Biodiesel Cutback: Colombia’s Controversial Strategy to Manage Diesel Prices

Colombia is considering a formula to lower diesel prices by reducing the biodiesel blend in the final diesel solution. This was announced by a spokesperson from the Ministry of Transportation in response to repeated protests from the transportation industry, which is threatening further demonstrations due to the continuous rise in fuel prices. So far, this increase has only affected gasoline but is expected to extend to diesel next year.

Biodiesel is a natural, renewable, and clean fuel primarily produced from vegetable oils and animal fats. It is used as a blend to create diesel that users purchase to fuel vehicles, especially heavy-duty trucks, as well as cars.

Gasoline Price

It’s worth noting that, in addition to the rise in the international market, the significant increase in gasoline prices in Colombia is due to internal factors. In this regard, the government announced that it would stop subsidizing fuel due to the high costs this represents for the country. This is why the price of gasoline has increased by 47% in Colombia over the past 11 months.

The government’s objective is to normalize the price of this fuel in line with neighboring countries. This would save the government around 36 trillion pesos annually (approximately 9 billion dollars).

These significant price increases have led to protests from citizens in general and transportation professionals in particular. Taxi drivers’ unions announced an agreement with the government last week, which will allow them to have a differentiated fare for this sector. However, the transportation sector has not entered into this agreement, and protests in the sector continue.

Reducing Biodiesel to Lower Prices

These increases in gasoline prices have not affected diesel so far. However, it is expected that increases in the price of this type of fuel will be noticeable starting in 2024.

In order to stabilize diesel prices, the government has announced a measure that has already caused discussion: reducing the biodiesel blend. If the measure goes ahead, it is expected that the price will remain frozen at its current value.

“On the instruction of the Ministry of Finance, it will be increased starting in January. But we as the transportation and cargo transportation sector have a proposal that will be shared with the President of the Republic to see if it can be taken into account, and we can continue freezing the fuel. But this decision is for the Ministry of Finance, and the minister must analyze the numbers and see if it can be implemented,” said Carlos Eduardo Enríquez, Deputy Minister of Transportation.

As the Deputy Minister himself indicates, the proposal is for now nothing more than that: a proposal that must be agreed upon with the ultimate authority, the Ministry of Finance. In the Ministry’s logic, biodiesel is the most expensive component of the blend that produces diesel in Colombia. Reducing its quantity in the final blend could help reduce the price.

Reactions from the Biodiesel Federation

As expected, reactions have not been delayed. The National Federation of Biofuels states that, if implemented, the proposal announced by the Ministry of Transportation goes against Colombia’s environmental objectives.

According to the Federation, the measure would send a mixed message about the country’s announced objectives to reduce emissions. Likewise, the Federation claims that the measure would not prevent the rise in diesel prices in the country. This is because the biodiesel that would no longer be used would be replaced by fossil-derived diesel, which would need to be purchased on the international market.

“Biodiesel is a renewable liquid energy source that supports a just energy transition. Derived from the national agro-industry chain of palm oil, biodiesel reduces greenhouse gas emissions, improves air quality, engine performance, and lifespan, generates formal jobs in rural areas, and ensures the country’s energy security and sovereignty,” reads the statement from the National Federation of Biofuels.

In addition, the Federation’s officials have announced the harmful effects that this measure could have on citizens’ health if it were to be implemented. The reduction of a non-polluting product like biodiesel would lead to increased use of diesel containing sulfur and other pollutant components.

“With a reduction in the blend, emissions would increase to 500 tons, which would worsen air quality, causing more than 13,000 deaths each year. Additionally, this would imply longer cargo vehicle traffic restrictions for transporters,” explains the Federation’s statement.

Defense of Biodiesel

In the words of the National Federation of Biodiesel, the government’s measure would be a step backward for the country, resulting in only negative effects on health, the economy, and the country’s international image regarding its commitment to renewable energy.

“The biofuels agro-industry is committed to the well-being and development of Colombia, as well as a just energy transition. In this regard, we invite the National Government to make the best public policy decisions aligned with the country’s commitments regarding climate change, economic and social development,” concludes the Federation in defense of this component of diesel.