Government confirms reduction of biodiesel mixture to 10% in Brazil. The Ministry of Mines and Energy (MME) confirmed the reduction of the mandatory mixture of biodiesel in diesel from 13% to 10%. The measure applies to the 79th Biodiesel Auction (L79), to supply the market in the months of May and June.
The measure meets a request from the distribution and resale market, which even sent a letter to the government in advocating the reduction to the B10, when the auction was suspended.
Throughout the week, producers tried to avoid the abrupt reduction and opened a trade so that the mixture would be 12% (B12). On the evening of Friday (9) was published a joint note from Aproprio, Ubrabio (biodiesel producers) and Abiove (vegetable oils), with a list of claims, including the reversal of the measure. See the list at the end of the story
“If the government intends to change the rules of the game, it should do so through the CNPE and for the next auction, whatever the L80,” the document says.
The sector estimates that, with the reduction in the percentage of mixture, the demand for the L79 should have a drop of about 250 to 300 million liters of biofuel, with a cascading effect throughout the production chain, since producers make raw material acquisition and contracts with family farming in advance.
Although the offer for the L79 was the largest since the beginning of bimonthly auctions, with producers putting more than 1.5 billion liters on sale, prices also recorded records, surpassing R$ 7 per liter in an exclusive stage for small producers.
The sector claims that the exclusive stage for small producers represents only 5% of the total volume of 1.5 billion liters to be sold, and that if the auction had continued, prices would be lower in the next stages, for trading 95% of the remaining volume. Understand
But the distribution market’s estimate is that the average auction price could be around R$ 6 per liter, which would still be a historic high for biofuel.
In an official statement, the MME and Agriculture also state that “despite forecasts of the crop of this grain for the current year point to a growth of 10% (from 124 to 136 million tons), the world market continues with strong demand for soybeans, mainly due to low u.S. product inventories and growing demand from China.”
The MME also says that it expects “as soon as possible, the resumption of the use of biodiesel at the levels established by the National Energy Policy Council (CNPE)” without, however, setting a date.
Until 18h this Friday, the ANP had not yet published the notice of resumption of the Auction.
Brazil Minister assured in March that there would be no reduction of mixing biodiesel
In early March, the Minister of Mines and Energy, Bento Albuquerque, personally assured parliamentarians that the b13 mixture (13% of biodiesel) was maintained, when the National Transportation Confederation (CNT) put the reduction to 8% (B8) on the agenda.
Bento Albuquerque, the Minister of Mines and Energy:
We will not make any mistakes at this time of economic recovery
The context was the escalation of diesel B prices, marketed to final consumers, resulting from the high dollar and oil prices, internalized by Petrobras.
Juan Diego Ferrés, president of Ubrabio (biodiesel industry association).
At a time when the country is close to achieving 350,000 deaths by covid-19, without enough beds and respirators to treat the sick, the worst the government could do is reduce the percentage of biodiesel.
In a joint statement, Ubrabio and Aprobio (biodiesel producers) and Abiove (vegetable oils) regretted the decision of the Ministry of Mines and Energy (MME) and the Ministry of Agriculture, Livestock and Supply (MAPA).
“The entities consider the measure a regrettable market intervention action, which transfers the entire burden of high fuel prices to the biodiesel producing sector, putting the market in a scenario of total uncertainty, harming a broad production chain that employs more than 1.5 million people and has invested more than R$ 9 billion in the country.”
The ministries say that “the government works to strengthen and consolidate the Brazilian biofuels market, but in an environment that allows competitiveness, seeking the guarantee of national supply and preserving consumer interest in price, quality and product supply,” said the Minas e Energia portfolio.
Sought-after, associations representing distributors did not speak out. On the statements of Bento Albuquerquein March, the ministry did not comment. The space is still open.
Biofuels save lives, EPE demonstrates
The reduction in the percentage of biodiesel, which is sulfur-free, will result in increased use of S500 diesels (with 550 parts per million sulfur), since the amount of S10 diesel (with less sulfur) produced in the country is insufficient for demand.
Sulfur dioxide is a pollutant that aggravates respiratory and cardiovascular problems.
The mandatory addition of biodiesel to diesel and anhydrous ethanol to gasoline prevents hundreds of deaths per year in the metropolitan region of São Paulo, according to a study by the Energy Research Company (EPE).
The results of the research were presented on Tuesday (6), in webinar that had the participation of the substitute director of the Department of Biofuels of the MME, Marlon Arraes.
In the technical note Impact on human health by the use of biofuels in the Metropolitan Region of São Paulo (.pdf), the EPE indicates that biofuel policies have a “significant” positive impact on human health, by reducing the emission of particulates.
In the case of biodiesel, based on data captured in 2018 in the region, the document shows that the mixture of 12% biodiesel in diesel B (B12) prevents 277 deaths annually and causes the population to stop losing ten days of life from birth, compared to the scenario in which diesel is used pure.
In the case of the 15% mix, scheduled for 2023, 348 deaths would be avoided per year, with an increase in life expectancy by another four days.
Claims in the biodiesel and vegetable oil sector Excerpt from the joint note of the Brazilian Association of Vegetable Oil Industries (Abiove), Association of Biofuel Producers of Brazil (APROBIO) and Brazilian Union of Biodiesel and Biokerosene (Ubrabio).
- “First, we demand that the measures communicated be cancelled, by extempoporâneas, and the Auction Process in progress began since the publication of the Notice and such an abrupt change in the volumes objectified that to date it had aimed at 13% of the estimated volume of Diesel (B) for the period of May/June, implying the implicit economic processes for the offer that was presented.
- If the Government intends to change the rules of the game, it should do so through the CNPE and for the next auction, whatever the L80.
- It is important to highlight that for the offer presented under the current Notice, producers had to guarantee the raw materials to originate such quantity of biofuel through contracts involving their suppliers.
- They also made financial commitments counting on the sale of 300 million liters more, something in more than R$ 2 billion in revenue that would cease to exist, drastically breaking the cash flow of companies, in addition to the problem of employees hired.
- We also call for management with predictability and legal certainty in the area of fuels to ensure business decisions inherent to the activity (regulated) and, according to CNPE Resolution No. 16/2018, which provides for a progressive increase in the mandatory mix reaching B15 in 2023.
- The rapid resumption of the L79 auction, a communication of the decisions in advance necessary to minimize negative impacts on market perception with intervention in the process without proper care, as well as guarantee of the return to 13% from the next auction.
- Ensuring predictability in the commercialization of fuel as established in the current legislation that would avoid the shortage of raw materials later this year, repeating what occurred in the last two months of 2020, due to inappropriate estimates of diesel B demand by distributors, which resulted in increased oil exports.
Government confirms reduction of biodiesel mixture to 10%, April 30, 2021
