Brazil mulls biodiesel 25pc blending hike timeline
Brazil's mines and energy minister suggested last week that the country's biodiesel blending mandate could rise to 25pc in the long term, a proposal praised by biofuel producers, with some reservations.
"It is extremely possible that we will reach the 25pc mix over time, depending on the decision of [national energy policy council] CNPE," Brazil mines and energy minister Alexandre Silveira said at the UN Cop 28 climate summit in Dubai on 4 December. The minister also mentioned a project to double the share of vegetable oils in diesel by 2030.
The minister did not specify the timeline for reaching the 25pc level. The current CNPE calendar foresees the minimum blending percentage climbing to 13pc in 2024, 14pc in 2025 and 15pc in 2026. The current 12pc was adopted in April.
Brazil's biodiesel congressional caucus FPBio considers it essential that the government's proposal is incorporated into the pending Fuel of the Future program. The sector was excluded from the draft legislation presented by President Luiz Inacio Lula da Silva in September.
FPBio is pushing to create a 10-year blending mandate plan, which would support the predictability of the target indicated by minister Silveira, it said. Market participants were also critical that the increase remains at the sole discretion of CNPE, leaving it as a matter of government policy and not a national plan.
The CNPE comprises 16 ministries — including finance, planning and budgeting and an executive body — and state-controlled energy research firm EPE. The council can, in times of volatility, oppose planned increases, as was the case during the four-year term of former president Jair Bolsonaro, whose government reversed a blending hike when biodiesel outpriced its fossil fuel counterpart.
Silveira's proposal has been met with enthusiasm by the industry. Erasmo Battistella, president of domestic biodiesel producer Be8, told Argus that the minister's statement was "important." Battistella argues that, following the approval of the Fuel of the Future bill, an implementation schedule should be defined and an evaluation made as to when it would be possible to meet the 25pc level.
For the Brazilian union of biodiesel and biokerosene Ubrabio and the association of biofuel producers of Brazil Aprobio, plants have enough installed capacity to meet a 20pc mandate and are ready to expand to meet greater demands.
"We await confirmation in law of a progressive, safe and predictable increase, to guarantee legal security for present and future investments," Aprobio's board of directors president Francisco Turra told Argus.
In Dubai, Silveira said investments in Brazil biofuels — biodiesel, ethanol, synthetic fuels and biomethane — will total R65bn ($6.56bn) by 2037 and refinery developments to handle green diesel will attract around R8bn.
Availability of inputs
Calculations by Brazil's vegetable oil industries association Abiove indicate that increasing the blending mandate to 25p
c could generate an additional demand of 50mn metric tonnes (t) of soybeans for crushing by 2036,
if the mandate rises by 1 percentage point a year.
Abiove argues that, in March 2024, the mandatory mandate will increase to 15pc from the predicted 13pc. But changes only take effect in April, according to CNPE. The council is expected to hold its last ordinary meeting of the year on 14 December, according to market participants.
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Saras sees diesel margin improvement later in the year
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