Background and objectives

Brazil sits on one of the world’s largest biomass resources and has become a global leader in biofuels through decades of industrial policy designed to leverage its feedstock and natural resource advantage. In the 2010s, growth moderated as uncoordinated policies, fuel-price distortions, and evolving sustainability standards created uncertainty for investors. In recent years, Brazil has renewed its policy framework through an integrated agenda linking regulation, market-based mechanisms, targeted finance, and infrastructure within a unified energy-climate-industrial strategy. Main policy objectives: Strengthen energy security and reduce oil import dependence. Cut transport-sector emissions in line with national climate targets. Economic and job development.

Key policy pillars

Brazil’s policy framework layers complementary instruments, including blending mandates, performance-based GHG targets, credit trading, and concessional finance, into a coherent system that links demand creation, emissions performance, and investment mobilization across the value chain:

1. Blending mandates

• Ethanol: 27% ethanol blending mandate in gasoline.
• Biodiesel: 14% biodiesel blending mandate in diesel.
• Sustainable aviation fuel (SAF): 1% SAF blending mandate in jet fuel (introductory mandate).
• Biomethane (2025): New biomethane blending mandate in natural gas.

2. Performance-based targets

• Lifecycle GHG-reduction targets for fuel distributors’ portfolio-wide emissions (flexibility in compliance).
• GHG-reduction credit trading system:
  • CBIO market issues tradable credits to certified biofuel producers for verified lifecycle GHG reduction.
  • Biomethane Guarantee-of-Origin Certificate (2025): certifies renewable-gas origin and carbon intensity.

3. Financial and fiscal incentives

• Low-interest loans through BNDES to support project investment.
• Tax incentives under Rota 2030 promoting flex-fuel and hybrid vehicle innovation.
• R&D funding for advanced biofuels and technology innovation.
• Dedicated credit lines (2025) for biogas & biomethane projects connecting producers to gas infrastructure.

4. Infrastructure development

• Public–private partnerships such as Logum Logística expanding ethanol pipelines and storage.
• National Gas and Biomethane Infrastructure Plan (2024) integrating production regions and demand hubs through new pipeline and logistics networks.

Outcomes achieved 

• 30% bioenergy contribution to Brazil energy generation
• Around 1 million direct and indirect jobs created around biofuels (70% in rural areas)
• 65 Mt of CO2e avoided (equivalent to 3% of Brazil's total emissions)
• $250 billion reduction in oil imports cumulatively (equivalent to 3.3 billion barrels)

Lessons learned

• Integrate and coordinate policy levers to build investor confidence and longer-term certainty: Align energy, climate, and industrial policies to balance multiple objectives, secure broad buy-in across the political spectrum, and create a coherent framework for sustained investment and market growth 
• Use market mechanisms to de-risk investment: Instruments such as credit trading and concessional finance lower financing costs, share risk, and reward verified emissions reductions 
• Leverage public–private partnerships for efficiency: Shared infrastructure and co-investment spread capital risk, improve delivery, and enable economies of scale