US biofuel feedstock DCO production up in October

Brazil waste oil mandate could raise biodiesel costs

Brazil waste oil mandate could raise biodiesel costs

Sao Paulo, 11 June (Argus) — The mandatory use of waste oils and fats (WOFs) in the production of biodiesel in Brazil is likely to raise product costs, considering the limited supply of these raw materials and competition from products with higher added value, such as sustainable aviation fuel (SAF) and hydrotreated vegetable oil (HVO). In May, Brazil's mines and energy ministry MME published a decree mandating the use of 1pc WOFs in the production of biodiesel, SAF and HVO starting 1 January 2028. Until then, the use of these raw materials is voluntary. Per the decree, the minimum percentage of WOFs will be reviewed every three years, based on factors such as the available quantity of the raw material, advances in traceability mechanisms, the expansion of collection infrastructure and increased pretreatment capacity. In Brazil, the market for used cooking oil (UCO) — one of the main types of WOFs — remains unregulated and lacks consolidated official data. Estimates of collection levels in the coming years vary widely, with projections ranging from 500,000 metric tonnes (t)/y to 2mn t/y, according to market participants. In 2025, biodiesel production used approximately 100,000t of UCO. When soybean oil prices are high, WOFs serve as an important alternative feedstock for biodiesel production, especially for non-vertically integrated plants. In 2025, for example, the average price of UCO fob Sao Paulo, with 3.5pc acidity was R5,438($1.051)/t. The price of soybean oil cif Sao Paulo stood at R5,808/t during the same period, according to Argus indicators. The mandatory use of WOFs may alter this trend, with increased demand from the biodiesel, SAF and HVO industries driving up the price of UCO and, consequently, the final product. The use of WOFs in biodiesel production is also expected to impact the glycerin market, which, because some countries accept only the byproduct derived from virgin vegetable oils, will need to diversify its consumer base. The Brazilian biofuels industry considers the deadline for the mandatory adoption of 1pc OGRs in biodiesel production to be insufficient, given the necessary adaptations required at plants that currently operate exclusively with virgin vegetable oils. A major biodiesel producer that acquired existing WOF plants in the Brazilian market told Argus that it has been involved for over three years in projects to adapt these industrial units. It considers it unfeasible for small-scale plants to complete all the required adjustments in just over a year and a half. The MME stated that the measure takes into account the sector's varying technological realities. The gradual implementation is specifically intended to allow for industrial adaptation and the expansion of processing capacity for these raw materials. Traceability initiatives Brazil's UCO market is maturing but, to date, lacks consolidated traceability projects. According to the MME, the period of voluntary use of WOFs was structured to allow for the sector's gradual adaptation, the development of collection and processing chains and the advancement of traceability mechanisms. In this context, Brazil's animal recycling association Abra is working to create a specific national classification of economic activities (CNAE) for UCO. The organization is also developing an app designed to record information on the collection and movement of the raw material, with the aim of reducing traceability gaps and increasing transparency throughout the production chain. Meanwhile, Brazil's state-controlled oil company Petrobras recently announced an investment of R23mn in initiatives for the collection of animal by-products intended for the production of biofuel. The funds will be directed toward projects by non-profit organizations to improve the logistics and infrastructure of collection points, including the provision of equipment for filtering and temporary storage of the product. By Natalia Dalle Cort Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.