October 29, 2015
Soybean Industry Promoting more Biodiesel use in Brazil
With the prospect of yet another record large soybean crop in 2015/16, various agricultural related industries in Brazil want the Brazilian government to increase the blending of vegetable oil into the nation's diesel fuel. Currently, the requirement is that petroleum diesel must be blended with 7% vegetable oil (B7) and the industries want that increased to a 10% blend (B10). Brazil has been at a B7 blend since November of 2014.
They proposed to the Minister of Mines and Energy that the blend be increase in a stepwise fashion over the course of two years and three months. Initially, they would like to go a B8 blend three months after the new rules are passed and then add 1% to the blend each of the next two years. Agricultural industries are pushing for the higher blend because 80% of the vegetable oil used in the mixture is soybean oil.
The Ministry of Mines and Energy is currently conducting a series of tests to insure that a higher blend would not cause any problems with the current diesel engines in use in Brazil.
The Association of Vegetable Oil Producers (Abiove) is the umbrella organization promoting the increase. They feel it would result in numerous advantages for the country including:
- A reduction in greenhouse emissions.
- A reduction in carbon monoxide.
- A reduction in particulates.
- Improved air quality in the big cities.
- Reduced diesel fuel imports.
- Add value to Brazil's soybean production.
- Increase the amounts of soybeans processed and thus increase soybean meal production which would be important for the livestock sector.
The soybean processors have increased their crushing capacity in recent years and they feel they could easily meet the new requirements. In fact, they would like to see an even higher blend of B30 be required for agricultural and industrial machines as well as for locomotives.
An increase in the blend would also reduce the level of imported diesel fuel. Petrobras is in charge of importing gasoline and diesel fuel into Brazil and these imports have been very costly for the Brazilian government. In 2014, Brazil imported 11.5 billion liters of diesel fuel at a cost of R$ 20 billion reals. These imports represented 19% of the domestic diesel consumption. Petrobras was then forced to sell the diesel fuel at a loss in an effort to hold down domestic inflation.