The prices of Renovabio's decarbonization credits (CBIO) rose 3.4% in the week ended March 4, trading at R$ 100.58 on average.

The credits reached R$ 101.50, the highest nominal price since the beginning of negotiations in June 2020.

The market is warmer. In the first 40 working days of 2022, 10.088 million CBIOs were sold, a 162% increase over the same period last year, when 3.848 million credits were sold.

In the week ended March 4, with fewer trading days due to Carnival, the volume traded fell by half, to 720,000 credits.

With the increase in prices, the more than ten million CBIOs transacted this year moved R$ 824 million, a 553% increase compared to 2021.

CBIO is a decarbonization credit required by fuel distributors. The apportionment is proportional to the sale of petroleum derivatives.

The emission of CBIOs, in turn, is made by producers of renewable fuels, such as ethanol (the main source), biodiesel and biomethane.

It is one of the pillars of Renovabio, a decarbonization program of the Brazilian transport sector. By the program methodology, each CBIO corresponds to 1 ton of carbon equivalent.

The annual purchase target of distributors is 35.98 million CBIOs this year, and 14.607 million have been issued so far, 40% of the annual target.

Distributors need to withstate decarbonization credit at the end of annual cycles to prove goals, a step called retirement.

Prior to that, CBIOs can be traded on the B3 over-the-counter market and purchased by other investors without a decarbonization obligation within Renovabio.

Reaction to high fuels

In this second (7/1), the CBIO stock of 14.607 million is 26.5% in the power of distributors (obliged); and 13.5% with emitters. Non-obliged parties bought 195,000 credits (0.54% of the stock); and 196,000 (0.55%) were retired.

In addition to the balance of supply and demand, the price of CBIO reacts to fuel prices, which came on a path of strong inflationary pressure in 2021 (exchange rate, stimulus and shocks related to covid-19).

The market is now in a new phase of uncertainty with Russia's invasion of Ukraine.

Although Petrobras, the main supplier in the domestic market, has not made the transfer of the wave in the international market, the price mix of oil products is affected by the minority participation of other sources - imports and private refineries.

In the short-term market, Brent is trading above $120 per barrel, but has touched $140, while the market tracks the risk of an abrupt supply cut for possible sanctions on Russia.

Western countries are trying to find alternatives to offset supply in the short term if the worsening crisis in Ukraine leads to a tougher stance against Moscow.

Even though Russian oil has not been officially embargoed -- which could occur in the coming days -- there is a strong movement by Western companies to withdraw from the country, as well as blocking financial transactions that undermine transactions with Russian companies.

Source: epbr