Biofuels ambitions rise along with crude oil volatility

As feedstock prices fall from all-time high, leading biofuel producers push for increased blending and production to cushion crude oil volatilities.
Crude oil prices, which declined sharply during the pandemic, started rising sharply as the world reopened and skyrocketed due to the Russia-
Ukraine war. Nations across globe are prioritizing energy security despite food prices remaining higher on year. Countries which scaled back
blending mandates related policy decision or withheld the pre-committed yearly revision of target on account of high food prices are now pressing
to move ahead on increased blending and production.

Biofuels blending mandates timeline Dated Brent

 Increase/implementaion  Delay/reduction 150
($/barrel)

100
2020
Jan — Indonesia rolls out B30 blending program 50
Dec — Argentina scaled back to 5% from 8% biodiesel blending 0
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22
2021
Mar — Malaysia delayed B-20 biodiesel blending mandate in some
regions by at least six months
Market data
Jun — Brazil cuts biodiesel-diesel blend to 10% for May-Jun period.
Spreads
Jul — Indonesia’s government delays B-40 biodiesel mandate to ($/mt)
• As feedstock prices fall from all-time
2022 amid Covid‑19-related disruptions 1500 high, leading biofuel
BMD CPO vs ICE gasoil Singapore MOC
• Producers push for increased
Sep — Brazil’s approved reduction in the minimum biofuel content 1000
CBOT soyoil vs ICE gasoil London MOC
blending and production to cushion
in diesel fuel to 10% for 2021 from 13% planned earlier crude oil volatilities.
Nov — US EPA proposes rule to further delay Renewable Fuel 500 • Crude oil prices, which declined
sharply during the pandemic,
Standard compliance dates for 2019, 2020 and 2021.
0 • Started rising sharply as the world
Dec — Indonesia proposes to delay B40 roll out to 2025. reopened and skyrocketed due to the
-500 Russia-Ukraine war.
 US EPA proposes cuts to 2020 renewable volume obligation Sep-20 Sep-21 Sep-22

2022 Biodisel output Ethanol output

(million mt) (billion liters)
Jan — Brazil maintains biodiesel mandate for rest of 2022 at 10%, 20 80
against planned mandate of 14%
15 60
Feb — Indonesia looking to increase biofuel blending mandate to 10 40
B40 from B30 in 2022
5 20
Apr — Finland slashed its biofuels mandate for 2022, 2023 to 12% 0 0
US EU Argentina Indonesia US EU Brazil -
Jun — Indonesia to road test B40 biofuel blending 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
mandates at end-July
 Indonesia plans to raise palm oil share
in biodeisel to 35% from 30% CPO vs biodiesel Asia US corn vs ethanol
($/mt) ($/mt)
 Argentina increases biofuel blending 2000
SE Asia biodiesel
2000
Ethanol NYH Cargo
mandate to 12.5% from 7.5% CPO FOB Indonesia Corn CIF New Orleans
1500 1500
 US EPA increases biofuel mandates for 2021
at 18.84 billion gallons 1000 1000
 US EPA decreases biofuel mandates for 2022 500 500
at 20.77 billion gallons
 “Fit for 55”: EU Council agrees on higher targets for 0
Sep-20 Sep-21 Sep-22
0
Sep-20 Sep-21 Sep-22
renewables and energy efficiency
Jul — Indonesia to implement B35 biodiesel mandate from July 20 Soybean oil vs biodiesel Argentina Brazil sugar vs ethanol
($/mt) ($/mt)
Aug — Indonesia launces road test for B40 biodiesel blending 2000
Soybean oil FOB Up River
2000
Ethanol FOB Cargo
Biodiesel Breakbulk white sugar
1500
 Argentina extends increased biodiesel blending mandate 1500
for 60-days
1000 1000
Nov — Brazil to raise biodiesel mandate to B14 from Jan 2023,
B15 from March 2023 500 500

0 0
Mar-22 Mar-22 Mar-22 Sep-20 Sep-21 Sep-22

Source: S&P Global Commodity Insights, USDA, EIA, Energy Ministry of Argentina, EU Commission, Gapki, EPA
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