Biofuels Mandates Around the World: 2015

December 31, 2014 |

biofuels-mandatesWho mandates what in biofuels? 64 countries have targets or mandates — but how much where, and when, and what?

In Florida, the Digest today releases its annual review of biofuels mandates and targets around the world, looking at the state of biofuels mandates in 64 countries.

The bulk of mandates continue to come from the EU-27, where the Renewable Energy Directive (RED) specified a 10 percent renewable content by 2020 but has been scaled back to the 5-7.5 percent range in recent months.

13 countries in the Americas have mandates or targets in place or under consideration, 12 in Asia-Pac, 11 in Africa and the Indian Ocean, and 2 from non-EU countries in Europe.

Besides the EU, the major blending mandates that will drive global demand are those set in the US, China and Brazil – each of which has set targets – or, in the case of Brazil, is already there – at levels in the 15-25 percent range by 2020-2022.

Mandates in the Americas

Argentina

In November 2013, we reported that the government has boosted the mandatory biodiesel blend to 10% from the current 8% to help offset a slump in exports resulting from anti-dumping duties in Europe. In addition to transport use, the government has also required thermal electric plants running on diesel to comply with the B10 mandate. The move is also expected to save the country $50 million in foreign exchange annually.

But turning to hard data, we reported in March that the government has set the price of biodiesel at $576.5 per metric ton, a price which producers say is too high for blenders to buy. As such, less than 5% of total diesel consumption is biodiesel, less than half of the 10% blending mandate. Tariffs on exports to the European Union were expected to drop volumes to just 750,000 tons this year, down from more than 1.15 million tonnes in 2013.

Argentina also has an E5 ethanol mandate in place – never filled.

Brazil

Mandates a minimum ethanol content — currently 25 percent, although the government is looking at 27.5 percent and the percentage was as a low as 20 percent earlier this year when ethanol supplies tightened on rising global prices for sugar. On the biodiesel side, we reported that the biodiesel industry is frustrated with the government because of continued delays in boosting the blending mandate to 6% from the current 5%. The Ministry of Energy and Mines, however, won’t say when the decision to boost the blend will be made. Industry says it has already invested more than $3 billion in biodiesel production and wants the opportunity to sell more domestically.

In September, we reported that he Brazilian Senate voted to raise the ethanol blending mandate to 27.5 percent and the biodiesel limit from 5 percent to 6 percent — but President Roussef had yet to approve the legislation.

Canada

Canada has a Renewable Fuel Standard featuring E5 ethanol, and RD2 renewable diesel (Biodiesel or HVO).

Canada introduced the 2 percent RD mandate as of July 2011, and the Canadian Renewable Fuels Association and the Canadian Truckers Alliance are locked in a tit-for-tat debate over it. The CTA is claiming that the mandate will push diesel prices higher and that biodiesel is bad for some engines. On the other hand, the CRFA claims price increases would be unnoticeable over a 25-year period and that engines have shown better performance under state testing than with fossil diesel.

Five provinces have individual provincial mandates, up to E8.5.

Also, the national government released its final regulations last year for its 5 percent ethanol mandate.

The Western Canada Biodiesel Association has been the lead body for biofuel regulations and incentive programs in the western provinces, and contributed the data for this section of the overall Mandates annual report.

Renewable Fuels Standards, by Province

British Columbia 5% ethanol 4 percent RD. BC also has an LCFS (10% carbon intensity reduction by 2010 a la California, with projected ethanol and RD increases to approx. 10% and 10% by 2020 respectively)

Alberta 5% ethanol 2% RD.

Saskatchewan 7.5% ethanol, 2% RD

Manitoba 8.5% ethanol 2% RD

Ontario 5% ethanol, 2% RD en route to RD3 in 2016, RD4 in 2017. Physical volume requirements are reduced if average carbon intensity of RD exceeds minimum reduction requirements. Most biodiesel and HVO exceed the minimum GHG reduction requirements, which go from 30% in 2015 to 70% for 2017 and onward.

Colombia

Has an E8 ethanol mandate in place since 2008, with discussions underway to increase the mandate to 10 percent.

Chile

Has an E5 ethanol and B5 biodiesel target in place, no mandates.

Costa Rica

Has an E7 ethanol and B20 biodiesel mandate in place.

Ecuador

In March, we reported that the government has mandated a B5 blend beginning in May 2013 that will over time increase to B10. Local biodiesel production is predominantly from palm oil. Petroecuador expects demand to be about 5.96 million metric tons of biodiesel monthly as a result of B5. Previously the biodiesel had been exported to countries including the US, Peru and Italy.

Jamaica

Has an E10 ethanol mandate that took effect in 2011.

Mexico

Has an E2 ethanol mandate in place in Guadalajara, and will ultimately expand the blending mandate to Mexico City and Monterrey.

Panama

In Panama, the country introduced a 2% ethanol mandate in April 2013, rising to 5% from April 2014, hitting 7% in April 2015 and reaching 10% by April 2016.

Paraguay

In July we reported that discussions are underway to boost the ethanol mandate to 27.5% to match what Brazil is potentially doing. Currently the local blend is at 25%, mirroring its neighbor market. On the biodiesel side, the government has convened a working group to study how to promote the fuel’s use. At the moment, oil companies aren’t even reaching the meager 1% blending mandate.

Peru

Has an E7.8 ethanol, and B2 biodiesel mandate in place. Expected to move towards B5 biodiesel.

Uruguay

Has a B2 biodiesel policy in place, but isn’t obligatory, and requires the use of domestic biodiesel. Expected to move to E5 ethanol in 2015. A plan is underway to develop a biodiesel plant in Montevideo and an ethanol plant in Paysandú for a total investment of $130 million. The B5 policy should be obligatory by 2015.

USA

President Obama supports the preservation of the Renewable Fuel Standard, as a part of an “all of the above energy strategy”. However, there is fear that affordable private capital will not be available to support any major capacity building for advanced biofuels — putting the RFS itself, with its steep annual volumetric increases, in considerable jeopardy.

Accordingly, there has been considerable instability around RFS policy. In November, the EPA announced that it was delaying finalization of the long-awaited 2014 Renewable Fuel Standard Renewable Volume Obligations until 2015.

The proposed 2014 rule ran into a steamroller of opposition from renewable fuel groups, who said the proposed rule substantially cutting biofuels targets “pulled the rug” from underneath billions of dollars investment made in reliance upon targets. The Agency said:

“Today EPA is announcing that it will not be finalizing 2014 applicable percentage standards under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the 2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015.”

The proposed EPA rule for 2014

The proposed volumes are (in billions of US gallons):

Proposed Statutory volume for 2014
Cellulosic 0.017 1.750
Biomass-based diesel 1.280 1.000
Advanced biofuel 2.200 3.750
Renewable Fuel 15.210 18.150

* The EISA Act did not set volumes past 2012 and 1.0 billion gallons for biomass-based diesel, but required EPA to set a volume based on market conditions each year.

The effective corn-ethanol mandate is (in billions of US gallons):

Corn ethanol 13.010 14.400

Overall, the reductions from statutory volumes are:

Advanced biofuels vs statute: -41.33%

Corn ethanol vs statute: -9.7%

In the US, California has implemented a Low Carbon Fuel Standard.

The standard is based on obligated parties meeting a targeted Carbon Intensity across all their fuels distribution in California, based on their preferred mix of alternative fuels, and the CI (carbon intensity) scores of those fuels.

The LCFS requires producers of petroleum-based fuels to reduce the carbon intensity of their products, beginning with a quarter of a percent in 2011 culminating in a 10 percent total reduction in 2020. Petroleum importers, refiners and wholesalers can either develop their own low carbon fuel products, or buy LCFS Credits from other companies that develop and sell low carbon alternative fuels, such as biofuels, electricity, natural gas or hydrogen.

The tables are here as of December 2012, the latest available.

Two of the issues most important to the low carbon fuels industry are the carbon intensity curve and cost containment issues including a potential ceiling and floor. Several leading members of the Low Carbon Fuels Industry suggested that Indirect Land Use Change should not be included in the carbon intensity scores of fuels at this time.

Another state mandate worth noting is Minnesota’s B10 biodiesel mandate. We reported in October that the Minnesota Departments of Agriculture, Commerce and the Minnesota Pollution Control Agency announced the move to a B10 biodiesel mandate. The departments say that the four conditions required to move to B10 have been met. Those conditions were federal standards for blend specifications, the production capacity of biodiesel in Minnesota, the amount of infrastructure and regulatory protocol for biodiesel blending, and the source of feedstocks. The policy was meant to come into place in 2012 with B20 planned for 2015.

But in April we reported that the delay in implementing B10 has also delayed the implementation of B20.in Minnesota. B20 was planned for 2015, but B10 will only now be implemented in July this year. Therefore, Rep. Clark Johnson has proposed a bill that would delay B20 until 2018, giving three extra years to get blending facilities and gas stations ready to offer the fuel.

Mandates in the EU

The EU currently has a 5.75 percent mandate directive in place, and was scheduled to move to 10 percent by 2020. But in September 2013, we reported that the European Parliament voted to cap first generation ethanol consumption at 6% of fuel demand by 2020 rather than the 10% originally mandated by the Renewable Energy Directive. The vote passed with 356 votes in favor, 327 against and 14 abstentions. Tripartite negotiations with the Council of 28 member states and the European Commission are taking place later in the year to achieve a final rule.

The biggest mandate news of the year worldwide was the Italian government’s decision in October to create a 0.6% advanced biofuels blending mandate by 2018, the first in Europe to set up such a policy to boost demand for next generation fuels. That figure will increase to 1% by 2022. Beta Renewables produces 75 million liters per year at its facility in Crescentino and the country expects three more cellulosic ethanol plants to come online in southern Italy during the next year.

Last week, we reported that France’s national oil body UFIP has agreed to increase the biodiesel blending mandate to 8% from the current 7%, with the official publication expected before the year’s end. It warned, however, that going above 7% may void some car manufacture warranties by going above the EU-wide approved 7% level.

In October we reported that in the UK, biofuel use in transport reached 4% of the fuel supply during the second quarter of 2014, but ethanol has reached 4.5% in the past. Ethanol blending is capped at 4.75%. The Renewable Energy Association is strongly pushing for E10 blends to help the country achieve the 10% biofuel mandate set by the EU for 2020.

We reported in December 2013 that in Germany, biofuel consumption was down nearly 9% in the 10 months through October compared to the same period last year at just 2.9 million metric tons. Road fuel consumption was up 0.5% during the period despite the drop in biodiesel consumption and a 6.25% blending requirement. Overall biodiesel consumption was down more than 10% on the year while ethanol consumption was down nearly a percent less.

In February, we reported that the consumption target for biodiesel has been lowered from 7% to 4.1%, announced the government on Friday. “It is considered appropriate to revise the mandatory consumption targets for biofuels in 2013 and thereafter, setting targets that minimize the fuel prices and ensure some stability in the sector,” states a document from the Ministry of Industry, Energy, and Tourism.

Elsewhere in Europe

Ukraine

In January, we reported that Zarya is investing $59 million in a 30 million metric ton per year ethanol plant along the Russian border. The facility that will use cereals including corn and rye as feedstocks is expected to come online in 2015. Only 133,000 tons of ethanol is expected to be produced this year, short of the 250,000 tons required for the E5 blend that was meant to come into force this month. As a result of the shortage, the mandate may be postponed by six months.

Norway

The current mandate is for B3.5 biodiesel, upped in 2012 from the previous B2.5, and B5 biodiesel blends are generally the standard, and there are B7 blends available on the market.

Mandates in Asia-Pacific

Australia

The state of New South Wales has an E6 ethanol blending mandate and a B2 biodiesel mandate in place. However, we reported last month that despite having the 6% ethanol blend in New South Wales, actual consumption is only about 3.1% because of market exceptions available to oil companies. Ethanol sales only hit 14.6 million liters in November rather than the 28.21 million liters that should have been sold if the mandate had been enforced. The state pledged to impose a 10% blend as of 2011 but that has yet to materialize. At the same time, national oil imports have soared to A$22.6 billion from just A$600 million in 2001.

A Queensland E5 ethanol mandate was expected to take effect in Fall 2011, but was shelved after opposition from the Against Ethanol Mandates Alliance. Meanwhile, the Queensland Parliament’s Development, Infrastructure and Industry Committee rejected a proposal in October to mandate ethanol blending because the chairman felt it was too narrow and a dusting off of old legislation proposed in 2009. He said that the entire biofuels industry needs support, not just ethanol, and needs appropriate legislation for this day in age rather than what was perhaps appropriate for 2009.

In June 2013, we reported that MP Bob Katter has proposed a bill that would mandate E5 nationally by 2017 and E10 by 2020. The outspoken legislator sees the mandate as a way to bring the country in line with other developed countries who already have a blending mandate as well as to diversify the diversify the grain, wheat and sugar industries. No action was taken on the bill.

China

Overall, the country seeks to move to a 10 percent biofuels mandate by 2020, and currently has a 15 percent overall target for 2020. Nine Chinese provinces have required 10% ethanol blends to date, including – Heilongjian, Jilin, Liaoning, Anhui, and Henan.

Fiji

The government approved in 2011 a voluntary blend of 5% biodiesel and 10% ethanol with an eye on a mandate by the end of 2012, but action on the mandate has not been forthcoming.

India

The country has an E5 ethanol mandate,  scheduled to move to E10 as soon as production is in place, and ultimately has set a goal of 20 percent for all biofuels content by 2017 – it is highly doubtful that they will reach the target. It’s been a rocky road all along for ethanol.

In June, we reported that the government has announced a major bail out of the sinking sugar industry including a boost to the ethanol blending mandate to 10%, up from the current 5%. The sugar import duty will also be hiked to 40% while additional interest-free loans will be available to mills if they guarantee to pay cane farmers back payments that are owed.

But in July we reported that oil marketing companies have only managed to achieve 1.37% blending of ethanol with gasoline, compared to the 5% they are mandated to blend. Infrastructure and inter-state trade hurdles have been identified and are being addressed while the new government is supporting farmers to help increase supplies.

Indonesia

An on-and-off 5 percent biodiesel mandate — now heading for B10 — and an E3 ethanol mandate.

In November, we reported that  the country plans to continue rolling out its B10 policy despite the uptake having been slow during the first nine months of the year, when just 1.2 million kiloliters were blended, compared to the 4 million kiloliters required. The blend applies not just to transportation but also to electricity production and industrial use. The B10 policy was introduced in September last year.

In September, we reported that in-line blending facilities for biodiesel are under construction at 15 facilities in Sarawak and Sabah in order to ensure compliance with the B5 mandate, and will be online by year’s end. Another 35 facilities with in-line blending have been online since November on the peninsula.

Malaysia

The country has a B5 blending mandate, but in August we reported that the country has delayed implementation of its B5 mandate to December rather than July due to slow implementation of 15 blending facilities in Sabah and Sarawak and the federal territory of Labuan. When the policy is implemented, national consumption of palm oil biodiesel will double to about 500,000 metric tons annually.

In October, we reported that the biodiesel blend jumped to 7% from the current 5% as of November. Domestic palm oil prices have fallen 20% this year due to oversupplies. National palm oil consumption to boost to 575,000 metric tons per year upon implementation of the B7 policy. The country is also exploring boosting the blend to 10% but a timeline for such a move hasn’t yet been set.

In November 2013, we reported that Malaysia had originally planned to boost its biodiesel blend to 7% in December 2013 from 5%, but it never materialized.

New Zealand

In 2013, we reported that the Labour Party began pushing for the government to reinstate the biofuel obligation that the party had introduced in 2008 when it was in power.

The National party replaced the Labour party’s Biofuels obligation with a biodiesel subsidy. Bioethanol enjoyed at the time and still does have an excise exemption. The subsidy scheme essentially levelled the playing field between the two biofuels. The biodiesel grants scheme was not extended beyond its original time frame of 30 June 2012.

The Philippines

Has an E10 ethanol and B2 biodiesel mandate, the latter scheduled for an increase to %5 in 2015.

In October, we reported that the ethanol blending mandate for the fourth quarter was boosted 7% by volume to 46,065 cubic meters of domestic product. The notice reached oil companies later than usual but even so, market players didn’t think they would be too impacted because of the availability of local ethanol supplies.

Last week, the government called for additional investment in biofuel production, recognizing that current production will have challenges to achieve the B5 planned for 2015, along with the E10 already in place that is supplied by significant volumes of imports,

As of July 2013, we reported that the mandated biofuels blend was scheduled to be raised to 5% from 2% after an announcement from the National Biofuels Board. Not only will the heightened blend requirements strengthen the country’s coconut industry as well as lowering air pollution, but the government will save billions of pesos because of petroleum import substitution, asserted Agriculture Secretary Proceso Alcala. Consumers may see higher prices at the pump, depending on coconut oil prices.

However in November, we reported that coconut oil exports grew by nearly 50% in the last 9 months as the country failed to implement the shift to a B5 biofuel mandate. The current blending requirement is 2%, and the proposal to shift to B5 has yet to secure approval from the National Biofuels Board. Coconut oil export goals for 2013 have been raised from 900,000 to 1.1 million metric tons.

South Korea

Last month, we reported that the government has decided to boost the biodiesel blend to 2.5% in August 2015 from 2% currently. Plans are for the mandate to rise to 3% by 2018. The Korea Petroleum Association is complaining that complying with the mandate has cost $77.5 million in 2014, will cost $91.2 million in 2015 and $118.7 million in 2018. Most of the biodiesel produced in the country comes from imported palm oil. Production reached 420,000 metric tons last year, just shy of a third of total demand.

Taiwan

Had a B1 biodiesel mandate in place since 2008 and moved to B2, but is phasing it out. considering an E3 ethanol mandate.

Last May, we reported that the country will phase out its B2 mandate over the next three months after low sulfur level in diesel fuels mixed with the country’s humid weather led to microbes clogging fuel tanks. In October 2013 alone, 100 motorists complained about the clogged fuel tanks. The 2% biodiesel content was blamed for the microbes.

Thailand

Has a B5 biodiesel mandate in place, but it has been on and off based on palm oil supplies, and a B3 program has been the fallback.

In January we reported that the palm oil producers association wants the government to make the biodiesel blending policy more flexible, allowing prices to rise when supplies fall rather than capping cooking oil prices as is currently being done. The group said that capping cooking oil prices distorts the market, as does exports. Exports rose 39% year-on-year as of November 2013, and there isn’t enough biodiesel domestically to supply the B7 mandate that was scheduled to come into effect on Jan. 1 2014. Those plans are currently on hold until supplies improve.

Vietnam

Has an E5 ethanol blending mandate.

Last month, w e reported that gas stations across Ho Chi Minh City began distributing E5 this week, blended with cassava-based ethanol, though some already began last week and had positive feedback from consumers. The government mandate expects Hanoi, Hai Phong, Da Nang, Can Tho and Ho Chi Minh and Ba Ria-Vung Tau and Quang Ngai to also begin selling E5 in December. E5 is currently retailing at about even with non-ethanol gasoline, but the ministries are working to lower costs to boost demand for the fuel. The seven cities combined have a total demand of up to half a million metric tons of ethanol with the E5 blend.

In July 2013, we reported that seven cities and provinces would use an E5 blend beginning in December of 2014, with the entire country soon to follow. The country currently has six plants producing 535 million liters per year, but 80% of the fuel produced in 2012 was exported. Thus far, E5 sales have been lower than expected, with the Minster of Industry and Trade blaming high production costs, slow development of distribution systems, and customers’ preferences for traditional fuel as possible causes.

Mandates in Africa and the Indian Ocean

Angola

Has an E10 ethanol blending mandate in place.

Ethiopia

Has an E5 ethanol blending mandate in place.

Kenya

Has an E10 mandate in place in Kisumu, the country’s third largest city.

Malawi

Has an E10 ethanol mandate in place, but depends on availability.

Mauritius

In Uly, we reported that an E5 mandate is not expected to be implemented this year due to delays in implementing the infrastructure required to supply the blend across the island. Omnicane blames the government for not establishing a clear policy regarding the mandate.

Mozambique

Has an E10 ethanol mandate in place.

Nigeria

Has an E10 ethanol target in place, no mandate.

South Africa

At long last the country’s E2 and B5 mandates will come into effect from Oct. 1, 2015. Tax incentives for both ethanol and biodiesel producers have been on the books since 2007 but that hasn’t been enough to encourage production. A Biofuels Pricing Framework will be released shortly.

Sudan

Has an E5 ethanol mandate in place.

Zambia

No mandate, but we reported in August that Zambia Sugar says that with a proper mandate in place, it could produce 10% of the country’s fuel needs from existing molasses supplies. The company also sees opportunity in expanding production to supply the growing vehicle market in the country. Sugar production during 2012/13 hit 404,000 metric tons, up from 374,000 the season before.

Zimbabwe

Last week, we reported that the government has cut the ethanol blending mandate to 5% following a sugarcane shortage due to heavy rains. Earlier in the year the blend had been boosted to 15% from 10%. When the weather improves and ethanol production can resume again, the higher blend is likely to be restored.

Previously, the national target was 15% ethanol. The country had been successively boosting the amount of ethanol in gasoline since the summer, first with a 5% mandate and then a 10% mandate. The goal was to achieve 20% blending in 2014 which would have led to a reduction of $108 million in fuel imports annually.

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