Increase in biodiesel mixture opposes sectors – 10/10/2023 – Panel SA

The new schedule for increasing the blend of biodiesel with diesel has reopened a political dispute between industry sectors affected by the change.

Manufacturers of fuel made from plants or animals defend the immediate resumption of the evolution in the mixture percentage defined in 2018 by the CNPE (National Energy Policy Council).

If the schedule had been maintained — the policy was interrupted during the government of Jair Bolsonaro (PL) — the diesel sold in Brazil would have contained 15% biodiesel since March 1st of this year.

In March, the CNPE approved an increase of two percentage points from April, when the mixture became 12% (it was 10%). The new calendar foresees annual increases until reaching 15% in April 2026.

Opposition to increased mixing comes from other industrial sectors linked to transport, car manufacturers and the parts, machinery and equipment industries. The central argument against biodiesel is the production of sludge, a residue that, according to these segments, damages parts, engines and machines.

Before the CNPE approved the increase in the mixture, representatives of nine entities linked to these segments released a note reaffirming their position against it. They say that biodiesel producers do not want to lose “the easy and quick profit from ester-based biodiesel, nor invest in modernizing the industrial process to produce green diesel.”

The problem with the green diesel agenda, says Donizete Tokarski, CEO of Ubrabio (Brazilian Union of Biodiesel and Biokerosene), is that it comes up against the cost, which is higher than that of biodiesel. Furthermore, Brazil does not produce this type of fuel.

He also argues that the mixture of up to 15% has what the industry calls oxidative stability. Diesel, he says, also produces a type of sludge.

Biodiesel industries — there are 59 in 15 states — also face idleness in their structures. When, in 2018, the mixing schedule was defined, the fuel production capacity was increased to up to 14 million liters per year.

With a percentage of 12%, demand will be 7.2 million liters and idleness will remain at 50%.

Bruno Pascon, director of CBIE (Brazilian Infrastructure Center), says that the volume of investments needed to meet the increase in the mix is ​​not large precisely because the sector had already been preparing for a frustrated calendar.

The consultancy’s estimate is that R$3.55 billion will be invested in the segment by 2032. The calculation considers that by that date, the mixture would already be at 20% and consumption would reach 16.6 million liters per year, triple the current level.

“The increase in biodiesel is doubly positive because it reduces gas emissions and reduces diesel imports.”

In the production sector, there is an expectation that the fuel will gain strength in the federal government’s green development agenda. In interviews on the topic, President Lula and other ministers spoke about biofuel, but the product is not in the bill that will discuss the topic.

Biodiesel production in Brazil is mainly from soybeans, which accounts for 70%. Another 20% comes from animal tallow and a smaller percentage from other sources, such as palm.

There is concern about the possibility of fuel prices becoming vulnerable to fluctuations. In Pascon’s assessment, there is a risk that the government will again delay the pace of increase to balance the price of soybeans.

Tokarski, from Ubrabio, says despite the predominance of soybeans in production, biodiesel uses oil produced from the grain. “And soybean oil is not a product of global interest in the food market.”

With Diego Felix

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