Argentina mulls biofuels blend cuts, producers cry foul

Argentina extended a biofuels law for two months in the face of congressional opposition to a bill that would allow the government to reduce blending mandates.

The extension of the 2006 law that enshrines a 12pc ethanol blend and 10pc for biodiesel was set to expire on 12 May.

The law will now remain valid until 12 July or "until a new ‘biofuels regulatory framework' comes into effect, whichever comes first," according to a decree published today.

Congressional allies of President Alberto Fernandez are pushing for new legislation that would provide flexibility on biodiesel and ethanol blending. Under the current bill, which would give priority to small and medium-sized producers, the biodiesel mandate would decrease to 5pc. The energy secretariat would have the flexibility to increase the mandate or reduce it to as low as 3pc depending on market conditions. The ethanol mandate would remain at 12pc but with a division of 6pc for ethanol from sugar cane and 6pc from corn. The latter could be reduced by three percentage points by the energy secretariat.

Government officials had previously said ethanol made from sugar deserved preferential treatment because, unlike corn, it does not have an export market.

Critics from the biofuels industry say the proposal is an indirect way for the government to control politically sensitive retail fuel prices by targeting biodiesel and ethanol.

Argentina's ethanol production declined by 13pc in the first two months of 2021, on the year, to 128,125m3, while biodiesel production plunged by 35pc to 192,485t in the same period, according to energy secretariat data.

By Daniel Politi