The sugarcane-ethanol chain and the carbon credits price formation: evidences of a success policy from Brazil’s RenovaBio program

RenovaBio links life-cycle performance in Brazil’s sugarcane–ethanol sector to tradable decarbonization credits - CBIOs. Yet, empirical evidence remains limited on how agricultural production dynamics in this chain and industrial conversion influence CBIO price formation. This study quantifies how key variables co-move across three linked stages: agricultural supply, industrial conversion and the CBIO market, using time-series models for each phase. In the agricultural stage (1976–2023), annual changes in produced quantity are driven primarily by productivity variation (β = 9.08 × 10 6 ; p < 0.0001; R 2 ≈ 0.30). In the industrial phase (1981–2023), hydrous-ethanol share dynamics move with milling throughput (β = 7.44 × 10 −10 ; p = 0.0034) and sugar allocation (β = 3.44; p = 0.022), and with GDP growth entering negatively (β = −0.348; p = 0.0358). In the CBIO phase (monthly, 2020/02–2024/08), it is indicated that increases in registered issuance and definitive traded quantity are associated with downward CBIO unit-price changes (β = −4.65 × 10 −8 and −2.63 × 10 −7 ; p ≤ 0.0001), whereas traded value and the fuel-market/chain activity are positively associated with price adjustments (β_VNDC = 2.92 × 10 −8 ; β_TPE = 6.47 × 10 −7 ; β_VGCM = 4.74 × 10 −4 ; p < 0.0001). The ethanol-to-gasoline consumption ratio has a negative sign (β = −2.62; p = 0.008), suggesting that ethanol-to-gasoline mix conditions help shape short-run CBIO price adjustments. Overall, CBIO price changes are better understood as outcomes of credit flows interacting with liquidity, value intensity and fuel-market conditions, rather than as one-to-one responses to issuance volumes.