Brazil faces a real prospect of a diesel fuel shortage at the pumps starting in April. The prolonged war between Iran and the United States, which began in February, and the closure of the Strait of Hormuz, through which 25% of the world's oil production passes, have already caused prices for consumers to increase by at least 20%.
Today, the country imports about 25% of the diesel it consumes and 60% of the naphtha, petroleum-derived items used in fuel production. With rising costs, the volume of diesel imports fell by about 60% in March, according to data from the National Petroleum Agency (ANP).
National production ranges between 140 billion and 150 billion liters of diesel per year, mostly produced by Petrobras. However, domestic consumption is around 180 billion liters annually. It is precisely this difference that the country imports, mainly from the United States, Russia, and the Middle East.
The good news is that the impact of the price increase and potential shortages can be minimized. The problem is that the federal government needs to comply with the provisions of the Future Fuel Law, which ensures, starting this March, an increase in the biodiesel blend in diesel fuel, from the current 15% to 16%.
This means that, for every liter of diesel sold by distributors in Brazil, 850 milliliters (ml) are effectively diesel oil, and the other 150 ml come from sustainable fuel, produced mainly from vegetable oils. With more biodiesel, the need to increase the use of fossil fuels is reduced.
The assessment from key industry leaders is that this lack of more proactive action, especially from the Ministry of Mines and Energy, to meet a demand that could be supplied by local – and sustainable – production is incomprehensible.
“The government is wasting time increasing the blend, because that’s the only solution right now. We don’t have fuel reserves, nor do we have an import strategy,” says Erasmo Carlos Battistella, founder and CEO of Be8, in an interview with NeoFeed .
A leader in the Brazilian biodiesel segment, with 15% of the national market's production volume of this clean fuel (approximately 1.7 billion liters per year), Be8 currently has six production units in the country. Last year, the company achieved revenues of R$ 12 billion.
In practice, this one percentage point increase would mean the immediate entry of one billion liters of biodiesel per year into the market. Last year, the sector produced 9.84 billion liters, a volume considered historic.
The fact is that there is no forecast of this advancement in Brasília, even though the biodiesel sector is prepared for a possible increase in demand. With more biofuel in the blend, Brazil partially reduces its dependence on diesel imports. And it decreases the chance of shortages at the pumps.
This mismatch has created a collision course between the government and the biodiesel production sector, which perceives a lack of political will to solve this problem. On the other hand, the government claims that there is a lack of testing to guarantee an increase in the percentage of biodiesel.
Amid this imbroglio, President Luiz Inácio Lula da Silva signed a decree on March 12, eliminating two tax rates (PIS and Cofins) on the import and sale of diesel.
Furthermore, he also signed a provisional measure guaranteeing subsidies to diesel producers and importers. The tax revenue loss from these two initiatives will reach R$ 30 billion.
According to Battistella, Lula's administration's strategy of focusing solely on economic compensation through tax reductions does not solve the problem.
“This measure cannot solve the problem. We are not just talking about price, but about product availability. And there's no point in reducing taxes if there's no product,” says the CEO of Be8.
The businessman understands that, given the emergency situation, the Minister of Mines and Energy himself, Alexandre Silveira, could sign a decree that would immediately increase the biodiesel blend not to 16%, but directly to 17%, which, according to the law, would only be scheduled for March 2027.
“We are in a war-like scenario. Perhaps today is the biggest energy crisis in history. The decision to increase the blend should have already been made,” he explains. “If we continue down this path, we will have fuel shortages in Brazil in April.”
A meeting is expected on Thursday, March 26, convened by the National Council for Energy Policy (CNPE) to discuss this issue, given the intense pressure from the productive sector and the rising cost of diesel in the states. The minister chairs the advisory body.
A survey conducted last week by the Federation of Associations of Municipalities of Rio Grande do Sul (Farmus) shows that at least 142 municipalities in Rio Grande do Sul are already facing problems with abusive diesel prices and difficulties in supplying fuel for public fleet vehicles.
NeoFeed had access to an official letter, signed by Governor Eduardo Leite (PSD) on March 13, and addressed to the ANP and the Ministry of Mines and Energy, requesting that the government prioritize the advancement of the biodiesel blend, also increasing to 17%.
"In addition to reducing external dependence on fossil diesel, this measure helps mitigate the impacts of international price shocks and strengthen national production chains," says Leite in the document.
Brazil doesn't act, it only reacts.
According to Jerônimo Goergen, president of the Brazilian Association of Biofuel Producers (Aprobio), the real risk of a diesel shortage will impact the entire biofuel production chain.
“Brazil can’t find a solution because it hasn’t organized itself. Unfortunately, the country doesn’t act, it only reacts. What needs to be clear is that for every liter of diesel that is not consumed, 15% of biodiesel will no longer be sold,” he explains.
The head of Aprobio states that he has already requested a meeting with the new Minister of Finance, Dario Durigan, to discuss the matter and explain the real need for a change in thinking on the part of the government.
The administration, however, has signaled to the private sector that it intends to first try to normalize the diesel import market. Durigan revealed last Tuesday, March 24th, that the government proposed to the states a subsidy of R$ 1.20 per liter of imported diesel, which would be funded half by the federal government and half by the state governments.
According to the Future Fuel Law of 2024, this would require technical feasibility tests that could take up to six months, at best. The Ministry of Mines and Energy even indicated that the available laboratories would deliver the tests in one year.
The productive sector, however, would be willing to pay for these tests if this is a problem for the public sector. “If that’s the case, let’s accelerate the testing. And companies are willing to bear this cost. What we can’t understand is the delay. This is not good for Brazil,” says Goergen.
The president of Aprobio, however, finds it inconsistent that Brazil can forgo R$ 30 billion in taxes but cannot make available approximately R$ 10 million, an amount that would be sufficient for testing. "This is unacceptable."
According to the founder of Be8, if the federal government accepts the sector's arguments, biodiesel companies will be ready to meet supply requests with the increased blending percentage to 17%.
“Be8 and all the companies are prepared for this. We have raw materials for B17 [a term representing the percentage of the biodiesel blend], as well as a factory and logistical capacity. We are ready. We cannot miss this opportunity,” says Battistella.
Contacted by NeoFeed , the Ministry of Mines and Energy stated that "the legislation was explicit in linking the implementation of levels higher than B15 to a technical demonstration of feasibility."
"The schedule includes the forecast of B16 starting in March 2026 and progression to B20 in March 2030, provided there is proof of the technical feasibility of mixtures exceeding 15%. In other words: until there are tests and confirmation of technical feasibility, it is not possible to implement the schedule," the Ministry added.
The ministry also says it is awaiting formal approval of the financial execution to enable the activities. The expectation is that the trials could begin in the first half of 2026, without specifying a particular date.
"The testing plan is a complex undertaking, built in a multidisciplinary and collaborative way, with the participation of representatives from automakers, system integrators, transporters, biodiesel producers, fuel distributors, universities, research institutes, and government agencies."
(Contributed by Cristiano Zaia, from Brasília)
