Market Effects, Greenhouse Gas Reductions and Costs of Brazil's RenovaBio Programme

ABSTRACT Brazil's RenovaBio programme aims to reduce transportation sector greenhouse gas (GHG) emissions. The programme sets falling carbon emission limits that fuel producers meet using tradable decarbonisation credits (CBIOs). This programme creates a system of new links between biomass prod...

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Bibliographic Details
Published inJournal of agricultural economics Vol. 76; no. 2; pp. 405 - 417
Main Authors Kim, Jong‐Ik, Thompson, Wyatt
Format Journal Article
LanguageEnglish
Published Oxford Wiley Subscription Services, Inc 01.06.2025
Subjects
Agricultural commodities
Agriculture
Biodiesel fuels
Biofuels
Biomass
carbon policy
commodity prices
Crops
Decarbonization
Emissions
Ethanol
Food consumption
Food prices
Food systems
Greenhouse effect
greenhouse gas emissions
Greenhouse gases
Markets
Petroleum products
Raw materials
RenovaBio
Structural models
Uncertainty
Brazil
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Summary:ABSTRACT Brazil's RenovaBio programme aims to reduce transportation sector greenhouse gas (GHG) emissions. The programme sets falling carbon emission limits that fuel producers meet using tradable decarbonisation credits (CBIOs). This programme creates a system of new links between biomass product markets and bioenergy markets, with producer and consumer implications, that can be assessed using appropriate forward‐looking economic methods. We model the CBIO and fuel markets using a structural model to simulate the impacts of RenovaBio. We link this model to a widely used model of agricultural and agricultural markets to analyse crop and crop product interactions. If implemented as announced, the programme would expand biofuel consumption and feedstock prices while decreasing petroleum product use. Our estimates highlight the potential for large impacts, similar by some measures to the impacts of US biofuel use mandates, subject to uncertainty about how the reduction targets evolve and how the industry responds. A programme of this type in a major biofuel and agricultural commodity producer and user affects global agricultural and food systems, as Brazil's supply to the world market diminishes and prices of ethanol and biofuel feedstocks worldwide are increased, depending on how the programme is implemented.
Bibliography:Funding
This material is based upon work supported by the U.S. Department of Agriculture, Office of the Chief Economist, under Agreement #58‐0111‐23‐014, and the USDA National Institute of Food and Agriculture, Hatch project number MO‐C1537173. Any opinion, findings, conclusions or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the U.S. Department of Agriculture, Korea Energy Economics Institute, or the University of Missouri.
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ISSN:0021-857X
1477-9552
DOI:10.1111/1477-9552.12627