Top Trends in 7 Key Latin America Hotspots

December 27, 2017 |

In a striking pledge made in the latter part of 2016. 20 Latin American countries promised to promote biofuel production and use, with the support of development finance institutions.

20 Latin American countries pitch for biofuels

That was then, this is now. What’s happening towards the development of domestic biofuels and chemicals in Latin America, and the development of market programs to utilize the fuels? Well, not all that much. There’s been innovation in Brazil a-plenty — on the renewable chemicals, cellulosic ethanol fronts and even in first-gen ethanol production.

Elsewhere, it’s mostly been about exports and imports and market programs, and less about deploying technology and building new plants. The US has been shipping ethanol wherever it can, and trying to fend off low cost imports of biodiesel, and those efforts (backed with pep by the new Trump Administration) have had impact across the region.

Here are the Top Trends in the 7 Key Markets as we have seen them from the Digest’s reporting.

Brazil

Policy. In December, we reported that Brazilian policy took a step forward when the Senate passed the long-awaited RenovaBio policy, the last step before heading to the President for his signature, potentially before the end of the year. The House of Representatives passed the bill just a few days after it was presented in November in an effort to push the legislation through. A lot of the details are yet to be filled in including blending mandates that are expected to be significantly higher for both ethanol and biodiesel.

RenovaBio policy passes Brazilian Senate, awaits President’s signature

Trade. In November we reported that the US Renewable Fuels Association, Growth Energy and the US Grains Council sent a letter to the US Trade Representative asking him to remove Brazil’s preferential status in retaliation for the import tariff and quota set for ethanol imports into Brazil. Removing Brazil’s GSP status wouldn’t just impact ethanol imports but all other imports originating in the country. The three organizations say in the letter Brazil is violating the requirement to provide “equitable and reasonable access to the markets.”

RFA, Growth Energy and USGC want USTR to strip Brazil of GSP status

Production. In November we reported that Copersucar expects sugar mills to continue their focus on ethanol production over sugar in the next center-south sugarcane harvest set to kick off in April. The company’s CEO says with the same amount of cane likely to be crushed next year as this year, it could account for an extra 1 billion liters of ethanol production. Although mills currently make better returns on ethanol than sugar, existing contracts limited their flexibility in shifting production during the season but that many of those agreements will have finished by April.

Copersucar sees Brazilian sugar mills producing 1 billion extra liters of ethanol next year

New technology, In July we reported that Raizen plans to scale up its cellulosic ethanol technology five-fold over the next two years to 40 million liters by 2018, a move that will make the fuel competitive with conventional ethanol. The Piracicaba facility is set to produce 14 million liters this year following its first 7 million liters produced last year. The company said seven or eight of its 24 conventional ethanol plants could receive bolt-on upgrades of the cellulosic technology.

Raizen scaling up cellulosic ethanol production five-fold by 2018

Corn ethanol comes to Brazil. In October we reported that ICM completed startup and commissioning of Brazil’s first standalone dry-mill corn ethanol plant.  The plant is FS Bioenergia, a joint venture between U.S.-based Summit Agricultural Group and Fiagril Ltda of Brazil. The ICM-designed ethanol plant is located in the middle of Mato Grosso, Brazil’s Corn Belt, near the city of Lucas de Rio Verde, enabling the region to benefit from the alternative use of local corn production.  The plant has the ability to produce feed products purposely manufactured from distillers grains, such as high fiber product and a high protein product. These specifications bring significant product value. The ethanol will primarily provide supply to the country’s domestic markets, which will offset the country’s increasing demand for biofuels.

ICM commissions Brazil’s first standalone dry-mill corn ethanol plant

Renewable chemicals. In  November, we reported that Braskem and Haldor Topsoe have signed a technological cooperation agreement to develop a pioneering route to produce monoethylene glycol (MEG) from sugar. The agreement calls for the construction of a demonstration plant in Denmark, with operation slated to begin in 2019. Topsoe will deliver a packaged solution for this project with Braskem, including catalyst and technology. The companies will combine their expertise to further develop, test and validate the process. The overall goal of the partnership is the start-up of a commercial plant in 2023. The project is based on a two-step process developed at Topsoe’s labs along with own catalysts, and focuses on the conversion of sugar into MEG at a single industrial unit, which will reduce initial investment in the production and boost the competitiveness of the process.

MEG(a)VENTURE: Braskem, Haldor Topsoe chase down biobased MEG in new commercial deal

Argentina

Taxes. In December, we reported that biodiesel exports will face an 8% tax beginning next year in an effort to keep more of the fuel home and bring it into balance with the 27% export tax already lobbed on soy oil. Argentine biodiesel exporters received relief earlier this year when the EU opened back up its market by lowered the import duty while the US went the opposite direction by tacking on an even higher import duty than the Europeans originally had.

Argentina lobs 8% export tax on biodiesel exports

Anti-dumping duties in US. In December, we reported that the US International Trade Commission voted 4-0 in favor of the National Biodiesel Board Fair Trade Coalition’s position that the industry has suffered because of unfairly subsidized imports of biodiesel from Argentina and Indonesia. This affirmative vote on injury, coupled with last month’s final countervailing duties determination by the Commerce Department, paves the way for final countervailing duty orders by the end of December.

Last month, a mix of large and small producers testified on the volume and price effects of biodiesel imports from Argentina and Indonesia, and the related impacts to the industry at a hearing before the ITC commissioners. If the Commerce Department makes an affirmative final determination on dumping, then the ITC will still need to vote early next year on the question of dumping.

US ruling on biodiesel dumping paves the way for duties on Indonesia, Argentina fuels

Recovery of EU markets. In November, we reported that following the drop in anti-dumping tariffs to a maximum of 8.1% in September, the biodiesel industry has already exported 300,000 tons to the European Union, and it expects exports will jump to at least 500,000 metric tons next year. Prior to 2013 when the tariffs of up to 25.7% were imposed, Europe had been Argentina’s largest biodiesel export market. Despite the increase in exports to Europe, a drastic fall in exports to the US following the imposition of anti-dumping tariffs there saw overall Q3 exports drop year-on-year to $739 million.

Argentina expects biofuel exports to Europe to pass 500,000 tons in 2018

Domestic markets. In January, we reported that the Argentine department of agriculture is developing a policy that would allow farmers to use their own biodiesel production on-farm to help reduce their operating costs for farm machinery. By some estimates, the move could save the agricultural industry $377 million every year thanks to biodiesel running at about 60% of the cost of fossil diesel. Every season, farmers use about 2.4 billion liters of diesel, 30% of which could be replaced by biodiesel.

Argentina’s farmers may save $377 million by using up to 30% biodiesel

Colombia

Mandates. In May, we reported that the country is looking to boost its ethanol-blending mandate to 10% by year’s end thanks to the 504,000 liter per day additional production that just came online at the El Alcaravan ethanol plant in central Meta, though that rate could eventually go even higher. Currently much of the country is at an E6 blend, while central Antioquia is at E8 and three regions bordering Venezuela don’t have blending mandates due to cross-border smuggling.

Additional ethanol production seen helping Colombia hit E10 by year’s end

Expanding production to meet mandates. In August, we reported that Bioenergia has achieved ethanol production of 238,000 liters per day, on its way to eventually produce 500,000 liters per day in early 2018, adding 37% to the country’s annual production capacity. Heavy rains last year through the early parts of this year hit domestic ethanol production, so ramping up has brought on new supplies to help fill the demand gap. Already agreements have been signed with two oil companies operating service stations in the country.

Colombia’s Bioenergia hits 238,000 liters/day production

Chile

Waste to fuels. In October, we reported that the city of Concepción has launched a used cooking oil collection program to complement the UCO collection from restaurants last year in an effort to boost biodiesel production. Last year, 165,000 liters of UCO was collected but hope the project’s expansion will see 200,000 liters collected annually as a result. Various collection points around the city will be set up to collect small amounts of oil deposited in individual plastic containers to help reduce the amount of UCO households dump into the sewage system.

Chilean city expands UCO biodiesel program into neighborhoods

Ecuador

E5 launch. In April, we reported that state-owned Petroecuador signed a $95 million offtake agreement for anhydrous ethanol from domestic producers Consorcio Artesanal Cado, Producargo S.A., Codana S.A. y Soderal S.A for the commercial roll out of the Ecopaís retail fuel to be marketed in eight provinces. The fuel is a 5% ethanol blend with gasoline launched in 2010 at 19 gas stations that is now sold in 372 gas stations. Private sector investment in ethanol reached installed production capacity of 75 million liters this year, from just 33.6 million liters in 2015.

Petroecuador signs $95 million ethanol offtake agreement with industry for E5

Uruguay

New cash-crop for farmers. In May, we reported that Agrisoma Biosciences and  Uruguay inked a partnership aimed at introducing a new, renewable, low carbon cash-crop for farmers. The deal gives the Quebec-based company the opportunity to grow its business outside of Canada by planting thousands of new hectares of the Carinata seed in Uruguay. Under this new deal, both parties anticipate significant economic and rural benefits from production of Carinata in Uruguay as a non-food crop that can be made into low carbon bio and aviation fuels as well as nutritious, GMO-free animal feed.

The partnership opens new opportunities for the Canadian agricultural sector to grow more Carinata and feed the global markets demanding a broad solution for world food security and clean energy.

Agrisoma, Uruguay sign partnership to introduce carinata for fuel, feed

The biogas option. In February, we reported that Brazilian researchers are expected to arrive in the capital of Montevideo on Thursday after a 532-mile drive from the Brazilian city of Montenegro in a vehicle powered entirely by biogas. The trial is meant to promote interest in the use of the fuel that the Uruguayan energy ministry hopes could be an option for adding value to agricultural waste, especially livestock. Use of biogas in agricultural equipment is seen as a major opportunity for the sector as well.

Brazilian researchers driving biogas-fueled car to Uruguay to boost awareness

CO2 targets. In October we reported that Uruguay’s transportation sector has lowered CO2 emissions since 2015 by an average of about 7% each year as a direct result of increased use of biofuels. Uruguay is one of the world’s largest biofuel consumers, in part thanks to the agro-fuels laws which require a 6% mix of biodiesel in gasoil and 9-10% of bioethanol in gasoline, according to BN Americas. Uruguay set a goal to lower Uruguay’s consumption of fossil fuels in the transportation industry by 15% as part of the Paris climate agreement and the country’s 2005-30 energy policy. A study by state-owned biofuel producer Alcoholes de Uruguay indicated that the 50% increase in biofuel production in 2016 contributed to preventing 270,000 tons of CO2 in 2016.

Uruguay cuts transportation sector’s annual CO2 emissions by 7% thanks to biofuels

Mexico

E10 ruled in. In June we reported that E10 was in as the  Mexican Energy Regulatory Commission said it would increase the maximum amount of ethanol that can be blended in Mexican gas supplies from 5.8 percent to 10 percent, except in the cities of Monterrey, Guadalajara and Mexico City. The announcement modified the Mexican Official Standard NOM 016-CRE-2016 regarding the quality specifications for fuels by increasing the maximum volume content of anhydrous ethanol as an oxygenate in regular and premium gasolines in Mexico.

This change comes as part of ongoing energy reforms in Mexico and follows input from stakeholders in the government, private sector, research scientists and social interest groups.

Mexico OKs E10 ethanol limit excepting 3 cities

E10 lawsuit and injunction. By October the outlook was less rosy for E10 as we reported that a lawsuit that led to an injunction on the increased ethanol blend of 10% from the current 5.8% could take more than a year to resolve. The plaintiffs claim that expert and environmentalist opinions were not taken into account when the policy was developed, a policy they say could worsen air quality in many of the countries cities than they are currently, rather than improving them as the policy is intended to do.

Mexico’s E10 could hang in the balance for at least a year

E10 impact on MTBE demand, IN October, we reported that the US MTBE industry is worried about the impact of Mexico potentially blending 10% ethanol from a previous cap of 5.8%. The $1 billion industry exports more than half of its production to Mexico but if the recently announced—and recently court-suspended—policy goes through, demand for oxygenates like MTBE will reduce significantly. That leaves US MTBE and ethanol lobbyists fighting neck and neck in Mexico City trying to secure the market for them since there is little additional room for them on their home turf.

MTBE and ethanol industries take market share fight to Mexico

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