An Analysis of the Effectiveness of Climate Policy Instruments for Biofuels and Low Carbon Agriculture in Brazil

Abstract

The gaps between the desired reductions in Greenhouse Gas (GHG) emissions—those declared by signatories of the Paris Agreement—and the reductions actually obtained are the principal motivation behind this work. This study reviewed the recent literature on the topic in the form of narrative analysis, a non-systematic analysis. Additionally, it analyzed documents, laws, and regulations, and collected quantitative data on institutional websites. This study provides an overview of the combinations of different instruments adopted, thereby contributing to an understanding of the advancements and obstacles influencing their effectiveness. The biofuels program mandates their blending with fossil fuels at distribution companies, combined with tradable carbon certificates and instruments of financial, fiscal, and technological incentives; this has demonstrated effectiveness in meeting mitigation targets, with indications that such arrangements facilitate the accomplishment of sector mitigation potentials. Non-mandatory instruments in the low-carbon agriculture plan, with public funds to support cheap agricultural credit, have also met their overall targets. However, there is no evidence that such instruments can effectively pursue the sector’s greatest mitigation and development potential: the restoration of degraded soil and pastures, the targets of which only one-third were accomplished in a decade. Following the biofuels program model, a mandate to gradually incorporate products with lower carbon emissions into the supply chains of meatpacking and dairy companies—key components of the livestock value chain—and also to leverage tradable carbon certificates, may not only enhance carbon reduction, but also promote economic and socio-environmental opportunities for small and medium-sized rural farmers.