Biofuels in South America - Statistics & Facts

In November 2016 the Paris Agreement, in which signing parties agreed upon the need of a global reduction in greenhouse gas emissions, entered into force. Nearly four years later, as effects of climate change become more severe and frequent, the need for policies and actions towards the reduction of emissions becomes more pressing. In the transport sector, emissions can be reduced by the replacement of fossil fuels with biofuels. Biofuels, unlike its counterparts, are produced from a variety of crops – such as sugarcane, corn, and soybean – and their combustion emissions are at least partially offset by the absorption of CO₂ from the feedstock crop during its lifetime. As a result, there is a general consensus that global use of biofuels needs to increase dramatically in order to reach the proposed emissions targets. In this context, South America – where two of the leading biofuel producing countries worldwide are located – plays an important role.

In Brazil, biofuels production added up to more than 38 billion liters in 2018, or 21 million tons of oil equivalent, making it the second largest producer in the world, only behind the U.S. The country’s history with ethanol fuel, which accounts for over 85 percent of the national biofuel output, dates all the way back to the mid-70s. Since 1976, a blend of ethanol fuel in commercialized gasoline is mandatory, with the minimum blend rate reaching 27 percent as of 2020. Furthermore, pure ethanol is also sold as vehicle fuel in Brazilian petrol stations, a generally cheaper alternative against increasing gasoline prices. In fact, nearly 90 percent of new light vehicles registered in the country are “flexible fuel” (vehicles with an engine that can run on any ratio of ethanol and gasoline).

A similar, yet more recent development is also seen in Argentina, the second biggest producer in the region. The mandated blend of ethanol fuel in gasoline sold in the country was first enforced in 2010. Since then, annual Argentine ethanol fuel output has increased by nearly nine-fold, reaching more than one billion liters in 2019. In contrast, Colombia’s inconsistent blend mandates have led the country’s annual production to oscillate over the past years. Although output was forecasted to reach the highest level of the decade in 2019, it is still not enough to supply the domestic demand, increasing the country’s dependence on ethanol imports.

In regard to biodiesel, Brazil, Colombia, and Argentina display a similar mandated blend rate in commercialized diesel fuel. While biodiesel prices are set by the national government in the two Spanish-speaking countries, sales of biodiesel in Brazil are carried out through bi-monthly auctions. In terms of market, however, Argentina is the one that stands out in the trio. In Brazil and Colombia, biodiesel production mainly supplies the domestic market. In contrast, in Argentina, biodiesel output was historically aimed at the foreign market. Despite the increase in domestic consumption, a result of the national blend mandate, exports still account for nearly half of production.

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Biofuels in South America

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