Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§47 |
Brazil |
2017 |
Sectors |
General environmental reference |
Energy |
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Under the Constitution, Brazil's hydropower sources and mineral resources (including oil and gas), whether in the subsoil, the continental shelf, or in the exclusive economic zone, are the exclusive property of the State. The sector remains dominated by state companies (Sections 4.4.3 and 4.4.4). The Ministry of Mines and Energy (MME) implements the general policy for the sector and chairs the National Energy Policy Council (CNPE), which proposes policies and regulations pertaining to hydrocarbons, biofuels, and electricity to the President. Policy for the ethanol and sugar industry is also determined by the Inter-Ministerial Council for Sugar and Alcohol (CIMA). Two autonomous regulatory agencies are linked to the MME: the National Agency for Petroleum, Natural Gas and Biofuels (ANP), which regulates hydrocarbons and biofuels (except for state-level distribution of natural gas); and the National Agency for Electrical Energy (ANEEL), responsible for regulating and overseeing the electricity sector. In the downstream segment, all activities involving petroleum products, as well as the transportation, processing, storage, liquefaction and re-gasification of natural gas, remain subject to ANP authorization, while importation and exportation are subject to authorization by the MME. Gas transmission pipelines and storage facilities projects must also be, in general, proposed by MME and undergo an auction conducted by ANP. The Energy Research Company (EPE) supports planning, inter alia, in areas such as electricity, oil, and natural gas and its derivatives, coal, renewable energy sources and energy efficiency.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§51 |
Brazil |
2017 |
Sectors |
Other price and market based measures |
Energy |
Relevant information
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The production-sharing regime is aimed at lowering the exploration risk, maximizing the government take from oil production, and achieving a more equal distribution of its proceeds among Brazilians; revenue from production-sharing contracts is to finance education, poverty reduction, and environmental initiatives. (...)
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§62 |
Brazil |
2017 |
Sectors |
General environmental reference |
Energy |
Relevant information
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During the review period, Brazil retained its position as the world's second-largest producer and exporter of ethanol as output grew from 23.5 million m3 to 30.2 million m3 and exports slowed down (2012-2014) before rising by 33.6% in 2015. In 2016, the total number of sugar-ethanol mills was estimated at 378 units; PETROBRAS is a shareholder in 11 units which processed about 40 million tons per year of sugarcane during the review period. In the 2012/13 harvest, they produced 1 billion litres of ethanol. In its Strategic Plan 2017–2021, PETROBRAS foresees a regression of its biofuels production. The market share of PETROBRAS in Brazilian ethanol production is quite insignificant. The ethanol fuel industry remained dependent on sugar output, support and pricing developments as well as petrol prices subsidization over recent years (see below and Section 4.2.3.1.3).
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§63 |
Brazil |
2017 |
Sectors |
Tax concessions |
Energy |
Relevant information
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Since April 2010, Brazil has reduced its import tariff on ethanol (HS 2207) from 20% to zero by including it in its national basic "list of exceptions" to the MERCOSUR CET; as of 24 September 2015, this and other exceptions were extended until 31 December 2021 (Sections 2.5.2.1.1, 3.1.3.1 and 3.1.3.2).
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§64 |
Brazil |
2017 |
Sectors |
Other environmental requirements, Tax concessions |
Energy |
Relevant information
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The change in ethanol blend ratio in gasoline is a policy instrument used when the biofuel supply is low. During the review period, the mandatory ethanol blend ratio, which may range from 18% to 27.5%, was raised for regular gasoline from 20% (October 2011-April 2013) to 25% (May 2013 March 2015) and as from 16 March 2015 it has been at 27% (E27). The blending requirement for premium gasoline remains unchanged at 25%. Ethanol prices are not controlled, and fluctuations in relative prices lead to changes in consumption patterns; as sugarcane represents 60%-70% of the cost of producing ethanol, high sugar and therefore ethanol prices act as a disincentive to the use of ethanol at petrol stations. Between 2012 and 2015, the average retail price for ethanol rose progressively from R$1,943 per litre to R$2,230 per litre. This increase was driven by the re-introduction of the Contribution for Intervention in the Economic Domain (CIDE) levy on gasoline, the maintenance of a zero rate of contributions to the social integration programme (PIS) and to finance social security (COFINS) (PIS and COFINS) taxes on ethanol and their increase for gasoline, and the readjustment of the ex-refinery prices for gasoline A and diesel (Section 4.2.3.1.3), as well as the 34% rise in demand for hydrated ethanol in 2015.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§66 |
Brazil |
2017 |
Sectors |
Loans and financing |
Energy |
Relevant information
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The National Bank for Economic and Social Development (BNDES) continues to provide specific administered interest rate credit lines for the sugar, ethanol, and bioenergy industries to fund investments on sugarcane production (Section 4.2.4), expansion of industrial capacity for sugar and ethanol, sugarcane biomass technology, cogeneration, logistics, and multimodal transportation. Total financing for the industry in 2015 was R$2.74 billion, down 60% from 2014 (R$6.8 billion) due to financial constraints faced by the Federal Government. The ethanol stock programme, also known as the BNDES PAISS programme, which offered up to R$500 million per beneficiary and was due to expire in 2013, was extended until 2015.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§67 |
Brazil |
2017 |
Sectors |
General environmental reference |
Energy |
Relevant information
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During the review period, Brazil's biodiesel output grew steadily from 2.7 million m3 (2012) to 3.9 million m3 (2015), inter alia, supported by the increase of the biodiesel use mandate (see below). In 2015, Brazil remained the world's second-largest producer of biodiesel after the United States. As at December 2016, Brazil had 48 plants authorized to produce biodiesel and their capacity represented approximately 1.9 times the mandatory biodiesel production to be blended in mineral diesel; PETROBRAS' four plants accounted for 6.8% of total installed capacity.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§69 |
Brazil |
2017 |
Sectors |
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Energy |
Relevant information
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The 2004 National Biodiesel Production Programme (PNPB) remains in place. Its aim is to promote domestic biodiesel production, reduce petroleum import dependency, lower pollutant emissions and health-related costs, generate jobs and income, and alleviate regional economic disparities by passing on benefits to family farmers. It is implemented through blending requirements and auctions promoted by ANP. Buyers in auctions are mineral diesel producers and importers, and PETROBRAS has a significant presence. Biodiesel producers holding a Social Fuel Seal Certificate sell first in these auctions (see below and Section 4.2.3.1.3).
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§70 |
Brazil |
2017 |
Sectors |
Other environmental requirements |
Energy |
Relevant information
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Since 2014, the mandatory blending ratio of biodiesel has been raised, and it is set to rise further. It rose from 5% (January 2010) to 6% (July 2014), and then 7% (November 2014). The mandatory biodiesel-use ratio is to continue rising, to 8% in March 2017, 9% in March 2018, and 10% in March 2019. As of January 2016, a voluntary biodiesel blending ratio above the mandatory 7% level for several heavy duty fleets like long haul trucks, buses, rail transportation, and agricultural machinery was authorized; however, if requested by the end users, the MME has the authority not only to authorize but also set the actual voluntary blend to be used by the fleet. Furthermore, in 2016, the National Congress set the need to conduct tests in diesel engines over a period of 12 to 36 months to verify the feasibility of a 10% and 15% blending ratio; if results are positive, up to 15% biodiesel mandate could be an option by March 2019.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§71 |
Brazil |
2017 |
Sectors |
Tax concessions |
Energy |
Relevant information
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Similarly to ethanol, biodiesel benefits from cross-subsidization through federal tax exemptions and incentives for PIS/PASEP and COFINS taxes depending on the nature of the raw material, size of producer and region of production, in order to encourage the production of biodiesel and to promote social inclusion.
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