The Brazilian President has approved a resolution by the National Energy Policy Council (CNPE) setting the mandatory blending of biodiesel in fossil diesel at 10% in 2022, in an attempt to protect Brazilian customers from higher commodities prices that make biodiesel much more expensive than fossil diesel. In April 2021, the country already reduced the mandatory blend in diesel from 13% to 10%, due to concerns about the inflation impact. The introduction of biofuels in diesel has been mandatory since 2008 (2%), with a goal to reach 15% in 2023. The CNPE can adjust the blending rate, cutting it up to 6% or raising it up to 15%, on public interest considerations.
The use of biofuels in transport has been strongly developed and represents 20% of the total transport consumption. The 10% blending mandate will be applied as of 1 January 2022, along with the new market model that will replace public biodiesel auctions with by a new marketing model. Under the new market model, biodiesel producers and large fuel distributors (over 5% market share in 2020) will contract directly.
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