Brazil Government Weighs Mixing More Biodiesel With Diesel Fuel

Brazil proposed raising the amount of biodiesel that’s blended with diesel from 5 percent as producers of the renewable fuel contend with a supply glut.

“We’ve already sent to the Presidency a proposal to increase the mixture of biodiesel with diesel,” Energy Minister Edison Lobao told reporters today in Brasilia. “There’s still been no decision taken.”

The world’s second-biggest biodiesel industry is operating at 50 percent of capacity, Jeronimo Goergen, president of a parliamentary lobby group for the renewable fuel, said today in a telephone interview.

Goergen said the blend rate may rise to 7 percent and then expand again to 10 percent in 2020. Lobao didn’t give a figure for the proposed increase.

Brazil started requiring distributors to blend 2 percent biodiesel with diesel in 2008, and initially planned to increase that to 5 percent in 2013, the Ministry of Mines and Energy said on its website.

The 5 percent blend was pushed forward to 2010 after companies brought sufficient capacity online to meet demand and the industry has been lobbying for a higher mix for two years, according to Goergen, who’s also a member of the lower house representing the Progressive Party for Rio Grande do Sul.

Brazil produced 2.7 billion liters (712 million gallons) of biodiesel last year, fuel regulator Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis said on its website.

The U.S. has the world’s biggest biodiesel industry with 10.3 billion liters of production capacity, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.