Apr 25, 2022
Brazil Gov. Has Not Given a Timeline for Increased Biodiesel Blend
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazil's biodiesel producers were highly critical last December when the Brazilian government lowered the biodiesel blend to 10% vegetable oil (B10) and declared that it would stay at that level for all of 2022. The government justified their decision because of the increased price of soybean oil, which is the main vegetable oil used in biodiesel.
In early 2021, the blend was at B13 but during 2021, the government gradually reduced the blend to B10 in an effort to hold down diesel prices. Soybean oil makes up 70% of the vegetable oil used in biodiesel and the government contended that the rising price of soybean oil was driving up the price of diesel fuel. But even with the reduced blend, the price of diesel fuel continued to increase indicating that petroleum prices were the main driving force behind the price increase and not soybean oil.
In a recent news conference on a trip to India, the Brazilian Minister of Mines and Energy, Bento Albuquerque, said the government is totally committed to renewable fuels and Brazil's RenovaBio program and as soon as conditions permit, the biodiesel blend will go to B14 and then B15 in 2023, but he did not give a timeline for the change.
In recent years, biodiesel producers had invested heavily in increased production capacity because the blend was scheduled to be B13 in 2021, B14 in 2022, and B15 in 2023. From that point forward, the blend was scheduled to increase 1% every year.
Last December, the biodiesel producers contended that the decision to remain at B10 would have devastating consequences for their industry. In a joint statement from the Brazilian Association of Vegetable Oil Industries (Abiove), the Brazilian Biofuels Producers Association (Aprobio), and the Brazilian Union of Biodiesel and Biokerosene (Ubrabio), they contended that this decision was contrary to the government's commitment to greener energy and renewable fuels (RenovaBio).
The Soybean Producers Association of Brazil (Aprosoja) stated that the lower blend will have a direct impact on Brazil's soybean exports. With the reduced demand for soybean oil, processors will send more of their soybeans to the export market instead of processing the soybeans into value added products such as soybean oil and soybean meal.