Biofuels Mandates Around the World: 2014

Who mandates what in biofuels? 62 countries in all have targets or mandates — but what’s the frequency, Kenneth?

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 62 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, and 10 in Africa.

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 15-20 percent range by 2020-2022.

Mandates in the Americas

Argentina

Earlier this month, 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.

Also has an E5 ethanol mandate in place – never filled.

Brazil

Mandates a minimum ethanol content of 20 percent – reduced from a 25 percent last 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.

On the other hand, we reported in November that the biodiesel blend to could be boosted to 7% from the current 5% as soon as January thanks to an expected bumper soy crop. The higher blending mandate would increase domestic demand for soy oil by 10%, requiring up to 9 million more tons of soy to be crushed. Soy is 80% meal and 18% oil.

Canada

Canada has a Renewable Fuel Standard featuring E5 ethanol, and B2 biodiesel.

Canada introduced the 2 percent biodiesel mandate as of July 2011, and he 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.  Four 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 Canadian Renewable Fuels Association said that an assessment conducted by econometric firm Doyletech Corporation concluded that, “the grand total of the annual positive economic impact of renewable fuels is $2.013 billion.”

Renewable Fuels Standards, by Province

British Columbia 5% ethanol 3 percent biodiesel moving to 4% in the future.

Alberta 5% ethanol 2% biodiesel

Saskatchewan 7.5% ethanol

Manitoba 8.5% ethanol 2% biodiesel

Ontario 5% ethanol

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 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

Has an E24 ethanol mandate and a B1 biodiesel mandate in place.

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.

Last year in Uruguay, he government said it was hoping to implement a B5 policy this year but it will depend on the ability to boost domestic biodiesel production.

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. The resulting lack of capacity and rewriting of mandates to support lower levels of capacity building — well, many US observers (including the heads of all the industry trade associations) take the view that the resulting market uncertainty will likely further reduce (or even zero out) investor interest in the sector.

The proposed EPA rule for 2014

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

* 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):

Overall, the reductions from statutory volumes are:

Advanced biofuels vs statute: -41.33%
Corn ethanol vs statute: -9.7%

A 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.

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, 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 will take place later in the year to achieve a final rule.

In November we reported that the head of low carbon fuels economics at UK’s Department for Transport says the country favors winding down the Renewable Energy Directive’s mandate to 5% from the current 10% target for 2020. Doing so would put the RED in line with the country’s Renewable Fuel Transport Obligation that has also been lowered to 5%, rather than following the direction set out by the RED. Dr Christoph Berg, managing director of FO Licht, says that continued policy uncertainty in Europe will weigh on potential investments as well as price pressure due to imports until the situation is cleared up after the next European elections.

We reported last week 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.

Mandates in Asia-Pac

Australia

The state of New South Wales has an E4 ethanol blending mandate and a B2 biodiesel mandate in place. The Queensland E5 ethanol mandate was expected to take effect in Fall 2011, but was shelved after opposition from the Against Ethanol Mandates Alliance.

In June, 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.

In October, we reported that In India, the oil marketing companies are set to miss the 5% ethanol mandate this year as well as the E10 set to begin in December due to delays in sourcing ethanol from sugar mills. The OMCs need to inspect sugar mills before awarding purchase orders but those inspections are delayed, pushing the date back further and putting mills at risk as it gets later into the season. About 20% of the bids for ethanol were rejected for being to high, but now farmers in Maharashtra are threatening to strike if higher prices aren’t paid for ethanol. About 1,000 farmers are expected to block fuel shipments to gas stations beginning Sunday unless the government boosts the price of ethanol to 97 cents per liter from 65 cents currently. The previous price set by the government was 43 cents per liter.

But it’s not all been about opposition and fall-back. In January,  Maharashtra has approved a 10% ethanol blend beginning March 1, up from the 5% implemented in most of the rest of the country. Maharashtra is one of the main sugarcane growing regions. Bharat Petroleum Corporation has posted an e-tender to source the 315.2 million liters needs to fulfill the state mandate. About 35 producers in the state have so far shown interest to supply the ethanol required.

Indonesia

An on-and-off 2 – 2.5 percent biodiesel mandate, and an E3 ethanol mandate.

Last year, we reported that the government is pushing mining companies to introduce biodiesel into their operations with the first mandate of 2% coming into effect on July 1. So far 25 mining operations have signed up to introduce biodiesel into their energy supplies. The plan is meant to help boost domestic demand for palm oil biodiesel as international demand for the fuel falls.

Malaysia

The country’s B5 blending mandate  kicked off in June 2011.

In November, we reported that  RHB Research says that the national biodiesel mandates implemented by Malaysia and Indonesia should go a long way towards stabilizing palm oil prices. Malaysia will boost its biodiesel blend to 7% in December from 5% currently while Indonesian state-owned oil company just finished a tender to purchase 6 million metric tons of biodiesel. That’s good news for Indonesia, who is complaining that anti-dumping tariffs placed on its exports to Europe were calculated unjustly.

New Zealand

Last year, 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, supporters are asking the biodiesel mandate to be increased to B5.

As of July, 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

Currently has a B2 biodiesel mandate in place.

Earlier this month, we reported that the oil industry is pushing the government to keep the biodiesel blend at 2% next year rather than raising it to 3% as planned, saying that a higher blend would raise production costs that then have to be levied onto the consumer. The increased blending mandate has already been delayed, which the national biodiesel industry says has damaged local producers. Oil refiners are suffering from a strong won that has reduced exports and weakened margins.

Taiwan

Has a B1 biodiesel mandate in place since 2008; considering an E3 ethanol mandate.

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.

Vietnam

Has an E5 ethanol blending mandate.

In July, we reported that seven cities and provinces will 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. Thusfar, 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

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.

Mozambique

Has an E10 ethanol mandate in place.

Nigeria

Has an E10 ethanol target in place, no mandate.

South Africa

In October, we reported that 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 before year’s end.

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

Earlier this month, we reported that all gasoline must contain a minimum of 15% ethanol as of Nov. 30, with a 10-day grace period for retailers to increase the ethanol volumes at the pump. The country has been successively boosting the amount of ethanol in gasoline since the summer, first with a 5% mandate and then a 10% mandate. The goal is to achieve 20% blending by Jan. 1 which will lead to a reduction of $108 million in fuel imports annually.