Automakers Join Forces With Transport, Fuel Production, and Distribution Companies Against Increased Biofuel Blend

Reduction of Biodiesel in Fuel Could Backfire and Trigger Industry Bankruptcy, Unemployment, Damage Engines, and Increase Fuel Prices

On the last Thursday, May 13, automakers and representatives from the transport, production, and distribution sectors of fuels issued a statement against the increase in the mix of biodiesel in fuel. According to the entities, increasing the percentage of the biodiesel blend may lead to higher transportation costs and consequently influence the increase in product prices.

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With pressure to lower carbon emissions, the automotive industry is already preparing to meet stricter limits in the coming years. However, according to them, the adoption of new technologies lacks experience with high levels of biodiesel in fuel composition.

The movement was signed and supported by Anfavea, Fenabrave, and Sindipeças – entities that represent automakers, dealerships, and auto parts manufacturers – along with Fecombustíveis, Brasilcom, and Abicom – representatives of commerce, distribution, and importation of fuels – and, on the transporters’ side, the National Transport Confederation (CNT) and SindTRR. The Brazilian Institute of Oil and Gas (IBP), representing the oil and gas industry, also signed the statement.

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Mixing Biodiesel with Diesel Oil Could Damage Engines and Increase Fuel Prices, Say Entities Representing Over 200,000 Companies in the Sector

The increase in the biodiesel blend in diesel has raised concerns among entities representing over 200,000 producing, distributing, importing, reselling, and transporting companies, as well as industries related to diesel consumption. According to them, there are serious problems in the quality standards of the fuel sold today, which could lead to increased fuel prices, as well as cause malfunctions in diesel engines.

The group reports that recent increases in biodiesel in diesel have caused issues with crystallization, hygroscopy, low filterability, and the formation of biodiesel sludge, consequently damaging machinery and engines; decreasing their lifespan; and lowering equipment performance, as well as increasing maintenance costs and impacting various sectors of the economy and Brazilians.

“It is important to note that any mandatory increase in the blend of biodiesel in diesel should only be established following comprehensive analysis and sound criteria, ensuring technical viability and safety not only for biodiesel producers but also for users regarding its adoption,” the entities argue. The group states that it has been seeking dialogue with the government and the biodiesel industry to “resolve the current issues of biodiesel content and product quality.”

Reduction of Biodiesel in Fuel Could Backfire and Trigger Industry Bankruptcy and Unemployment

The government’s measure to reduce biodiesel in fuel could impact industries that expanded their operational capacities based on high demand, and consequently generate unemployment, since the biodiesel production chain employs over 1.5 million people.

Approximately 80% of the biodiesel consumed in the country is produced from pure and recovered soybean oil, the production of which stimulates the production of soybean meal, the main input for the feed chain – which in turn feeds poultry, fish, and pigs. The consequent inflation impact will affect society as a whole, including sectors that currently aim to benefit from the reduction in fuel prices at the pump. In other words, the intervention may backfire.

An economic analysis conducted by GO Associados, led by Gesner Oliveira, former president of the Administrative Council for Economic Defense (Cade) and Sabesp, indicates that the reduction could lead to the bankruptcy of companies that made investments and increased their production capacity relying on the schedule of the National Energy Policy Council (CNPE), established by resolution in October 2018, which was abruptly modified on Wednesday, the 14th, in the auction of the product that will be placed on the market in May and July. “It is a measure that goes against several aspects of public policy. The climate agenda is very illustrative. At this moment, when there is a global effort that should be a national one to reduce emissions, it makes no sense to interrupt a schedule that has already been established,” Oliveira tells Revista VEJA.