Law 13,263/2016 of March 23, 2016, determines an increase in the current minimum percentage of biodiesel addition to traditional diesel from 7% to 10% which is meant to occur during the next three years. The percentage will be gradually increased, with current biodiesel addition increasing from 7% to 8% by March 2017, 9% by March 2018, and 10% by March 2019. The law also established that the National Council for Energy Policy (“CNPE”) will be entitled to authorize a 15% biodiesel addition if this percentage is deemed to be viable after engine testing that will be performed within three years after publication of the law.

Additionally, the law authorized the voluntary use of biodiesel in greater percentages in public and railroad transportation, inland navigation, in equipment and vehicles employed in mineral extraction and power generation, and in agricultural vehicles.

The increase represents a guarantee of firm demand for the years to come and a positive signal for new investments in this sector. Brazil has the second greatest consumer market for biodiesel in the world.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.

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