Brazil expects biodiesel testing to wrap in March 2027, official says

Brazil's government expects tests ‌for ​diesel containing 20% biodiesel to finish in March, Marlon Arraes, a senior official at the Ministry of Mines and Energy, said on Tuesday, adding that approval for the blend's future use ‌could follow in May or October. While Brazil is a powerhouse producer of biofuels from raw materials like soy and sugarcane - with current mandated blends of 15% biodiesel in diesel and 32% ethanol in gasoline - its agricultural sector was hit by a spike in diesel ‌prices after the US war with Iran pushed oil prices higher and raised the cost of diesel imports.

Once the blend - ‌known as B20 - is approved, it will be ready for Brazil's national council of energy policy (CNPE) to make a decision about raising the mandated blend of biodiesel in diesel at some point in the future, Arraes, the cabinet director for the ministry's national secretariat of oil, gas and biofuels, said at industry event ⁠BIODIESELBR ​in Sao Paulo. The first phase of ⁠tests are analyzing blends greater than the current legal mandate of 15% - known as B15 - and will go up to B20. A 16% blend of ⁠biodiesel had been expected earlier this year but authorities held off raising the legal mandate, citing need for tests.

"All of this will be done ​very quickly because we are aware of the urgency and the necessity," Arraes told Reuters on the sidelines of the ⁠event, citing the state of the diesel market and the broader geopolitical situation. In an email, the Ministry of Mines and Energy said it expected B20 to ⁠be ​adopted in 2030.

In the wake of the war's start earlier this year, agriculture lobby CNA requested the government to hike the mandatory blend to 17%, though fuel importers were less keen. Brazil will be ready for a 20% blend in biodiesel, ⁠said Carlos Eduardo Hammerschmidt, the vice president of commercial and institutional relations at biofuel producer Grupo Potencial, adding that the increase would bring ⁠considerable benefits to Brazil's economy ⁠and energy sovereignty.

"We're talking about a 30% to 35% increase in Brazilian biodiesel production. This represents an additional 3.5 billion to 4 billion liters of biodiesel per year, along with an extra 20 ‌million (metric) tons of ‌soybeans being crushed in Brazil," Hammerschmidt said.