Brazil expected to increase biodiesel blend requirement

Industry representatives expect Brazil's government to announce an increase to the minimum requirement of biodiesel that is blended into diesel.

The decision would increase the biodiesel requirement to 6% in July and 7% in November from the current 5%, lowering Brazil's diesel fuel imports.

Modifying this blend requirement has been considered for years but experienced opposition from the Finance Ministry, which has had difficulty in keeping inflation within the central bank's target range before a presidential election scheduled to take place in October.

Opponents were worried that using more soy to make fuel could increase commodity prices and affect Brazil's consumer price index.

With a 7% biodiesel blend requirement, biodiesel consumption in Brazil could rise to 4.2 billion litres a year from the current 3 billion litres. According to industry data, in 2015, Brazil would replace 10% of the volume of its diesel demand with domestic biodiesel.