Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§63 |
Brazil |
2017 |
Sectors |
Tax concessions |
Energy |
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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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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§72 |
Brazil |
2017 |
Sectors |
Other price and market based measures |
Energy |
Relevant information
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The domestic biodiesel market remains regulated by the Government through an ANP operated electronic auction system (reverse auctions), which gives preference to producers certified with the Social Fuel Seal. [103] The ANP sets the volume of government purchases and a maximum price that suppliers must underbid. The distributors are responsible for the commercialization of biodiesel. PETROBRAS operates as a system administrator and has no interference with the volumes to be acquired by distributors. Biodiesel prices received by producers are determined by the auction system. At auctions held between June 2014 and October 2016, average prices followed an overall rising trend and ranged from R$1,884.15 per m3 (June 2014) to R$2,855.10 per m3 (October 2016).
[103] To obtain this certification, biodiesel producers must purchase a minimum share of raw materials from family farmers registered under the PRONAF (Section 4.2.4.3). Minimum shares differ by region: 15% in the north and mid-west; 30% in the south-east, north-east and the semiarid area; and 35% in the south. In the 2014/2015 harvest biodiesel producers purchases stood at approximately R$ 4 billion.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§73 |
Brazil |
2017 |
Sectors |
General environmental reference |
Energy |
Relevant information
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Between 2011 and 2015, Brazil's installed capacity and power generation continued to grow faster than electricity consumption. In 2015, Brazil had 140.6 GW of installed capacity for electricity generation, generated 581.5 TWh of electricity, and consumed 522.8 TWh; these figures represented annual increases of 20.1%, 9.3% and 8.9% respectively compared to 2011 levels. Hydroelectric sources accounted for 64% (70.4% in 2011) of installed capacity, followed by thermal (30.2%), wind (3.5%) and, nuclear (2.4%) sources. [108] Brazil's electricity imports in 2014 accounted for 5.7% of domestic supply, down from 7.4% in 2012; the drop in the hydropower share due to Brazil's exceptional drought in 2015 and 2016 was compensated by the output of thermal power plants which increased the cost of energy. Electricity produced by the Itaipu plant and imported from Paraguay continues to account for most of Brazil's imports. In 2015, Brazil imported 33,651.5 GWh from Paraguay and 913.2 GWh from the Bolivarian Republic of Venezuela, and exported 219 GWh to Argentina and 0.4 GWh to Uruguay. Although under the Ten Year Plan for Energy Expansion 2024 (Section 4.2.2), the share of hydropower capacity is to rise and a number of auctions have been conducted, construction of several hydroelectric plants is behind schedule. The main power consumption groups consist of manufacturing (37.6%), residential consumers (25.1%), service activities (17.5%) and agriculture (5.1%).
[108] There are two operational nuclear reactors in Brazil; a third reactor was due to come online by January 2016 but construction of the plant has become paralysed due to investigations by federal prosecutors into corruption.
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Secretariat TPR |
WT/TPR/S/358/REV.1 |
S-IV§74 |
Brazil |
2017 |
Sectors |
General environmental reference |
Energy |
Relevant information
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ELETROBRAS continues to play a major role in the electricity sector; as at March 2017, the Federal Government owned 40.99% of its common shares, BNDES/BNDESPAR 15.99%, Brazilian Government funds 3.44%, and others 19.94%; in addition, its preferred shares, i.e. those with a higher claim on its assets and earnings than common stock, are owned by BNDES/BNDESPAR (2.73 %) and others funds (16.89%). [112] (...)
[112] ELETROBRAS consists of the following 14 companies: Holding, CGTEE, Chesf, Eletronorte, Eletronuclear, Eletrosul, Furnas, Amazonas Energia, Amazonas Geração e Transmissão, Distribuição Acre, Distribuição Alagoas, Distribuição Piauí, Distribuição Rondônia, Distribuição Roraima, and it owns half of Itaipu Binacional. ELETROBRAS had 50.93% of the shares of the company Celg Distribuição S.A. (CELG) an energy distribution company operating in the Brazilian state of Goiás until November 2016 when Enel Brasil S.A. (subsidiary of the Italian Enel S.P.A.) acquired 94.6% of CELG's shares in a public tender. Moreover, the ELETROBRAS holding controls the Electric Energy Research Center (Eletrobras Cepel), and Eletropar Participações S.A. (Eletrobras Eletropar). It owns 47 hydroelectric power plants, 121 thermal power plants, 2 nuclear power plants, 60 wind farms, and 1 solar power plant. ELETROBRAS (2016), Annual and Sustainability Report 2015. Viewed at: http://www.eletrobras.com/elb/main.asp?Team={D00A1456-A64A-40DC-B7D8-BB2E23A8FACE}; ELETROBRAS online information. Viewed at: http://ri.eletrobras.com/pt/ri/Paginas/Capital-Social.aspx; ENEL online information. Viewed at: https://www.enel.com/content/dam/enel-common/press/en/1666524-1_PDF-1.pdf; and Investopedia online information. Viewed at: http://www.investopedia.com/terms/p/preferredstock.asp.
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