Page 44 - Biofuels for a More Sustainable Future

38 Biofuels for a More Sustainable Future

to promote production and use of ethanol as a fuel. For security reasons in
1938blendingobligationswereimposedupondomesticproducers,andguar-
anteed prices for ethanol and sugar were introduced (Rutherford, 2016).
In order to face the 1973 oil crisis, a National Alcohol Programme
(PROALCOOL) introducing low-rate credits from public banks and prices
parity between ethanol and sugar was launched in 1975. Moreover, automo-
tive policy aimed at promoting the development of pure bioethanol motors
was introduced, and cassava (mandioca) and other fuel-agriculture products
were incentivized. After the second oil crisis PROALCOOL was further
developed through the introduction of loans in line with the inflation rate,
as well as tax reductions for bioethanol cars and bioethanol itself.
Most supporting interventions in the bioethanol sector were progres-
16
sively reduced over the period 1989 and 1999. Despite today bioethanol
in Brazil being largely driven by market forces (Rutherford, 2016, p. 216),
new supporting instruments (mainly financing innovations in the sector and
bioethanol storage) were introduced to face the bioethanol supply crisis in
2011. Mandatory blending level was also maintained in the range between
18% and 27.5%—this in order to match bioethanol prices with petrol price.
When it comes to biodiesel, despite the first supporting programs were
launched in 1980s, policy support accelerated starting from 2002. Since
November 2014 the blending level of biodiesel has reached 7% and tax
exemptions and other incentives are also available. The biodiesel legislation
isdrivennotonlybyeconomicandsecurityreasonsbutalsobysocialinclusion
and environmental (e.g., climate policies) concerns. To this aim, the Social
Fuel Seal (SFS), which promotes the inclusion of small-scale agriculture in
diesel production, was created. To obtain the SFS, biodiesel producers must
purchase feedstock from family-based farmers included in the National Pro-
gram for the Strengthening of Family Farming. SFS holders benefit from tax
exemption, better conditions of financing, preferential allocation in auctions,
and exclusive supply for biodiesel stocks (Rutherford, 2016).

5 Lessons learned and future perspectives for the bio-
based economy

The analysis developed so far shows that biofuels development is associated
with several problems, including competition with food production,
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However, in the face of dropped oil prices and increased prices for sugar, the mandatory
blending level was established at 22% in 1993.