Recently, Brazil and Argentina signed a memorandum of understanding to promote, through diplomacy and cooperation, the increased use of bioenergy in the context of increasing the sustainable development of both countries. In the document, representatives of both nations agreed on several cooperation measures, including the constant exchange of information and promotion of research programs and dialogue with the automotive industry, in order to maximize the use of bioenergy, including biofuels.

In the same context, Brazil recently enacted Federal Decree No. 9888 in June 2019, which addresses the annual mandatory targets for reducing greenhouse gas emissions to be met by the biofuels trading sector, within the scope of the National Policy for Biofuels (Renovabio). In addition to setting the method for calculating the value of these targets, which were detailed in Resolution 791 of the National Oil Agency (ANP), the decree contributed to the structuring of the biofuels market and fixed certain obligations to the biofuel distributor in articles 5 and 6. While the first provision determines the need for the entrepreneur to prove the fulfillment of its individual goals, under the terms established by the ANP, the second provides for the imposition of sanctions, applicable by the agency, in case of failure to meet in full or in part such individual goals.

The initiatives demonstrate that despite the intense debate over climate change and political disputes regarding the matter, the diversification of the energy matrix, as defined in Brazil’s Nationally Determined Contribution (NDC) under the Paris Agreement, is still in the pipeline for the federal government.

Lawyers in the Environmental practice of Tauil Chequer Mayer Brown are constantly monitoring the rules regarding the promotion of biofuels and bioenergy and are available to provide clarification on the impact of those new regulations to the industry of fuel distribution.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.