SAO PAULO (Reuters) - Brazil’s latest policy to boost biofuels use has improved the outlook for ethanol production and should attract new investment in plants, BP Plc’s chief executive for biofuels, Mario Lindenhayn, said on Wednesday.
Brazil is advancing with additional regulation for the policy, called RenovaBio and expected to be enacted in 2020, Lindenhayn said, adding that he does not see signs that the government of President-elect Jair Bolsonaro, which kicks off in January, would put up obstacles.
“We are very positive. This is a very important signal the country is giving, creating a stable regulatory environment that will allow companies to invest,” Lindenhayn told Reuters on the sidelines of an energy presentation at the company’s corporate office in Sao Paulo.
RenovaBio will mandate fuel distributors to gradually increase the amount of biofuels they sell. The program aims to double the use of ethanol by 2030 from around 26 billion liters currently. The program also targets increases for other renewables such as biodiesel.
BP has three ethanol mills in Brazil, crushing 10 million tonnes of sugar cane per year. It formed a venture last year with Brazil’s Copersucar, a leading global ethanol seller, to jointly operate one of the largest fuel terminals in the country located in Paulínia, in Sao Paulo state.
Lindenhayn said the program provides an opportunity for mills in Brazil, which have experienced stagnation caused by years of low sugar prices and a long period of subsidized gasoline prices that led to the closure of many firms.
“If the program advances as planned, it will be a large opportunity. There are no greenfield projects around, and the country is a net fuel importer,” he said.
Asked if BP would be interested in increasing ethanol capacity via acquisitions, since there are several assets being offered in Brazil by companies with financial difficulties, Lindenhayn said: “We will see, we will consider.”
On Wednesday, Brazilian oil and fuels regulator ANP published in the official gazette another part of RenovaBio complementary legislation, with rules for biofuel companies to obtain certification.
With that, the plants will be able to issue and trade emissions reductions credits, called CBios, that fuel distributors could buy to comply with targets in case they fall short. It would be Brazil’s first emissions reductions market, although limited to the fuels industry.
Reporting by Marcelo Teixeira; Editing by Leslie Adler