Abstract
Biofuel production in Brazil has been motivated by a desire to reduce dependence on fossil fuels and encourage rural economic development. Policies and technologies over the past 25 years have lowered production costs and created profitable opportunities. The industry grew through political willingness to support an infant industry, continuous technological advances in both biofuel production and complementary industries (e.g., automotive), ability to utilize agricultural byproducts, and income growth in rural areas. It was confronted by the challenges of price instability due in large part to changing oil prices, uncertainty about the prospects of biofuels as a viable source of energy, the ability to create and maintain policies conducive to its growth, and, finally limited access to credit. This paper demonstrates the importance of political economy factors in the evolution of the biofuel sector in Brazil and suggests their importance to understand the evolution of this sector in other parts of the world.
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Notes
- 1.
ANP: Brazilian National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás e Biocombustíveis).
- 2.
IPI: Imposto sobre Produtos Industrializados.
- 3.
IPVA: Imposto sobre Veículos Automotores.
- 4.
IUCL: Imposto Único sobre Combustíveis Líquidos.
- 5.
UNICA was created in 1997 and accounts for Brazilian Sugarcane Industry Association.
- 6.
ICMS accounts for Tax on Circulation of Goods and Services (Imposto sobre Circulação de Mercadorias e Serviços). ICMS is a Local Government tax, defined by each state.
- 7.
CIDE is a Federal Government tax.
- 8.
PIS/COFINS are Federal Government taxes.
- 9.
Import Tax (or II, which means Imposto sobre Importação) is a Federal Government tax.
- 10.
CIDE refers to Contribution for Intervention in the Economic Domain (Contribuição de Intervenção no Domínio Econômico).
- 11.
PIS accounts for Contribution to the Social Integration Program (Contribuição ao Programa de Integração Social), and COFINS means Contribution to Social Security Financing (Contribuição para Financiamento da Seguridade Social).
- 12.
Especially when it is not exported and export opportunities are limited.
- 13.
Petrobras earns more from oil than biofuel because it does not have to pay rents to farmers.
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Cicogna, M.P.V., Khanna, M., Zilberman, D. (2017). Prospects for Biofuel Production in Brazil: Role of Market and Policy Uncertainties. In: Khanna, M., Zilberman, D. (eds) Handbook of Bioenergy Economics and Policy: Volume II. Natural Resource Management and Policy, vol 40. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-6906-7_5
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