Brazil's Higher Biodiesel Mandate Boosts Output, Lowers Prices: Ministry

by Jeff Fick (S&P Global Platts) Brazilian biodiesel prices dropped to an 18-month low during a government auction this month on growing output and expectations for additional increases to the country's biodiesel-diesel mandate later this year, according to the country's Mines and Energy Ministry.

The latest positive trend was the fruit of recent moves to boost biofuels consumption, including a new program dubbed RenovaBio that was implemented in mid-2016. The program was aimed at reducing the country's need to import refined products such as diesel and gasoline as well as meet commitments to reduce greenhouse gas emissions under the Paris Accords. The volume of biodiesel blended with diesel sold at the pump has been growing gradually since the early 2010s, reaching 10% in March 2018. Brazil also mixes 27% anhydrous ethanol with gasoline sold at the pump, while hydrous ethanol can be used directly in flex-fuel cars.

About 77% of biodiesel production comes from soybeans, with 17% produced from animal fats and the remaining amount from raw materials, such as cotton and recycled cooking oil.

Brazil's higher biodiesel output will also help ease price concerns at home, a sore spot in Latin America's largest economy after rising diesel prices caused independent truckers to go on a brutal 10-day strike last year. The government was forced to implement a Real 0.30/l subsidy on diesel prices to settle the strike. But the subsidy expired December 31 and has not been extended by the administration of new President Jair Bolsonaro, which he took power January 1.

Brazil currently allows biodiesel blends of higher than 10% in private fleets and for experimental purposes, a move that was implemented when last year's strike disrupted diesel supplies across the country. READ MORE

Excerpt from Reuters (Google Translation): The National Association of Automobile Manufacturers (Anfavea) has urged the government not to increase biodiesel content in diesel to 15 percent, a target set for 2023, which has prompted protests from the biofuel industry.

Anfavea said tests have shown that if the government decides to increase biodiesel content to that level, vehicles may experience environmental damage, increased operating costs for the transporter and impacts to the safety of the vehicle.

"Especially for the fleet in circulation that is not adapted to the new biodiesel content," added Anfavea, citing among the problems that would be caused by the clogging of filters and injectors, increased fuel consumption, wear of the metal components of the engine, among others. READ MORE