Congressmen claim that expanding benefits increases energy vulnerability; alternative would be to increase biodiesel
A (Biodiesel Parliamentary Front) stated on Thursday (12.mar.2026) that the federal government’s measure to exempt up to R$ 0,64 on a liter of biodiesel at a cost of R$30 billion is the wrong response to the scenario of rising prices and will increase “even more” Brazil’s dependence on fossil fuels.
“Subsidizing imported fossil diesel is a mistaken response from a strategic point of view. Instead of reducing the country’s energy vulnerability, the measure deepens Brazil’s dependence on a fuel subject to geopolitical crises, supply shocks and international price fluctuations”stated the president of FPBio, deputy (MDB-RS), via note.
The president’s government (PT) also on Thursday (12th March) a package of measures to the impact of the rise in diesel prices in Brazil. The initiative includes tax reductions and the creation of a fuel subsidy until December 31, 2026.
The measure was adopted after the rise in the price of oil on the international market, associated with the escalation of involving the United States, Israel and Iran. Diesel is considered strategic for the Brazilian economy because it influences the cost of transporting cargo and, consequently, the price of food and other products.
The government’s plan has 2 main actions: reducing federal taxes and creating a diesel subsidy.
End federal taxes on diesel
O 12,875 reduces federal taxes on diesel. The economic team’s estimate is that the measure will result in a drop of around R$ 0,32 per liter in the price of fuel.
The fiscal impact of the tax reduction is estimated at R$20 billion by the end of 2026, an amount corresponding to the federal government’s loss of revenue.
Direct fuel subsidy
A (provisional measure) 1,340 of 2026 also creates a subsidy for R$ 0,32 per liter of diesel for producers and importers.
The cost is R$10 billion for the Treasury. The government did not detail how it will monitor whether the benefit will actually reach the pumps, a historic problem in the sector.
Together, the two measures seek to reduce R$ 0,64 per liter the price of diesel.
For the deputy, the ideal alternative to reduce fuel prices and reduce Brazil’s dependence on fossil sources, such as diesel, is to increase the share of biodiesel in the fuel matrix.
“The sector currently has ample installed capacity, raw materials and logistics to quickly respond to an increase in mandatory mixing. Furthermore, the plants operate with high industrial idleness, estimated at around 40%”he stated.
