To meet the obligations assumed by Brazil at the United Nations Conference on Climate Change 2015 (COP 21), the Brazilian National Biofuels Policy (RenovaBio) was implemented in 2017 by Law No. 13,576/2017, with additional regulations established by Decree No. 9,888/2019 and Ordinance No. 419 of November 20, 2019 issued by the Brazilian Ministry of Mines and Energy.

In an effort to fulfill the commitments made at COP 21, Brazil set annual decarbonization targets for its fuel sector with the aim of increasing the bioenergy share in the Brazilian energy matrix to approximately 18% by 2030.

The Decarbonization Credit (CBIO) is an instrument adopted by RenovaBio as a tool to reach this target. CBIOs will be issued by biofuels producers and importers duly certified by the National Petroleum Agency (ANP), based on their purchase and sale invoices. In contrast, fossil fuel distributors will have annual decarbonization targets calculated by the ANP based on the ratio of fossil fuels they sell. Purchasing CBIOs is the only way to reach these targets.

Each CBIO will be equivalent to 1 ton of CO2 avoided, it will not expire and can only be withdrawn from circulation when its retirement is requested. Each year, fuel distributors should request the retirement of CBIOs held by them in an amount equivalent to the decarbonization targets set for them.

CBIO issuance and B3’s role

The authorization process for issuing and validating invoices to enable the issuance of CBIOs is carried out by biofuel producers and importers with the ANP, without B3’s involvement. Once the required documentation is obtained, issuers must hire an Underwriter (a bank or other financial institution) to issue the CBIO and then forward it to B3 for registration.

B3 will provide the registration environment for CBIO issuance, trading and retirement request. Financial institutions will have access to the environment and act as Underwriters and/or representatives for CBIO buyers.

Statistical information regarding CBIO will also be disclosed by B3 through the Historical Series of the OTC environment. In this link, selecting CBIO in “Data by Asset” it will be possible to consult:

  • Volume deposited – amount registered per day on the selected period;
  • Custody – daily information of total amount custodied;
  • Volume traded – traded amount on the selected period;
  • Retirement – total amount retired on the selected period.

Investors interested in trading CBIO, should directly contact a financial institution of their relationship, since the broker is required for trading and B3 is not supposed to indicate them.

Although there is no restriction on the type of buyer eligible to purchase CBIOs,, it should be noted that, according to Law No. 13,576, it is mandatory for fossil fuel distribution companies to buy CBIOs to meet their decarbonization targets.