Brazil biodiesel output jumps 5% but mandate cuts slow growth
Quantum Commodity Intelligence - Biodiesel production in Brazil hit a record 6.77 billion litres in 2021 as diesel demand recovered, but lagged the overall rise in fuel sales after domestic blending mandates were dialled back from planned levels.
The output figure was up 5% on the year and 15% from 2019, according to ANP data Thursday, with most of the annual increase coming during a very strong first five months during and immediately following the soybean harvest.
The year-on-year gain lagged that in overall diesel demand though, which was 8% higher at 62.1 billion litres, after the government announced in March 2021 the minimum blend requirement would be lowered to 10% from a planned 13% to try and keep fuel costs down.
After averaging 18% above year-ago levels from January to May, production was down an average 3% on the year in the following seven months.
The biodiesel blending mandate had been planned to increase 1% each year through to 15% in 2023, but the Bolsonaro government has since u-turned on the plans as they are seen as increasing highly politically sensitive fuel costs.
The mandate was again set at 10% this year, compared to the scheduled 14% target for the March 2022 - February 2023 period.
Much of the country's extensive biodiesel capacity has laid idle during and since the pandemic and producers started to seek certification to open export opportunities to European and other markets, which is not an overnight process.
The industry has also lobbied this year for mandates to be increased to at least 12% in order to combat shortages of diesel fuel and reduce reliance on expensive imports of the distillate, which is attracting all-time high production margins due to a global shortfall.
Lobby group FPBio said the country's 55 plants are expected to produce only 6.2 billion litres this year but have the capacity to double that amount.