Sunday, May 25, 2014

Brazil B-7 by Sept

To help Petrobras, the government will increase to 7% blend of biodiesel for diesel
Measure can reduce by R$ 1 billion of state imports

Harvest in ParanĂ¡: government wants to increase biodiesel production to alleviate the deficit in petroleum account

BRASILIA - President Dilma Rousseff will sign next week an interim measure to increase from 5% to 6%, the mixture of biodiesel to diesel fuel sold at pumps, starting in July.

The prosecutor will also provide for the increase in the percentage to 7% in September.

The main objective of the measure is to encourage the production of renewable product in the country, helping Petrobras to reduce imports of fossil diesel and deficit called "petroleum account".
Estimates of shared government-industry indicate that the increase of the mixture of 5% to 7% decrease by 1.2 billion liters per year of diesel imports of the country, an annual savings of R$ 1 billion to Petrobras account. The average monthly imports of diesel last year was 827 million liters, but in January this year the volume imported was a record and reached 1.25 billion liters. The government has insured the price of fuel, to avoid impact on inflation. And Petrobras, in its May report, indicated a loss of 30% of its net profit.

Unpublished survey by the Ministry of Mines and Energy shows that the production and effective use of renewable fuels in Brazil - biodiesel, ethanol and anhydrous ethanol - have stagnated since 2010.

During this period, the demand for fuel jumped 14%, but as there is no domestic production. Enough to meet it, Petrobras had to import gasoline and diesel to supply the market.

The measure also weighs in favor of the environmental aspect, since it will promote the use of clean and renewable fuel to replace fossil. Each percentage point increase in biodiesel blend of diesel is equivalent to planting nearly 7.2 million trees, reveals report "Environmental benefits of production and use of biodiesel," the Ministry of Agriculture, October 2013.

The main raw materials used for the manufacture of biodiesel in Brazil is soybean oil (almost 70% of the total); beef tallow; cottonseed oil; used frying oil; lard; and chicken oil.

The decision to extend participation in the oil biodiesel sold for vehicles has technical support in the government for some time, from the international experience. Trucks that circulate in other countries with similar engines have taken good advantage in terms of power and emissions to 7% blend, known as B7.

 The adoption of the larger percentage as the national standard was hampered, however, the perception that most biodiesel in the blend become the most expensive oil in the distribution, pushing inflation. However, at this juncture, the imported diesel is already about 20% more expensive than the biodiesel produced in Brazil.

A recent study by the Getulio Vargas Foundation (FGV) served to remove the resistors from the Ministry of Finance to measure, because it showed that the increase in productivity of agribusiness and idleness of plants for biodiesel production - currently at 61% of its potential - make changing the mix almost neutral in relation to the impact on the IPCA.

Mixture became mandatory in 2008

Despite the announcement occur almost on the eve of the opening of the 37th biodiesel auction, scheduled for June, the National Petroleum Agency (ANP) is already prepared to make the necessary changes and adopt the mixture of 6%.

- We have practically certain that (the signature) will occur next week, because in June the auction must be conducted so that biodiesel can begin shipping in July. The edict was issued by the ANP with a mixture of 5%. The MP must be published so that the notice is changed - said the president of the Brazilian Biodiesel Union and Biokerosene (Ubrabio), said Odacir Klein.

The mandatory blending of biodiesel to 6% and 7% will increase ten years after the launch of the National Program for Production and Use of Biodiesel (NPPB), when fuel was introduced in the Brazilian energy matrix, with a focus on social inclusion and regional development . While starting to be produced in December 2004, the biodiesel blend only became mandatory from 2008 throughout the country, with 2%. Then it was expanded to 5% in January 2010, anticipating in three years the goal established by Law No. 11.097, of January 13, 2005.

During this period, the government had to adopt a series of adjustments to prevent clogging in engines with higher fuel oxygenation by increasing the proportion of biodiesel. Since then, the specification has changed and there was more careful while handling the product, which, in the evaluation of government agents, ensuring a gradual migration from 5% to 7% with no major mishaps.
- The government is taking this responsibility - said a source familiar with the measures.
The sector, according to Klein, is capable of a mixture of up to 10%, but he points out that "you can not demand that the government increase by 100%" (compared to 5% today). And remember that two years ago had been claiming increasing content of the mixture. Government agrees to discuss further increase, but with technical studies to prove the efficiency.