current decade. The program was proposed by the Ministry of Mining and Energy and institutions related to the sugar-energy industry, which might contribute to reaching the targets to reduce GHG emission established by the government. The program define actions to guarantee predictability as well as environmental, economic and financial sustainability in the biofuel sector.
Differently from other existing programs in countries that have policies to encourage the use of biofuels through the competitiveness to fossil fuels, Renova Bio, similar to Renewable Fuel Standard (RS) in the United States, has Certified Emission Reductions measured in carbon tons as the main tool. Establishing differentiation among many alternative energy sources, based on their capacity to favor climate conditions, it is necessary to increase gradually the ethanol share in the total fuel consumption, which is also in expansion.
The sugar-energy sector in Brazil, in spite of current financial difficulties, continues to invest in the development of new technologies that can enhance efficiency in the ethanol production, not only suggesting methodologies that can break paradigms, in case of the industrial process, but also looking for increase of sugarcane productivity in the field. In this context, the release of genetically modified sugarcane by CTC (Sugarcane Technology Center) might lead to a considerable increase of the current productivity average.
The sustainability of the ethanol program in Brazil, on the other hand, depends on efforts from other segments of the Brazilian industry, namely the automotive sector, looking for gains in efficiency using ethanol in flex-fuel vehicles, or regarding its use in hybrid vehicles, such as the recent launched in Brazil by Toyota, which runs on electricity and gasoline. Besides these proposals, the Brazilian Ministry of Development, Industry and Foreign Trade program Rota 2030 also involves the use of ethanol in fuel cells that might be used in a not very distant future.
In the scenario that the necessity to expand the biofuel market is identified, it is urgent that its regulation allow an increase of both production and use of these products, for the light fleet (cars and light commercial vehicles) and other modes of transportation. It is believed that these goals can be attained without subsidy, but considering positive externalities of renewable fuels and new market tools.
For ethanol, however, short-term measures are necessary in order for enterprises in the sugar-energy sector to continue operating when Renova Bio suggestions are used. Among these measures, favorable PIS/Cofins values to ethanol should not be disregarded. As an emergency and transitory draft, it can contribute to the financial health of companies, in the short-term, which is compromised in many cases. However, in the opposite direction, the Brazilian government stablished, in the third week of July, an adjustment of the factors that penalized the renewable fuel market compared to fossil fuel sector, surpassing what had been stablished in the current legislation referring to aliquot. Even though a review of the value initially stablished was proposed in late July in order to adjust it according to the legislation, it is clear that ethanol positive contributions to mitigate environmental issues have not been taken into account.