The regulatory framework for fuels in Brazil is an effective monopoly, with matching prices for close substitutes. Biodiesel prices are unattractive because domestic diesel prices are below international relative oil prices, transportation logistics burden furthermore with unnecessary routes designed for fossil fuels, beyond heavy indirect taxation. An alternative framework, without taxation, for short distance supply, with a large variety of raw materials is better suited for technological innovation.
Fossil fuels monopoly; Biofuels; Biodiesel; Market regulation; Technological innovation