On December 31, 2024, Brazil enacted Federal Law No. 15,082 (the “Law”), amending the National Biofuel Policy Act – Renovabio (Law No. 13,576/2017) to include independent producers of raw biofuel materials in the participation of revenues generated by the sale of Decarbonization Credits (CBIOs).
The Law changes the existing Renovabio framework, in which only biofuel producers had access to revenue generated by the sale of CBIOs. The new wording establishes that such revenue be shared with the producers of biomass used in the production of biofuel. The lack of access of producers to this revenue has always been a point of contention with Renovabio, and the enactment of the Law reflects these discussions.
The Law defines different shares for sugarcane producers and producers of other raw materials intended for the production of biofuels. Producers of sugarcane will be entitled to a share of at least 60% of the revenue generated by the sale of CBIOs, and may be entitled to an additional amount if they provide biofuel producers with additional data allowing the biofuel to achieve a higher energy-environmental efficiency rating. This additional amount will correspond to 85% of the difference between the value of CBIOs generated from the additional data and the value that these CBIOs would generate without the additional data.
Producers of other forms of biomass will also be entitled to a share of the revenue from the sale of CBIOs. However, in this case, the share will be negotiated between biofuel producers and biomass producers, and the amount may be transferred in the form of a premium, exempt from taxation.
To enforce these provisions, the Law provides that failure to pay sugarcane producers will incur a fine proportional to the amount of unpaid CBIOs, which may range from BRL 100,000 to BRL 50 million. The Law does not discuss sanctions resulting from failure to pay producers of other forms of biomass.
The modifications introduced by the Law represent a significant change in the dynamics of Renovabio, whether due to the pre-established percentages for sugarcane producers or the free agreement of the percentage with producers of other biomasses; in both cases, potentially generating legal consequences that require assessment on a case-by-case basis.
The Environmental, Climate Change and ESG Practice of Tauil & Chequer Advogados in association with Mayer Brown is available to provide further clarification on this topic.
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