October 1, 2014

New Biofuel Mandates take Effect in Brazil

The Brazilian President signed into law on September 24th new mandates for the biofuel industry in Brazil. The legislation stipulates that the amount of ethanol blended into gasoline will go from the current 25% (E25) to 27.5% (E27.5) provided there are no technical difficulties with the higher blend. Tests are now underway to determine the higher blend’s impact on corrosion, durability of the engine parts, and emissions.

If all the gasoline supply in Brazil contained the higher blend of ethanol, it would add one billion liters of domestic demand for ethanol annually. Ethanol producers have been pushing for this increase as well as higher gasoline prices as a way for the ethanol sector to grow its way out of its current problems.

The new law also stipulates that the amount of vegetable oil used in biodiesel will be increased to 7% (B7) on November 1st. This is the second increase in this percentage this year. On July 1st it went from 5% (B5) to 6% (B6). The Under Secretary in charge of this program in the Ministry of Agriculture wants more of the raw material for the blend to be sourced from small family farmers. Soybean oil will still be the primary vegetable oil used in the blend, but the amount of soybean oil has been capped at 80% of the total. The limit on soybean oil was put in place to encourage the development of alternative vegetable oil sources.