Recently, the Brazilian government announced that it plans to increase the minimum biodiesel in diesel fuel in less than one year and increase it by 1 percentage point by 2023, thereby increasing demand for soybeans. After the biodiesel blending ratio increased from 10% to 11% last September, Brazil will increase the minimum blending ratio of biodiesel in diesel fuel to 12% in March next year, and it is expected that the proportion will increase to 15% in 2023.
Increasing the blending ratio of biodiesel can reduce diesel imports and boost demand for soybeans. Fabio Vinhado, head of the ANP laboratory at the Brazilian oil and fuel regulator, said: “We are testing a higher blending ratio and are currently testing diesel blends of 20% and 30% biodiesel. “”
Consulting firm BiodieselBR estimates that Brazil’s biodiesel supply will increase from 4.62 billion liters in 2016 to 6.69 billion liters this year and is expected to increase to 9.7 billion liters in 2023. Miguel Angelo Vedana, the principal analyst of the company, said: “In the future, demand for biodiesel in Brazil will grow strongly and capacity will continue to expand, thus ensuring supply.” Brazilian biodiesel producers association (Ubrabio) said that 11 plants are currently expanding. There are 10 new plants under construction. It is expected that once these projects are put into operation, Brazil’s diesel production capacity will increase to 12.6 billion liters.
A feature of the Brazilian biodiesel policy is that fuel dealers are still allowed to sell higher blends of diesel after determining the minimum blending ratio. Another incentive for fuel distributors is the new federal policy, the RenovaBio Biofuels Boost Policy starting in 2020. The policy proposes emission reduction targets for fuel distributors. These targets are based on sales of petroleum fuels in the previous year. If they can sell more biofuels, they will have smaller reduction targets in the next year.