News
09/10/26
Voluntary biodiesel use furthers Brazil climate goals
Voluntary biodiesel use furthers Brazil climate goals
Sao Paulo, 9 October (Argus) — Voluntary use of biodiesel in Brazil above its
15pc mandate is broadening across sectors, highlighting diverse approaches to
decarbonization and energy security amid intensifying global conflicts. The
pending implementation of a regulated carbon market in Brazil means companies
will need to reduce or offset greenhouse gas emissions. To meet those
obligations, many are expanding their use of biofuels alongside the purchase of
carbon credits. Biofuel use could also gain ground as an alternative to
petroleum-based diesel, especially during price spikes driven by geopolitical
conflicts such as the Mideast Gulf conflict and the Russian war in Ukraine,
market participants from biofuel companies and industries say. Biodiesel is
typically more expensive than diesel in Brazil, but that relationship can flip
during periods of global tension. Between 2 March, the first trading day after
the start of the US-Iran war, and 6 October, the price of S10 diesel at the
southern port of Paranagua, in Parana state, reached R7,402($1,480)/m³, the
highest level since the 2020 start of Argus' historical series. Biodiesel in the
same period was quoted at R5,434/m³ in the spot market in Araucaria, also in
Parana. Companies have also begun to pay greater attention to energy security in
light of recurring international crises and supply risks. Brazil imports between
20-25pc of its diesel demand, leaving it exposed to foreign market conditions.
In this context, biofuels are gaining importance not only as a decarbonization
tool but also as an alternative to reduce reliance on imported fuels and bolster
energy security. This concern has been reinforced by recent events highlighting
the vulnerability of global supply chains. Russia, one of the world's leading
diesel exporters and historically a major supplier to Brazil, went so far as to
restrict overseas shipments to safeguard its domestic market during the war in
Ukraine. In the US, statements by President Donald Trump regarding potential
limits on fuel exports have also fueled fears of a tightening in global supply.
"Companies need to analyze the magnitude of the risk associated with not having
the product [diesel]" in hand, said Daniel Furlan Amaral, regulatory affairs
director at the Brazilian vegetable oil industry association Abiove. "This will
become a component of companies' risk matrices." Industries from mining to
consumer goods test higher blends Brazilian mining giant Vale is among the firms
testing higher biodiesel blends. In Mariana, in southeast Minas Gerais state,
the company uses 30–50pc biodiesel blends in part of its truck fleet, which has
a capacity of up to 190 tonnes (t). Vale sees biodiesel use, once performance
parameters are validated, as having the potential to generate meaningful
environmental gains and serve as a benchmark for large-scale adoption across the
sector. The miner is also investing in solutions such as ethanol and
battery-electric trucks. A Brazilian-based subsidiary of German auto giant
Mercedes-Benz is also testing diesel with a 30pc biodiesel blend in its
vehicles. According to the automaker, the trials assess component durability and
equipment performance under long-term operating conditions. Besides
Mercedes-Benz, state-controlled Petrobras is running tests with 20–25pc blends
to evaluate the potential for emissions reductions, while rail operator Rumo
uses a 16pc blend in part of its rail fleet. There are also cases of pure
biodiesel use in specific applications. Mercedes-Benz reported positive results
with the fuel during the Rota Sustentavel COP30 initiative, carried out in
partnership with Brazilian biofuel producer Be8. In the initiative, a truck
traveled about 4,000km between Passo Fundo, in the southern state of Rio Grande
do Sul, and Belem, in the northern state of Para, cutting greenhouse gas
emissions by about 99pc, according to researchers from the Instituto Maua de
Tecnologia. Among other firms evaluating biodiesel use are consumer goods giant
Unilever, which uses pure biodiesel in boilers; maritime logistics firm Wilson
Sons Servicos Maritimos, in waterborne operations; and power plant Energetica
Suape II, in thermoelectric generation engines. Be8 and other biodiesel
producers, such as Amaggi, Potencial, Binatural and Oleoplan, are also
conducting evaluations with blends above the mandatory level. Regulatory shift
eases voluntary blending Hydrocarbons regulator ANP is revising the rules for
voluntary biodiesel use above the mandatory 15pc blend. Previously, companies
needed prior authorization from the agency. With a provisional procedure now in
effect, companies only need to notify the agency of their use. The regulator has
been aligning its rules with Brazil's Fuel of the Future law to streamline
procedures and provide legal certainty for the adoption of these alternatives.
Replacing prior authorization with a notification model had long been sought by
the industry, according to Abiove. According to Amaral, the process required
approvals from different agencies — including the Brazilian environment and
renewable natural resources institute Ibama — and could take more than six
months to complete. "All these requirements discouraged interest" in the past,
Amaral said. By Natalia Dalle Cort Send comments and request more information at
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