Sep 05, 2023

Brazilian Congress to Consider Increasing Biodiesel to a B20 Blend

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Legislation has been introduced into the Brazilian Congress that would gradually increase the percentage of vegetable oil blended into biodiesel used in Brazil.

The current blend is 12% vegetable oil (B12) and the proposal is to increase that to B15 within 90 days of the law passing and then up to B16 on March 1st of the subsequent year, B18 in the second year after passage, and B20 on March 1st the third year after passage. Most of the vegetable oil used to make biodiesel is soybean oil and biodiesel producers have excess capacity to produce biodiesel because they thought the blend would already be near 20%. In fact, the sector currently has 50% idle capacity.

Brazil lacks the refining capacity to supply the domestic diesel market forcing it to import diesel fuel. From January through July of this year, Brazil imported 7.8 billion liters of diesel fuel at a cost of US$ 5 billion. It could have been worse because the use of biodiesel reduced the amount imported diesel by 4 billion liters or US$ 2.6 billion.

Supporters of the legislation point to several benefits if the blend percentage is increased. Biodiesel produces less pollution, which has health benefits for urban residents and increasing the blend would gradually help to reduce greenhouse gas emissions.

The increased blend would benefit soybean producers since soybean oil is the major vegetable oil used to make biodiesel. Increasing the amount of soybeans crushed to supply the higher blend would also increase the amount of soybean meal available for livestock producers, especially the poultry sector. In turn, it could help to hold down food inflation and make Brazil's soybean meal exports more competitive.

The increased biodiesel blends and subsequent soybean crush, would improve income and job opportunities for rural residents.