RenovaBio aims to increase the use of all biofuels in Brazil, including ethanol, biodiesel and biomethane, with the aim of increasing energy security and reducing greenhouse gas emissions.

A statement released by the Brazilian Ministry of Mines and Energy on Dec. 27 explains that the RenovaBio law provides for the establishment of national emissions reduction targets for the nation’s fuel supply. Targets will to be met annually by fuel distributors. The ministry said that the targets are fundamental to bring predictability to the national fuel supply and will provide better conditions and less uncertainty for private parties to carry out investment planning and analysis. In addition, the ministry indicated RenovaBio will allow the Brazilian fuel sector to comply with the Paris Agreement.

RenovaBio creates a system that allow for the certification of biofuels. The Ministry of Mines and Energy said the objective of the certification is to measure the exact contribution of each biofuel producer to greenhouse gas emissions reductions, in relation to their fossil substitute. The law also creates a decarbonization credit that combines the emissions reduction targets and the life cycle assessment of each biofuel producer. The credits are described as a financial asset that can be traded on a stock exchange. The credits are issued by the biofuel producer following the sale of product. Fuel distributors will meet required targets by acquiring these credits.

Brazil is currently the world’s second largest producer and consumer of biofuels. In 2017, the country produced an estimated 27.7 billion liters (7.32 billion gallons) of ethanol and 4.2 billion liters of biodiesel. The Ministry of Mines and Energy said on a combined basis, biofuels and bioelectricity account for 18 percent of Brazil’s energy mix.