Brazil deploys B10 biodiesel blend one year early

Brazil raised its biodiesel mandate to 10% on March 1 from the previous 8%, with the change expected to boost demand by nearly 25% for the biofuel this year, according to the Mines and Energy Ministry.

The change has been introduced a year ahead of schedule

Brazil’s vegetable oils industry association Abiove estimates that biodiesel demand will rise by 1 billion litres this year from 5.3 billion litres in 2017, mainly because of the faster-than-expected blend hike.

The hike was scheduled to rise to 9% this month and to 10% in March 2019, but the government has raised it by 2 percentage points in response to lobbying from Brazil’s biofuels industry so producers can utilise idle capacity.

Only half of Brazil’s biofuels production capacity was being used in January, according to data from Brazil’s oil, gas and biofuels regulator ANP.

The country’s petroleum-based diesel consumption is also beginning to recover, with sales of conventional diesel reaching 54.77 billion litres in 2017, after peaking in 2014 at more than 60 billion litres before severe economic recession set in, ANP data showed.

Soybean oil accounted for 70% of the feedstock for biodiesel production in 2017, with beef tallow making up 18% of biodiesel feedstock, and other organic oils and fats making up the rest, according to the ANP.

Brazil’s biodiesel program, which was launched in 2005, has reached the maximum blend permitted by current legislation. Brazil’s new biofuels stimulus law RenovaBio will lay out future increases in the blend.

Brazil made its COP21 Paris climate pledge to reduce greenhouse gasses by 43% from 2005 levels by 2030 based on models that rely on the expansion of biofuels use, including ethanol, biodiesel and bio-jet fuel.

The timeline for future blend increases is expected to be announced in the coming days as the implementation of the new RenovaBio legislation unfolds.

The country’s biodiesel industry is located predominantly in Brazil’s centre-west and southern grain belt.

Brazil is typically a net importer of diesel due to a structural deficit in its refining capacity. The rise in the biodiesel blend should help lighten its need to buy the fuel on the international market in the future, analysts say.