Biodiesel Market in Brazil
The increase in the production and consumption of biofuels in the last decades due to physical, political and environmental issues was responsible for the major development of biodiesel in Brazil. This article presents the Brazilian biodiesel market.
Elevated oil prices, and subsequently its derivatives, along with ever increasing demand for combustibles create opportunity for new fuels . The massive use of these types of non-renewable fuels face many problems:
- Physical problem: since this fuels aren't renewable, if they were extracted without limit their reserves will diminish.
- Political problem: a large portion of war or international conflict can make the price of oil rise abruptly.
- Environmental problem: this fuels releases a significant quantity of carbon dioxide – for each 3.8 liters of oil burned by an automobile 10 kg of carbon dioxide is released into the atmosphere – that contributes to the expansion of the Greenhouse Effect.
The world has faced problems giving more space to renewable energy sources, such as biodiesel in the energy market. Brazil is a large producer of this biofuel thanks to its geography. Made by renewable sources – plants (vegetable oils) and animals (animal fat) – biodiesel is a very interesting type of fuel being produced in Brazil.
The country is situated in a tropical region, with lots of sunshine and average annual temperatures. Associated with water availability and regularity of rainfall, Brazil has great potential for biodiesel production.
Brazilian Potential for Biodiesel
Brazil uses less than a third of its arable land, which is the longest area in the world for agricultural expansion – approximately 150 million hectares. Of this area, 90 million hectares are correspond to new frontiers, while the other 60 hectares are grazing lands that can be converted to agricultural use in the short-term.
There is also a wide variety of options for biodiesel production with the use of vegetable oil:
| Region | Type of Plant |
| North | Dendê, Babaçu and Palm |
| Northeast | Cotton and Mamona |
| Center West and Southeast | Soy |
| South | Sunflower |
ANP estimates that the current domestic production of biodiesel is approximately 176 million liters per year.
| Region | Number of Plants | Installed Capacity (1000 m³/year) | Installed Capacity (%) |
| North | 4 | 202 | 3% |
| Northeast | 6 | 741 | 10% |
| Center West | 27 | 3,072 | 43% |
| Southeast | 11 | 890 | 12% |
| South | 11 | 2338 | 32% |
| Total | 59 | 7243 | 100% |
From a Niche to an Industrial Chain
The biodiesel market in Brazil is no longer an industrial niche, it had become a dense and full chain, bringing benefits to the entire agribusiness and to big cities. The use of biodiesel can attend different market demands, because in theory, biodiesel can replace oil based diesel in any of its applications. However, the inclusion of this fuel in the Brazilian energy matrix should occur gradually and be focused on specific markets, to ensure a fixed place in energy supply chain.
The biodiesel market in Brazil is not open, the auction sales are conducted via the National Agency of Petroleum, Natural Gas and Biofuels (ANP). Companies with the Social Fuel Seal are preferred in these auctions, having 80% of the reserved market and can compete in 100% of the auctions.
Social Fuel Seal
The Social Fuel Seal is a component of identification created by the Ministry of Agricultural Development. Biodiesel producers that promote the inclusion of family farmers in the market chain of biodiesel are granted with the seal.
The use of the Social Fuel Seal concedes reductions in the PIS/Cofins and Pasep rate to biodiesel producers. The reduction varies according to the raw material purchased and the region of acquisition, commercial incentives and funding.
Auctions and Market Participation
In June of 2013 the 31st Auction Biodiesel to supply the market during the fourth quarter of 2013 was promoted by ANP. Forty-four companies were qualified by agency to submit their proposals, respecting the maximum reference prices that varied according to the region and the obtaining of the Social Fuel Seal.
From 765 800 m³of liters – the total volume commercialized in the auction – 513 mil m³ of liters (99,5%) were provided by companies holding the Social Fuel Seal. The auctions permit buyers to choose plants according to their needs and through the consultation of distributors, that also actively participate in the process.
Incentives through PNPB
The Brazilian government created the Programa Nacional de Produção e Uso de Biodiesel – also known as PNPB in order to develop the national production of biofuels in Brazil. Nowadays the program's main objectives are:
- expand the usage of renewable sources
- diversify the energy matrix
- stimulate national agricultural activity
- reduce the emission of greenhouse gases
- social inclusion and generate emploment
- internal development
- increase Brazilian participation in the international market of biofuels
PNPB contributes to Brazil diminish the purchase of mineral diesel from other countries, stimulating the production and consumption of national clean energy sources. Also encourages market of grain in the country and the family agriculture.
Brazil as a Global Player
Nowadays 75% of the worldwide production of biodiesel is concentrated in only ten countries, Brazil being one of them.
| Country | Billions of Liters Produced |
| Germany | 2.6 |
| Brazil | 2.4 |
| Argentina | 2.1 |
| France | 2.0 |
| United States | 1.2 |
| Spain | 1.1 |
| Italy | 0.8 |
| Indonesia | 0.7 |
| Thailand | 0.6 |
| Others | 0.5 |
Brazil is the second largest producer of this biofuel in the world, but the country hadn't participated in the international market, until June of 2013.
On this date, the first exportation of biodiesel for commercial means was realized. The Brazilian company BSBIOS exported 22 tons of biodiesel with destination to Rotterdan Port in Netherlands. This might be the first step of Brazil to become an important player in the biodiesel international market.