Article

September 30, 2026

RenovaBio and AFOLU emissions in the Center-South: quasi-experimental evaluation with Propensity Score Matching and Differences-in-Differences

Renovabio and Emissions in the Center-South: A Quasi-experimental Evaluation with Propensity Score Matching and Differences-in-Differences

Alvaro Luz Alves Coutinho; Abdoulaye Aboubacari Mohamed

DOI: 10.22167/2675-6528-202602643

Article derived from a Course Conclusion Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by Instituto Pecege for textual synthesis and organization.

Summary

The study assessed the association between RenovaBio adherence and municipal greenhouse gas (GHG) emissions related to sugarcane in the Center-South region of Brazil. A quasi-experimental design was used, combining Propensity Score Matching (PSM) and Two-Way Fixed Effects (TWFE) differences-in-differences on a balanced panel of 1,511 municipalities and 19,643 observations between 2012 and 2024. In the aggregate specification in log(1+y), for which the joint test did not reject pre-trends at 5%, an increase of 26.0% in AFOLU emissions associated with sugarcane was estimated post-2019 in treated municipalities compared to controls. Estimates at the absolute level and by macro-channel showed pre-trends and were therefore interpreted as descriptive or suggestive evidence: a reduction of 36.1% in Land use change and 44.2% in Agricultural residue burning, an increase of 62.8% in Managed soils, and a difference of -12,157 tCO2eq at the level. Complementary analyses indicated a 13.0% increase in sugarcane area without statistical evidence of native vegetation reduction, as well as an insignificant variation of -0.5% in emission intensity per ton. Taken together, the results are compatible with an internal recomposition of emissions, but causal attribution is better supported only for the aggregate in logarithmic scale and remains conditional on the assumptions of the observational design. The findings contribute to the evaluation of decarbonization policies and suggest attention to managed soil emissions in the program’s evolution.

Keywords: Decarbonization; Differences-in-Differences; AFOLU Emissions; Propensity Score Matching; RenovaBio.

1. Introduction

Brazil has demonstrated a significant commitment to the global climate agenda, setting ambitious targets in the Paris Agreement for the reduction of its greenhouse gas emissions by 48% by 2025 and 53% by 2030 (MAGALHÃES; DOMINGUES, 2016). In this scenario, the National Biofuel Program, known as RenovaBio and established by Law No. 13.576/2017, has emerged as a fundamental pillar for the decarbonization of the transport sector in the country (BRASIL, 2017).

The RenovaBio structure is based on three interconnected elements: the establishment of mandatory targets for reducing carbon intensity, the commercialization of Decarbonization Credits (CBIOs), and the certification of efficient biofuel production through the Energy-Environmental Efficiency Note (NEEA) (BRASIL, 2017; LÁZARO et al., 2023). The economic magnitude of the program is notable, with individual targets totaling 41 million tCO2eq in 2023, representing an estimated financial volume of R$ 4.6 billion. The cumulative mandatory target for the period 2024 to 2033 reaches 570.76 million CBIOs (ANP, 2025).

Despite the relevance of RenovaBio in Brazilian climate policy, evidence on its environmental impacts and the mechanisms through which these effects manifest is still limited. This gap is crucial, as the program focuses on carbon intensity per unit produced, rather than absolute emission limits. Analytically, this can lead to heterogeneous responses among the various emitting sources, with the possibility of reducing extensive pressures and, simultaneously, intensifying production that entails greater input use (LÁZARO et al., 2023; OBSERVATÓRIO DO CLIMA, 2025).

The issue is particularly relevant for first-generation sugarcane ethanol (E1GC). The agricultural phase of this technological route is responsible for 86.8% of the total carbon intensity, with emissions concentrated in nitrogen fertilizers, burning of agricultural waste, and fossil fuel consumption in mechanized operations (MATSUURA et al., 2018; LIU et al., 2023). Additionally, RenovaBio certification requires compliance with the Native Vegetation Protection Law, linking economic incentives to territorial management requirements (NOVAES et al., 2023). Given the concentration of national sugarcane production in the Center-South — with eight states accounting for 99.6% of production between 2019 and 2021, and São Paulo contributing 57% —, the analysis of this regional scope is fundamental to understanding the environmental effects of the program (RAMOS et al., 2024).

The identification of effects attributable to RenovaBio, however, presents challenges. Adherence to the program does not occur randomly, as municipalities with certified plants differ systematically from others in factors such as production scale, level of mechanization, access to credit, and land tenure structure. These differences prevent direct comparisons and require empirical strategies that minimize observable selection bias, although they do not eliminate the possibility of residual confounding (ROSENBAUM; RUBIN, 1983; CALIENDO; KOPEINIG, 2008). Furthermore, different emission channels may react in distinct ways to program incentives, making an analysis based solely on aggregate data insufficient (OBSERVATÓRIO DO CLIMA, 2025).

Given this context, this study contributes to the evaluation of decarbonization policies by examining changes in municipal AFOLU emissions associated with sugarcane after adherence to RenovaBio. Thus, the objective of this study is to evaluate the association between adherence to RenovaBio and changes in municipal AFOLU emissions associated with sugarcane in the Center-South region of Brazil, using a quasi-experimental design that combines Propensity Score Matching and Differences-in-Differences for the period from 2012 to 2024.

2. Material and Methods

This study adopted a quasi-experimental approach to assess the association between adherence to the National Biofuel Program (RenovaBio) and changes in municipal emissions from Agriculture, Forests, and Other Land Use (AFOLU) related to sugarcane. The research focused on the Center-South region of Brazil, covering the period from 2012 to 2024. The methodological design combined Propensity Score Matching (PSM) and Difference-in-Differences (DiD) techniques with two-way fixed effects (TWFE).

The unit of analysis consisted of municipalities, and the final analytical sample was composed of a balanced panel of 1,511 municipalities and 19,643 observations. The treatment group was defined as municipalities that had at least one certified first-generation sugarcane ethanol plant (E1GC) in RenovaBio in the year 2019, totaling 198 municipalities. The year 2019 was established as the beginning of the post-treatment period, in accordance with the program’s operationalization after ANP Resolution No. 758, of November 2018 (ANP, 2025).

The analytical base was built from the integration of eight distinct data sources. The 2017 Agricultural Census and the bases of the IBGE System of Automatic Recovery (SIDRA) provided the pre-treatment covariates. The National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the System for Estimating Greenhouse Gas Emissions (SEEG v13.0) were used for treatment and emissions data, respectively. MapBiomas and the Systematic Survey of Agricultural Production (PAM/IBGE) contributed information on land cover and agricultural production, while the Institute of Applied Economic Research (IPEA/PNUD) and IBGE Centro-Sul complemented with socioeconomic data and municipal geometries.

The data collection and integration procedures involved harmonizing all sources by the seven-digit municipal code from IBGE. Records from certified plants were geocoded at the municipal level, and the annual databases were reorganized into a municipality-year format for the period from 2012 to 2024. The standardization of identifiers, handling of missing values, and organization of variable names were documented in a reproducible notebook, implemented in Python 3.12.

In the pre-processing covariate engineering step, variables were transformed to mitigate asymmetries and scale differences. Absolute variables, such as Gross Domestic Product (GDP), population, and agricultural areas, received logarithmic transformation (log(1+x)). Relative indicators were expressed as shares or densities. Missing values were imputed by the median of each covariate, and already normalized indices were kept in their original scale, resulting in 21 covariates for the final specification.

Before propensity score estimation, a quality and multicollinearity diagnosis was performed. Data types, the proportion of missing values, and the presence of multicollinearity were checked. Variables with more than 60% missingness or with a Variance Inflation Factor (VIF) greater than 10 were excluded, according to the guidelines of HAIR et al. (2009).

The propensity score was estimated using a regularized logistic regression logit model, after standardizing the covariates. The model’s discriminatory capacity was evaluated by the Area Under the Curve (AUC) and McFadden’s pseudo-R². The score logit was employed as a distance metric in the matching process, due to its more symmetric behavior in the tails of the distribution (ROSENBAUM; RUBIN, 1983).

The matching was performed using the nearest neighbor method, at a 1:1 ratio and without replacement, with a caliper of 0.2 standard deviation of the logit of the score. The matched subsample was used to diagnose the balancing of covariates. The balancing was assessed by the Standardized Mean Difference (SMD), adopting |SMD| < 0.1 as a reference (CALIENDO; KOPEINIG, 2008). Units outside the common support region were excluded.

The outcomes were organized into four balanced municipality-year panels (2012-2024). Panel A included total AFOLU-sugarcane emissions, harmonized from SEEG. Panel B disaggregated emissions into macro-channels: Land-use Change, Agricultural Residue Burning, Managed Soils, Soil Organic Carbon, and Forest Residues. Panel C addressed land cover, with MapBiomas data aggregated by class and municipality. Panel D integrated municipal sugarcane production from PAM/IBGE with SEEG emissions to calculate production and emission intensity.

The post-treatment differences were estimated by the TWFE model, formulated as `Yi = αi + λt + β (Treatedi × Postt) + εit`. In this equation, `αi` represents municipality fixed effects, `λt` year fixed effects, and `β` the average post-2019 difference between treated and control municipalities. The variable `Post` assumed a value of 1 for t ≥ 2019. Standard errors were clustered at the municipal level to accommodate intra-municipality serial correlation (BERTRAND et al., 2004). The analyses were performed on two scales: absolute level (tCO2eq) and logarithmic (log(1+y)), the latter being the main specification due to the greater stability of proportional trends (ROTH; SANT’ANNA, 2023).

The plausibility of parallel trends was assessed through an event study and joint Wald tests of the pre-treatment coefficients. The model included indicators of time relative to the treatment, omitting a reference period. Additionally, a sensitivity analysis to the reference period was performed, comparing the baselines k = -1 (2018) and k = -2 (2017) to verify the robustness of the results.

To triangulate the results on emissions, additional models were estimated for the sugarcane area, the participation of sugarcane in the municipal area, and the participation of native vegetation, using data from MapBiomas. With data from PAM/IBGE, the emissive intensity per ton and a specification of emissions with production control were calculated. These complementary analyses aimed to qualify the aggregated pattern and verify its compatibility with differences in productive scale or per-unit efficiency.

This study adopted a quasi-experimental approach to assess the association between adherence to the National Biofuel Program (RenovaBio) and changes in municipal emissions from Agriculture, Forests, and Other Land Use (AFOLU) related to sugarcane. The research focused on the Center-South region of Brazil, covering the period from 2012 to 2024. The methodological design combined Propensity Score Matching (PSM) and Difference-in-Differences (DiD) techniques with two-way fixed effects (TWFE).

The unit of analysis consisted of municipalities, and the final analytical sample was composed of a balanced panel of 1,511 municipalities and 19,643 observations. The treatment group was defined as municipalities that had at least one certified first-generation sugarcane ethanol plant (E1GC) in RenovaBio in the year 2019, totaling 198 municipalities. The year 2019 was established as the beginning of the post-treatment period, in accordance with the program’s operationalization after ANP Resolution No. 758, of November 2018 (ANP, 2025).

The analytical base was built from the integration of eight distinct data sources. The 2017 Agricultural Census and the bases of the IBGE System of Automatic Recovery (SIDRA) provided the pre-treatment covariates. The National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the System for Estimating Greenhouse Gas Emissions (SEEG v13.0) were used for treatment and emissions data, respectively. MapBiomas and the Systematic Survey of Agricultural Production (PAM/IBGE) contributed information on land cover and agricultural production, while the Institute of Applied Economic Research (IPEA/PNUD) and IBGE Centro-Sul complemented with socioeconomic data and municipal geometries.

The data collection and integration procedures involved harmonizing all sources by the seven-digit municipal code from IBGE. Records from certified plants were geocoded at the municipal level, and the annual databases were reorganized into a municipality-year format for the period from 2012 to 2024. The standardization of identifiers, handling of missing values, and organization of variable names were documented in a reproducible notebook, implemented in Python 3.12.

In the pre-processing covariate engineering step, variables were transformed to mitigate asymmetries and scale differences. Absolute variables, such as Gross Domestic Product (GDP), population, and agricultural areas, received logarithmic transformation (log(1+x)). Relative indicators were expressed as shares or densities. Missing values were imputed by the median of each covariate, and already normalized indices were kept in their original scale, resulting in 21 covariates for the final specification.

Before propensity score estimation, a quality and multicollinearity diagnosis was performed. Data types, the proportion of missing values, and the presence of multicollinearity were checked. Variables with more than 60% missingness or with a Variance Inflation Factor (VIF) greater than 10 were excluded, according to the guidelines of HAIR et al. (2009).

The propensity score was estimated using a regularized logistic regression logit model, after standardizing the covariates. The model’s discriminatory capacity was evaluated by the Area Under the Curve (AUC) and McFadden’s pseudo-R². The score logit was employed as a distance metric in the matching process, due to its more symmetric behavior in the tails of the distribution (ROSENBAUM; RUBIN, 1983).

The matching was performed using the nearest neighbor method, at a 1:1 ratio and without replacement, with a caliper of 0.2 standard deviation of the logit of the score. The matched subsample was used to diagnose the balancing of covariates. The balancing was assessed by the Standardized Mean Difference (SMD), adopting |SMD| < 0.1 as a reference (CALIENDO; KOPEINIG, 2008). Units outside the common support region were excluded.

The outcomes were organized into four balanced municipality-year panels (2012-2024). Panel A included total AFOLU-sugarcane emissions, harmonized from SEEG. Panel B disaggregated emissions into macro-channels: Land-use Change, Agricultural Residue Burning, Managed Soils, Soil Organic Carbon, and Forest Residues. Panel C addressed land cover, with MapBiomas data aggregated by class and municipality. Panel D integrated municipal sugarcane production from PAM/IBGE with SEEG emissions to calculate production and emission intensity.

The post-treatment differences were estimated by the TWFE model, formulated as `Yi = αi + λt + β (Treatedi × Postt) + εit`. In this equation, `αi` represents municipality fixed effects, `λt` year fixed effects, and `β` the average post-2019 difference between treated and control municipalities. The variable `Post` assumed a value of 1 for t ≥ 2019. Standard errors were clustered at the municipal level to accommodate intra-municipality serial correlation (BERTRAND et al., 2004). The analyses were performed on two scales: absolute level (tCO2eq) and logarithmic (log(1+y)), the latter being the main specification due to the greater stability of proportional trends (ROTH; SANT’ANNA, 2023).

The plausibility of parallel trends was assessed through an event study and joint Wald tests of the pre-treatment coefficients. The model included indicators of time relative to the treatment, omitting a reference period. Additionally, a sensitivity analysis to the reference period was performed, comparing the baselines k = -1 (2018) and k = -2 (2017) to verify the robustness of the results.

To triangulate the results on emissions, additional models were estimated for the sugarcane area, the participation of sugarcane in the municipal area, and the participation of native vegetation, using data from MapBiomas. With data from PAM/IBGE, the emissive intensity per ton and a specification of emissions with production control were calculated. These complementary analyses aimed to qualify the aggregated pattern and verify its compatibility with differences in productive scale or per-unit efficiency.

3. Results and Discussion

The research results reveal a complex panorama regarding the association between RenovaBio adherence and municipal sugarcane-related greenhouse gas (GHG) emissions in the Center-South region of Brazil. The quasi-experimental analysis, which combined Propensity Score Matching (PSM) and Differences-in-Differences (TWFE), indicated a post-2019 increase of 26.0% in sugarcane-related AFOLU emissions in treated municipalities compared to controls, when evaluated in the aggregated log-linear specification. This finding is the most robust in terms of causal attribution, as the joint test of pre-trends was not rejected at 5% (p = 0.098), although the causal interpretation remains conditioned on the assumptions of the observational design.

In contrast, the absolute-level estimates and those for the macro-emission channels showed significant pre-trends, qualifying them as descriptive or suggestive evidence, rather than identified causal effects. The absolute-level estimate indicated a difference of -12.157 tCO2eq, but the rejection of pre-trends prevents a direct causal interpretation. This distinction between the logarithmic and absolute scales reflects differences in the functional form and initial magnitude of emissions, with the logarithmic transformation being more suitable for comparing proportional variations between groups with distinct emission bases (ROTH; SANT’ANNA, 2023).

Quality of Matching and Balancing of Covariables

The propensity score matching step was fundamental to mitigate observable selection bias. The regularized logistic model demonstrated strong discriminatory capacity, with an Area Under the Curve (AUC) of 0.962 and a McFadden pseudo-R² of 0.550. This confirmed the existence of systematic differences between treated and control municipalities before the intervention, as expected for an observational study (CALIENDO; KOPEINIG, 2008). Before matching, the largest discrepancies between the groups were observed in variables of productive structure, such as sugarcane area (SMD = 2.22), the participation of sugarcane in the total agricultural area (SMD = 1.52), and sugarcane intensity in the landscape (SMD = 1.34).

After matching, there was a substantial improvement in the balancing of covariates. The proportion of variables with Standardized Mean Difference (SMD) below 0.1 increased from 4.8% to 66.7%, and thirteen of the twenty-one covariates showed a bias reduction greater than 80%. The final analytical sample for the TWFE models comprised 1,511 municipalities, with 188 treated and 1,323 controls, totaling 19,643 observations in the period from 2012 to 2024. However, seven covariates still remained with |SMD| above 0.1, indicating that matching reduced, but did not completely eliminate, the observable imbalance between the groups.

Evaluation of Pre-Trends and Identification Strength

The assessment of pre-trends is crucial for the validity of causal inference in Differences-in-Differences designs. For the aggregate specification in log(1+y), the joint Wald test of the pre-treatment coefficients did not reject the null hypothesis of parallel trends at a 5% significance level (W = 10.71; p = 0.098). This result offers relative support for the causal interpretation for this specification, although it is not definitive proof of the absence of pre-trends, which may have limited power (ROTH, 2024). In contrast, for absolute-level emissions, the hypothesis of parallel trends was rejected (W = 27.30; p < 0.001), which restricts the interpretation of this estimate to a merely descriptive character.

The sensitivity analysis to the reference period (baseline) revealed that, for the aggregate in log(1+y), the number of significant pre-treatment coefficients dropped from three to one when changing the baseline from k = -1 to k = -2. This suggests a possible anticipation of certification practices in 2018. For the macro-channels of Land use changes and Managed soils, the pre-treatment coefficients remained significant in both baselines, indicating divergences in emission trajectories prior to the program’s implementation. This pattern limits the causal interpretation for these channels, reinforcing the need to treat them as suggestive evidence.

Post-Treatment Estimates and Strength of Evidence

Post-treatment estimates from TWFE models revealed that, in the aggregate specification in log(1+y), the coefficient β was +0.231 (standard error = 0.046; p < 0.001). This value corresponds to a 26.0% increase in total AFOLU emissions associated with sugarcane in treated municipalities, compared to controls, in the post-2019 period. The 95% confidence interval for this effect ranged from +15.3% to +37.8%. This is the main finding of the study with the strongest support for a causal interpretation, given the non-rejection of pre-trends, but always considering the limitations inherent in the observational design.

At an absolute level, the estimate indicated a reduction of 12,157 tCO2eq (standard error = 2.659; p < 0.001) in total emissions. However, due to the rejection of pre-trends for this scale, this estimate should be interpreted only as a descriptive contrast. The level decomposition, although descriptive, suggests a reduction of 12,965 tCO2eq in Land-use change, an increase of 1,787 tCO2eq in Managed soils, and a reduction of 955 tCO2eq in Agricultural waste burning. These values help to understand the composition of emissions, but should not be causally attributed to RenovaBio.

Macro-Channel Decomposition

The macro-channel analysis revealed a heterogeneous pattern in post-2019 emissions in treated municipalities compared to controls. An estimated reduction of 36.1% in Land use change emissions and 44.2% in Agricultural waste burning emissions was observed, both on a logarithmic scale. These results are consistent with lower extensive pressure on land use and the substitution of manual burning harvesting for green mechanized harvesting. However, pre-trend tests for these channels were rejected, preventing exclusive causal attribution to RenovaBio, as pre-existing state legislation and sectoral transformations may have contributed to these patterns (CLIMATE OBSERVATORY, 2025).

In contrast, emissions from managed soils showed an estimated increase of 62.8% on a logarithmic scale. This pattern is consistent with the increased use of nitrogen fertilizers and organic residuals, indicating production intensification. However, the upward trend prior to 2019 for this channel suggests that a significant portion of this increase may be attributed to pre-existing sectoral processes, not exclusively to RenovaBio. Emissions from soil organic carbon and forest residuals also showed reductions of 17.4% and 18.7%, respectively, on a logarithmic scale, but the strength of identification for these channels is limited by pre-trends observed in event studies.

Triangulation: Land Cover and Emissive Intensity

Complementary analyses on land cover and emissive intensity help qualify the aggregated results. An estimated increase of 13.0% in the sugarcane cultivated area was observed on a logarithmic scale in the treated municipalities. However, no statistically significant variation was detected in the participation of native vegetation in the municipal area (β = +0.0002; p = 0.390), nor in the participation of sugarcane in the municipal area (β = +0.0004; p = 0.496). This data from MapBiomas is compatible with the expansion of sugarcane over pastures or other crops, but the absence of statistical significance for native vegetation does not allow us to infer that the program has causally caused deforestation containment.

Regarding production and emissive intensity, sugarcane production was 97.9% higher post-2019 in the treated municipalities, but this result is descriptive due to the strong previous productive imbalance. Emissive intensity per ton of sugarcane showed a non-significant variation of -0.5% (p = 0.082). When including production as a control in the analysis of total emissions, the difference dropped to +2.1% (p = 0.531), also without statistical significance. Together, these results are compatible with a scale mechanism, where increased production may influence emissions, but they do not causally confirm this mechanism, as production may be a result of the program itself.

Discussion: Mechanisms and Policy Implications

Together, the estimates suggest a pattern of internal recomposition of emissions, diverging from an expectation of uniform reduction. Negative contrasts in extensive sources, such as Land-use change and Agricultural waste burning, coexist with positive contrasts in sources associated with intensive input management, such as Managed soils (LÁZARO et al., 2023). This recomposition should be interpreted as a joint reading of the results, rather than a fully demonstrated causal mechanism, given the variation in the strength of identification between outcomes.

RenovaBio, by operating as a carbon intensity-based pricing instrument, remunerates the reduction in intensity per unit produced, without imposing a direct limit on the total volume of emissions (BRASIL, 2017). This design encourages practices that decrease the carbon intensity of the technological route, but allows for production expansion, which can increase CBIO revenue and, consequently, absolute emissions. The reduction in the burning of agricultural residuals is consistent with the progressive elimination of manual harvesting, penalized by RenovaCalc, but also driven by state legislation and previous sectoral trends, which makes it difficult to attribute causality exclusively to the program.

The increase in emissions from managed soils can be the complementary face of productive intensification, reflecting the greater use of nitrogen fertilizers, vinasse, and other residues. This dynamic is an intrinsic property of intensity-based instruments, as documented in the literature on carbon policies (FISCHER; NEWELL, 2008). The distinction between intensity standards and absolute caps is crucial for evaluating climate policies, as only the latter guarantee the reduction of aggregate emissions when production expands. The results are consistent with the international literature that points to heterogeneous responses to carbon instruments, conditioned by pre-existing institutional and technological capacities (HUANG; CHEN, 2022; FAN; ZHANG, 2021).

As a policy implication, the findings suggest that the evolution of RenovaBio should pay special attention to emissions from managed soils. Options such as progressive nitrogen use efficiency targets, incentives for controlled-release fertilizers, nitrification inhibitors, and conservationist management practices should be evaluated. The implementation of these measures, preferably with field data and designs that allow for the estimation of their specific effects, can be crucial to enhance the program’s environmental impact.

Limitations

The main limitation of this study lies in the observational nature of the quasi-experimental design. Although Propensity Score Matching reduced differences in observable characteristics, seven covariates remained above the balancing threshold, and unobserved factors may have simultaneously influenced program adherence and emissions. Thus, the aggregate estimate in log(1+y) has the strongest support for causal interpretation, while the estimates at the individual and macro-channel levels, which showed pre-trends, should be treated as descriptive or suggestive.

Additionally, the binary definition of the treatment, based on the presence of at least one certified plant in 2019, does not capture the intensity of participation in RenovaBio, the volume of CBIOs traded, the Energy-Environmental Efficiency Score (NEEA), or changes in certification over time. The use of the broader sample in the common support for TWFE, while preserving information, maintains residual heterogeneity between groups. There is also the possibility of spatial interference, where plants buy sugarcane in areas that exceed municipal boundaries, and economic, technological, or environmental effects can reach neighboring municipalities, which would violate the SUTVA (Stable Unit Treatment Value Assumption) assumption and could contaminate the control group.

The outcomes analyzed derive from an inventory based on emission factors and municipal allocation proxies, meaning that local variations in soil, climate, and management may not be fully captured. The results, therefore, refer to officially estimated emissions and not to direct field measurements. The sensitivity of the baseline choice to the aggregate diagnosis, and the temporal horizon of 2012–2024, which may be insufficient to capture long-term structural effects, are other limitations. These considerations prevent an interpretation of absolute causality and justify the explicit gradation of the strength of evidence adopted in this work.

In summary, this study demonstrated that adherence to RenovaBio is associated with a 26.0% increase in aggregate sugarcane AFOLU emissions in treated municipalities, relative to controls, on a logarithmic scale. Although results at the absolute and macro-channel level suggest an internal recomposition of emissions, with reductions in Land-use change and Burning of agricultural waste and increases in Managed soils, the presence of pre-trends limits the causal interpretation of these findings. The research found no statistical evidence of native vegetation reduction or worsening of emission intensity per ton, indicating that the program may be encouraging productive intensification without, however, guaranteeing an absolute reduction in emissions or preventing increases in specific channels, such as managed soils, which points to the need for continuous attention to these aspects in the evolution of the decarbonization policy.

4. Conclusion

This study evaluated the association between RenovaBio adherence and changes in municipal AFOLU emissions related to sugarcane in the South-Central region of Brazil, using a quasi-experimental design. An increase of 26.0% in aggregate sugarcane AFOLU emissions was observed post-2019 in treated municipalities compared to controls, in the log-scale specification. This finding, for which the joint test of pre-trends was not rejected, has the most robust support for a causal interpretation, although conditioned on the assumptions of the observational design. At the absolute level and for the macro-channels, the estimates showed pre-trends, being interpreted as descriptive or suggestive evidence of an internal recomposition of emissions. A reduction was observed in Land use change and Agricultural waste burning, while emissions from Managed soils showed an increase. Complementary analyses indicated an increase in cultivated sugarcane area, with no statistical evidence of native vegetation reduction, and a non-significant variation in emission intensity per ton. The main contribution of this work lies in the evaluation of decarbonization policies, by evidencing that RenovaBio, as an intensity-based pricing instrument, can lead to an internal recomposition of emissions, suggesting the need for special attention to managed soils emissions in the program’s evolution.

Despite the results, the study has limitations inherent to its observational design, such as the persistence of imbalances in seven covariates after matching and the inability to control for unobserved factors that may influence adherence and emissions. The binary definition of treatment did not capture the intensity of program participation, and the outcomes derive from an inventory based on emission factors and proxies, not direct field measurements, which may not capture local variations in soil, climate, and management. The time horizon from 2012 to 2024 may be insufficient to capture long-term structural effects. For future studies, it is suggested to explore participation in RenovaBio using continuous intensity measures, analyze certification cohorts, and adopt estimators robust to temporal heterogeneity. Incorporating effective supply areas of the plants and spatial spillover models may also enhance the understanding of the program’s effects, testing land-use shifts and reducing reliance on the municipality as an isolated unit. In summary, the findings indicate that the decarbonization policy must consider the complex dynamics of emissions, especially in managed soils, to ensure the program’s effectiveness.

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