Biofuels would provide even greater record in the soybean crop, says sector

Projections from the Brazilian Institute of Geography and Statistics (IBGE) and the National Supply Company (Conab) expect a record production of the soybean crop in 2022, with about 140 million tons of the product, of which Brazil is the largest producer. world.

However, a part of the segment, biodiesel producers believe that this production could be even greater.

All because, since September 2021, the National Energy Policy Council (CNPE) has momentarily reduced the percentage of mandatory blending of biodiesel in diesel.

The level stipulated by the National Biofuels Policy (Renovabio) went from 13% to 10%. The public policy calendar provides for an increase to 14% as of March this year, which is not yet known.

As soy represents about 75% of the Brazilian biodiesel production matrix, the sector argues that the adoption of these levels would make it possible to expand production, with a series of indirect impacts.

According to a survey by the Brazilian Association of Vegetable Oil Industries (Abiove), the decision meant that, in 2021, soybean processing fell by 300 thousand tons compared to the previous year, due to the lower demand for vegetable oil.

This reduction caused Brazil to produce 1.2 billion liters of biodiesel less compared to the initial projection of eight billion liters, made by the Brazilian Biofuel Producers Association (Aprobio).

President of the entity and Minister of Agriculture in the government of ex-President Fernando Henrique Cardoso, Francisco Turra highlights that, once Renovabio levels are re-established, producers would be able to raise their crop numbers this year.

“Without a doubt that would be possible. The companies in the sector trusted the public policy and prepared themselves for a production 30% greater than the current one. Many of them are now able to operate with up to 18% blending of biodiesel in diesel”, he criticizes.

“Our product helps to reduce the use of fossil fuel, which is imported, and still generates jobs here, with a focus on the environment. Biodiesel was decanted as a solution at COP-26 in Glasgow. But, in practice, this is not what we have seen here.”

The CNPE’s decision, in September, took place amid the increase in diesel prices in the international market. The country does not produce the entire domestic demand for the product, and depends on imports to supply the market.

The fuel is used in public road transport and in trucks, for shipping products and various goods across the country. At the time, the board justified the decision as follows:

“The measure stems from the effects of the appreciation of the cost of soy oil in the Brazilian and international markets, combined with the exchange rate devaluation of the Brazilian currency against the dollar, which has boosted soy exports and also increased the value of nationally produced biodiesel”, said in a note.

“In this sense, the CNPE considered it appropriate to reduce the biodiesel content during the 82nd Biodiesel Auction in order to avoid an excessive increase in the final price of diesel to the final consumer.”

Aprobio also points out that, from January to October 2021, the variation in the price of biodiesel in the final blend of diesel varied by only 0.1 percentage point. In that same period, the cost of fossil diesel rose 13.7%.

Over the course of 2021, the price of fuel varied by 64% over 2021 at refineries. According to the Price Survey Service (SLP) of the National Agency of Petroleum, Natural Gas and Biofuels (ANP), the fuel showed an increase of 46.8% in the average cost of a liter throughout the country.

According to Francisco Turra, the sector is still in talks with the government to revoke the measure. For Aprobio, the CNPE’s decision is the result of the body having representatives from more than ten departments, with themes little associated with the needs of the National Biofuels Policy.

“We would like to discuss the matter directly with the president. We are sure that he will understand the needs”, he says.

Former director general of the ANP and energy efficiency consultant at the United Nations (UN), Luiz Augusto Horta Nogueira that the trend is, over time, for the production costs of biofuels to be reduced. And that, if the price of soy is high on the international market, so is diesel.

“There is a learning curve in the production of a new fuel, and Brazil has reduced costs in this area”, he says.

Currently, most of the Brazilian soy production is exported to China, which buys, on average, 100 million tons per year of the product on the international market, from different suppliers.

According to the producers, the use of the commodity in the production of fuels would generate an increase in the added value of the product and provide the destination of the bran for poultry and swine feed, with production concentrated in the south of the country.

Asked about the forecast of returning to the original level of 13% of mandatory blending of biodiesel in diesel, or even about the implementation of the new percentage of 14%, foreseen by Renovabio, the Ministry of Mines and Energy has not yet commented.