Ethanol's carbon credit got cheap. Who wins and who loses
The CBIO is worth less than half what it was a year ago. Distributors are thankful; mills feel it.
To save you time4
- What's a CBIO?
- RenovaBio's decarbonization credit: mills generate them, fuel distributors are required to buy them.
- How far did it fall?
- R$25.12 in July, 59% below a year earlier. The 2025 average was R$54.72.
- Why?
- High inventories: the market now follows supply and demand, and supply is ample for the 2026 target of 48.09 million CBIOs.
- Can it rebound?
- An opinion from Brazil's Prosecutor-General could push prices up, per Argus. Without tougher targets, it's hard.
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Few people outside the sector follow it, but the CBIO moves listed companies' earnings. And it's cheap.
What it is, in one sentence
It's the carbon credit of Brazil's RenovaBio program: ethanol and biodiesel mills generate it, fuel distributors must buy it to meet targets.
The drop
In July, a CBIO was worth R$25.12, 59% below a year earlier. For comparison, the 2025 average was R$54.72, per the Ministry of Mines and Energy. From November 2025 to mid-year it went downhill, from around R$35 to record lows.
Why
The market stopped reacting to regulatory noise and started following inventories. There are spare CBIOs for the 2026 target of 48.09 million.
Who wins, who loses
- Distributors (like VBBR3): pay less to comply. Margins say thanks.
- Mills (like SMTO3): lose extra revenue that was worth double in 2025.
My read
An opinion from Brazil's Prosecutor-General's Office could move prices, per Argus. But the bigger message: the CBIO has become a commodity. Without more ambitious targets, I wouldn't count on that money returning to mills' cash flow anytime soon.