Biofuels Law (Ley 42 que establece lineamientos para la politica nacional sobre biocombustibles y energia electrica a partir de biomasa en el territorio nacional)

The 2011 Biofuels Law (Law 42 of 2011) regulated by Decree 345 of 2013, defined national policy guidelines for biofuels. It established a blending mandate for 10% bioethanol by 2016, that gradually would increase from 2% in 2013, to 5% in 2014, and 7% in 2015. It also allows the use and blending of biogas and biodiesel, stipulating that a biodiesel mandate will require previous measures and coordination with biofuel producers.

The Law also established subsidies of 20% of feedstock costs during the first five years for the operations of biofuel plants that process local biomass. 

In addition, the Biofuels Law provides fiscal incentives for biofuels, including: 10 year exemptions from import taxes on equipment and supplies; transfer tax; income tax on sales; and income tax on carbon credits. Likewise, it also exempts biomass projects from licensing fees at the national and local level for 10 years.

The Biofuels Law provides exemption of transmission and distribution fees for electricity generated from biomass when sold through direct contracts for up to ten years after beginning of operation.

Law 42 also states tge priority for biomass projects in electricity auctions. 

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