chapter  21
7 Pages

The viability of the biodiesel program as an instrument of social inclusion

ByMARCOS COSTA HOLANDA , BRUNO MOREIRA WICHMANN

The biodiesel program The oil crisis of the 1970s encouraged the search for renewable energy sources in several countries. In Brazil, this search resulted in the launch of two fuels of vegetable origin: alcohol from sugar cane and biodiesel. The environmental concerns of recent years increased the support of biodiesel as an alternative automotive fuel. To this end a federal law now requires that a minimum of 2 percent of vegetable oil is incorporated in diesel sold to the market.1 By 2013 this proportion should be 5 percent. As of 2005 the consumption of diesel oil was in the order of 39 million m3. In this case, the mandatory addition of 2 percent of biodiesel would create a demand close to 782,000 m3 of biodiesel. In the Northeast the consumption of diesel oil was 5.7 million m3, representing a demand of around 114,000 m3 of vegetable oil. Specifically, in Ceará, this demand would amount to 11,300 m3 of biodiesel. Several raw materials can be used for the production of biodiesel such as, castor beans, soybeans, palm oil, animal fat, sunflower seeds, maize and cotton. Besides the introduction of the minimum percentage of biodiesel in commercial diesel fuel, the federal government created the label “Social Fuel” by setting a tax exemption for the production of biodiesel by small farmers.2 This label is granted to producers

of biodiesel that purchase raw materials from small farmers. Its aim is to promote social inclusion of persons engaged in family farming. According to the regulations of the label, the producers that use castor beans enjoy a reduction of at least 77.5 percent in the PIS/PASEP and COFINS federal taxes.