Report discusses Colombia’s recent move to an E10 mandate

By Erin Voegele | August 15, 2018

A report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network discusses Colombia’s recent decision to increase its biofuel blend mandate to 10 percent.

According to the report, the Colombian government introduced E10 and B10 across most of the country in March 2018. The move aimed to help reduce pollution in major metropolitan areas, help the country meet its climate change commitments under the 2015 Paris Climate Conference (COP21), and incentivize local production.

The report explains that Colombia currently manages its biofuel market using a system of mandates, tax relief, environmental regulations and price controls. Regarding pricing, the government has established formulas to calculate the price of biofuels based on the opportunity cost of using raw materials to supply other markets, which generally provides an advantage to palm oil and sugarcane production. “This mechanism of administered prices creates market opportunities for biofuels producers abroad that use less expensive feedstocks or in general are able to produce at lower costs,” the report said.

In April 2014, the government enacted a policy to allow biofuel imports only if there was a shortage in domestic production. That measure was repealed in May 2017, but followed by technical regulations requiring all ethanol, produced and imported, to comply with fuel quality and carbon footprint standards.

The report states that Colombia’s carbon footprint regulation for fuel ethanol took effect near the end of last year, restricting some U.S. exporters from shipping ethanol to the nation. The regulation included a sugarcane ethanol modeling example, but excluded a corn ethanol-based mode, which leads to many modeling uncertainties regarding the treatment of corn ethanol and its coproducts. “Colombia could reduce the effects of this regulation on corn-based ethanol by changing the modeling accounting methodologies for this type of ethanol and using a broader certification system than ISO,” the report said.

The report notes that Colombia currently has seven ethanol plants with a combined capacity of 600 million liters (158.5 million gallons). Ethanol production is expected to reach 480 million liters this year, with fuel ethanol imports reaching 130 million liters, primarily from the U.S.  Ethanol consumption is expected to reach 608 million liters this year, reaching a an average of an E9 blend rate.

Colombia also has eight palm oil-based biodiesel plants with a combined capacity of 700 million liters. Biodiesel production is expected to reach 620 million liters this year.