In Brazil, rising ethanol consumption and the implementation in 2020 of RenovaBio, a federal program to curb carbon emissions by 10% in 2028, in line with the UN Paris Agreement on climate change, will benefit Brazil´s sugarcane industry, says Moody´s Investors Service in a new report.
Under RenovaBio, tradeable carbon credits known as CBIOs, will be granted to certified producers generating an extra revenue source. On the other hand, fuel distributors will meet their annual carbon-emission reduction targets through the purchase of CBIOs.
At the same time, ethanol margins have become increasingly sensitive to oil price fluctuations. The correlation between international oil prices and Brazilian ethanol prices has increased since 2017, after domestic gasoline prices began to incorporate more periodically the changes in import parity. But Brazil’s low production cost helps local ethanol production to remain competitive even under stresses oil prices.
Large sugarcane producers Raízen, Adecoagro and São Martinho have proved their strength during challenging moments for the industry in Brazil and are set to benefit from the increase in demand.
Category: Producer News
This articles was originally posted at: https://www.biofuelsdigest.com/bdigest/2019/12/04/moodys-says-renovabio-will-boost-ethanol-demand-and-support-brazilian-industry/ on