Brazil's Ministry of Mines and Energy Minister Edison Lobao said last Wednesday it will increase the mandatory blending of biodiesel that must be blended into diesel fuel from the current 5 percent to 6 percent in July and to 7 percent in November.

The increase is aimed at replacing a significant portion of Brazil's diesel fuel imports with more domestically produced biodiesel that uses oils from soybeans and animal fats such as beef tallow as feedstock.

The measure, which will be sent to Congress, was signed by President Dilma Rousseff during an event at the Presidential Palace on Tuesday May 28, attended by the Ministers of Mines and Energy, Edison Lobao, and Agrarian Development, Miguel Rossetto.

"We went from a situation in which, on the scale of countries producing biodiesel, we did not exist, to become, today, the third in the world," said Rousseff.

The Minister Edison Lobao said the move will allow full use of the production capacity of biodiesel in the country and benefit family farmers with income generation. He also cited the environmental gains. With a 7 percent biodiesel blend requirement, biodiesel consumption in Brazil could rise to 4.2 billion liters a year from the current 3 billion liters annually. Brazil currently is able to process about 7.5 billion liters of biodiesel per year.

"The increase in this percentage is perfectly integrated to the Brazilian policy of energy diversification, with emphasis on renewable and clean energy. This expansion will enable reduction in the emission of 23 million tons of carbon dioxide by 2020, putting Brazil in the best goals that pledged before the United Nations, "the minister said while announcing the new percentage. Lobao added that with the change, the country will cease to import 1.2 billion liters (264 million US gallons) of diesel per year.

The president of the Sectorial Chamber Biodiesel Odacir Klein, spoke at the ceremony and said the decision benefits the industry. "This decision is a gesture of the government reflected in all areas such as health, employment generation, the Gross Domestic Product and virtually no reflections on inflation.

The National Biodiesel Program instituted the percentage of 2% of the mix in 2008, and in 2010, rose to 5% after this change had not occurred. According to the Minister of Mines and Energy, each percentage point increase in biodiesel mixture prevents the importation of approximately 600 million liters of diesel fuel per year, which, at current prices, represents a direct savings of nearly $500 million.

The government's biodiesel blend announcement was welcomed by state-run Petroleo Brasileiro SA, which has been forced by government policies to import diesel fuel and sell it at a loss. That has contributed to a surging debt load for Petrobras.