RenovaBio is a Brazilian carbon reduction regulation that will become effective in December of this year. The regulation was fast tracked and has developed very quickly leaving a lot of questions and concerns for the US renewable fuel industry. In our attempts to keep you current with recent industry happenings, Christianson has prepared a brief overview of the program and the main concerns for U.S. participants.
There are three main points that we want to address prior to getting into the overview of the model and regulation.
First, it was announced that the Brazilian tariff rate quota would remain intact but would be raised to 198 million gallons of tariff free gallons rather than the previous 159 million gallons. Anything imported to Brazil from the U.S. beyond the 198 million gallons will be subject to a 20% tariff.
Second, the RenovaBio program is a voluntary program. Certification of your renewable fuel and creation of CBIOs (equivalent to carbon credits) are not required to transport gallons of renewable fuel into Brazil.
Third, the CBIOs are not required to be transferred with gallons of renewable fuel for this program. In fact, the CBIOs are never attached to gallons like in the U.S. RFS program, they are actually considered a co-product and will be bought and sold separate from the physical renewable fuel.
The RenovaBio program uses its own GHG model, RenovaCalc. RenovaCalc does not take into account an indirect land use change like other models we are familiar with, but it does require the feedstock land be actively managed since 2007. Another point that is very different from other GHG calculators is the requirement to enter farmer data on all feedstocks received in a year including farmer names, plot locations, acreage, amount produced and moisture. There are also optional inputs for farming related items that affect CI such as fertilizer make up and usage and fuel and electricity usage among other items. If the plant chooses not to use the additional farming data then they are assigned a standard value for that information. The choice to input data or use the standard values is done on a per farmer basis. Many of the other inputs in the calculators are similar to what we see in other GHG models, but most require conversion to a different reporting unit.
In order to begin generating CBIOs under the RenovaBio program, the importer of the renewable fuel must have a RenovaBio Certification. Essentially, this would be similar to establishing a pathway under another program and having that pathway audited. The importer of the renewable fuel would be required to have a certification for each plant that produced the gallons being sent to Brazil. The certification process requires that the importer obtain one year of the RenovaCalc data from a particular plant and send it to an accredited inspector to undergo audit procedures. The audit procedures currently include a 100% review of the farmland noted in the calculator to verify that all of the land has been actively managed since 2007. It will also include a sampling of other data and tracing that data to the source documents for accuracy and recalculating any conversions of data that were required to complete the RenovaCalc. Once the audit is complete, the full RenovaCalc model and inspector’s report is posted to a Brazilian website for public comment. Currently there are no provisions in place to protect any information viewed as confidential.
The RenvoaBio program requires certification once every three years. In the years where certification is not required, plants are required to monitor the RenovaCalc and if the final CI number changes by more than 10% then they would need to recertify prior to generating any additional CBIOs.
Based on recent workshops and conversations with U.S. stakeholders, we have developed a brief list of major concerns that U.S. companies are seeing with this newly developed program.
- Difficulty collecting the farm related information to complete the calculator and large penalties in CI for using standard data (looks approx. 3 times worse than entering actual data)
- The 100% sustainability (land use) testing seems like it will be very cumbersome
- The RenovaCalc Spreadsheet is locked down so that you cannot see/follow calculations so to become familiar with the model is somewhat difficult.
- The requirement to post the entire model for public comment with no consideration of confidential business information will be very difficult, especially with the amount of farm related data that does not belong to the renewable fuel producer or the importer.
- Translation issues – currently no translated information has been released by Brazil. The U.S. Grains Council is working on a translation, but any errors in translation could also cause issues unless certified by Brazil. In addition, any submitted reports under the program must be translated and submitted in Portugese.
The U.S. Grains Council is still working with the U.S. Government and Brazilian Government to try to address some of the concerns described above. As a reminder, certification under this program is voluntary and not required to send gallons into Brazil.
If you have further questions regarding the program or its status, please reach out to Kari Buttenhoff at Christianson.
Learn more about other Compliance services offered by Christianson here.