Brazil's Cbio prices rise as deadline nears

: Electricity, Emissions
24/10/28

Widespread demand for carbon credits two months ahead of the year-end deadline for meeting 2024 goals under Brazil's Renovabio national biofuel policy helped push October Cbio prices up by 17pc over two weeks to R91 ($16), the highest level since May.

Heightened demand from fuel distributors increased the volume of Cbio credits traded on the B3 Brazilian stock exchange. The sum of trades from 1-23 October totaled R742mn, second only to the R1bn reported in February — one month ahead of the 2023 goal deadline. In October 2023, the financial volume of trades was around R691mn.

The Cbio price rally lost momentum after reaching R91 on 21 October, with prices retreating recently. The short-term outlook is positive.

The approaching 31 December deadline for 2024 acquisition goals and potential stricter penalties for non-compliance are driving the increased demand.

An amendment to proposed legislation would include rural producers in Renovabio and make non-compliance with decarbonization goals a crime against the environment. The bill is being processed urgently and could be voted on soon.

"Without news, the [Cbio] market does not have the strength to move," a source from a financial institution linked to Renovabio said, skeptical of the sustainability of the recent price increase.

One issue that has intrigued buyers is the high Cbio inventories among biofuel producers. Producers are holding around 11mn credits, the most since the program started. But it is unclear whether producers are willing to sell or intend to hold the credits.

As of 23 October, the sum of Cbios in the hands of distributors plus the number of credits already retired in the current cycle was 32.3mn, 69pc of the revised 2024 target of 46.4mn credits. Cbio retirement marks the end of its market life under Renovabio. The market is monitoring the 2025 goal, proposed at 40.4mn. The Renovabio committee is reviewing public hearing comments to send to the CNPE in November. The CNPE must approve and publish the 2025 goals by 31 December.

Biofuel associations Unica and Abiogas support a 2025 goal of 42.6mn credits, but warn of a 12.5mn credit surplus by the end of 2024 if defaulting distributors do not change.

By Conrado Mazzoni and Rebecca Gompertz

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24/10/30

Guatemala's power capacity tender opens tomorrow

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LatAm-China energy ties lurk for next US leader

24/10/30

LatAm-China energy ties lurk for next US leader

Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK government consults on oil and gas scope 3 emissions

24/10/30

UK government consults on oil and gas scope 3 emissions

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Australia to support four new carbon credit methods

24/10/30

Australia to support four new carbon credit methods

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Central America, Caribbean lag behind renewable targets

24/10/29

Central America, Caribbean lag behind renewable targets

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