Brazil Strengthens Energy Security with Fuel Tax Exemptions and Subsidies Amid Global Price Pressures

On April 8, 2026, the Brazilian government unveiled a comprehensive package of measures aimed at bolstering the country’s energy security and alleviating the impact of soaring global fuel prices, particularly influenced by the Middle East conflict. Key among these steps was the federal decree that exempts PIS/Cofins taxes on aviation kerosene (QAV) from April 8 to May 31, intended to ease operational costs for airlines whose expenses have surged following a 55% price increase in QAV announced by Petrobras on April 1.

QAV accounts for about 45% of airlines’ costs, with Petrobras controlling approximately 85% of QAV production while still maintaining an open market to competition. To compensate for the tax break on aviation fuel, the government will increase the Industrialized Products Tax (IPI) on cigarettes, raising the minimum pack price from R$6.50 to R$7.50.

Additionally, Brazil has implemented subsidies for diesel fuel and liquefied petroleum gas (GLP) to support domestic markets and low-income consumers. A R$1.20 per liter subsidy for imported diesel, expected to cost R$4 billion over two months, complements an R$0.80 per liter subsidy for locally produced diesel. For GLP, a subsidy of R$850 per ton on imports aims to align prices with domestic rates, benefiting vulnerable populations reliant on cooking gas.

In parallel, a financial support mechanism worth R$9 billion will provide credit lines to airlines via the National Bank for Economic and Social Development (BNDES) and the National Civil Aviation Fund, targeting liquidity strains in the aviation sector.

Brazil’s Mines and Energy Minister, Alexandre Silveira, emphasized during the Latam Energy event that Brazil leads globally in energy security and self-sufficiency. Silveira highlighted Brazil’s status as self-sufficient in gasoline and its strategic push towards diesel and ethanol autonomy, underscoring the importance of reducing dependency on fossil fuels and expanding biofuel production from sugarcane and corn. He further criticized previous setbacks in Petrobras' refining capacity and outlined governmental efforts to expand the natural gas market through regulatory reforms and programs like Gás do Povo, which supports low-income families by reducing energy poverty.

These intertwined measures collectively reaffirm Brazil’s position to manage energy challenges through strategic policy interventions that enhance fuel affordability and nurture domestic production, thus reinforcing the nation’s energy sovereignty in a turbulent global context.