US lawmakers say Brazil low-carbon fuel program blocks US companies

By Marcelo Teixeira

NEW YORK (Reuters) – A group of U.S. congressmen have formally complained about what they call unfair ethanol trade practices by Brazil that includes a blockade of U.S. companies seeking to take part in the Brazilian low-carbon biofuel program RenovaBio.

The bipartisan group of 21 members of the U.S. Congress are asking Trade Representative (USTR) Katherine Tai to address the Brazilian tariffs on U.S. ethanol and the non-tariff barrier created by the biofuel program implemented in 2020.

RenovaBio is a carbon market that gives Brazilian biofuel producers an additional revenue source. Companies such as ethanol makers generate carbon credits, called CBios, from the lower emissions of biofuels when compared to oil-derived fuels such as gasoline.

Those carbon credits are sold to fuel distributors in Brazil who have targets to cut emissions, or in a secondary market at Brazil’s B3 exchange.

The lawmakers in a letter to the USTR complained about the implementation in Brazil in February of an import tariff of 16% on U.S. ethanol. That import tax will increase to 18% in 2024.

They also complained about the lack of approval from Brazilian authorities of U.S. companies’ applications to take part in RenovaBio to be able to generate and sell carbon credits.

“Brazilian ethanol producers have access to our Renewable Fuel Standard and California’s Low Carbon Fuel Standard program, which recognize the inherent value of low-carbon biofuels,” the letter said. “This treatment is not reciprocated by Brazil, where U.S. ethanol producers, after two years, have yet to be approved for Brazil’s biofuel program.”

The U.S. government has said in the past that it was working with Brazilian officials to get certificates for U.S. ethanol plants.

Brazil’s oil and biofuels regulator ANP, who is in charge of RenovaBio certification, did not immediately answer a request for comment.

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