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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

14 March 2012

USDA GAIN: Portugal Biofuels Standing ReportUSDA GAIN: Portugal Biofuels Standing Report

There is no production of bioethanol for transport fuel in Portugal. Biodiesel production is dependent on diesel sales under a blending quota system and stands currently at around 340,000 MT per annum. Portugal transposed the Renewable Energy Directive in 2010 but the emission of Biofuel Entitlements (TdB) will be dependent on the compliance with sustainability criteria beginning January 1, 2013.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Biodiesel companies are investing in being certified under different EU approved certification schemes. The Portuguese biodiesel industry is favorable to the use of soybean oil and to further soybean imports. Portugal advocates for adopting a method to determine energy and emission credits for co-products that does not discriminate against soybeans.

1. Bioethanol

There is no production of bioethanol for transport fuel in Portugal. Portugal established mandates for liquid biofuels as a whole and later introduced quotas for biodiesel only. The only private company created with the aim of producing bioethanol has now decided to abandon its project and dissolve. Given the country’s soil and climatic conditions, the production of crops for bioethanol could be an efficient way of using the irrigation capacity of Alqueva, a major irrigation dam in the South of the country that is allowing the switching of 110,000 ha from dryland to irrigated crop area.

As long as Portugal does not produce bioethanol, blenders from other Member States (MS) can continue to export gasoline with incorporated bioethanol that counts to meet other MS’s targets on biofuels. The Portuguese law protects national produced feedstock and when national production eventually starts, blenders will incorporate Portuguese produced bioethanol that counts for Portuguese biofuel targets.

2. Biodiesel

a. Production, supply and demand

Sales of biodiesel fell by 6.7 percent in 2011 to 342,276 MT in line with lower road transport diesel sales, a consequence of the economic recession the country is going through. Based on industry information we estimate sales of biodiesel to further fall by 5 percent in 2012 and 3 percent in 2013.

Maximum production capacity is estimated by the industry at 626,000 tons/year in the existing seven biodiesel plants. However until 2011 only five of these had started production due to market conditions and the lack of government support. In 2011 the sixth producer started production bringing operating capacity to slightly above 576,000 tons/year (Table 2).

Based on previous year deliveries and their installed capacity, biodiesel producers were attributed 395,000 tons of quota for the reserve of biofuel emission entitlements (TdB) in 2011. The value for 2012 is still under discussion but is thought to be around 355,000 metric tons.

According to Article 28 of Decreto-Lei 117/2010 this quota is allocated to each producer by order of the Directorate General for Energy and Geology and is the sum of:

  • Q1 = 50% * sales to consumption in the previous year
  • Q2 = quantity allocated proportionally to the installed capacity (capped at 120,000 t/year) of each producer that applies to this quota

b. Maximum Biodiesel Price and Potential Feedstock Use

The maximum price of biodiesel (See section 4) is the maximum price of sale by the biofuel producers to the entities obliged to incorporate biodiesel in road transport diesel when accompanied by the respective biodiesel title (TdB), at 1 TdB for each biodiesel TOE, in accordance with article 28 of Decree-Law 117 2010. This price is currently set by a formula published in the Implementing Order 41-2011 of 19 January:

Maximum Biodiesel Price (€/m3) = oil mix index + freight index + methanol index + variable production costs + other production costs

S = (quotation published by Reuters - SOIL - NLD - GUM - P1, in €/t)* 0.91
P = (quotation published by Reuters - PALM - OLEIN - P1, in USD/t)* 0.91
C = (quotation published by Reuters - RPEO - NLEURO - P1, in €/t)* 0.91
Fp = (quotation published by Reuters - FIX - MYRDM5 - 10, in USD/t)* 0.91
Me = (quotation published by Reuters - MTH - CIFNWE - 10, in €/t)* 0.792
€/USD = exchange rate €/USD published by the European Central Bank

The oil mix index suggests the following percentages for feedstock use:

  • Winter months: 30% soybean oil; 70% rapeseed oil
  • Intermediate months: 70% soybean oil; 20% rapeseed oil; 10% palm oil
  • Summer months: 75% soybean oil; 25% palm oil

If we assume a constant production of biodiesel throughout the year then using the oil mix index percentages would give us the annual feedstock use percentages:

  • Soybean oil: 59%
  • Rapeseed oil: 27%
  • Palm oil: 14%

Taking into account the current consumption of diesel for transport use, the current biodiesel blending target of 6.75% v/v (in place until 2014), and a 59% use of soybean oil as feedstock, we estimate the potential market for soybeans to crush into biodiesel in Portugal to be around 1.0 million metric tons/year.

3. Renewable Diesel

Some blenders have pilot projects in Hydrogenated Vegetable Oils (HVO) that are not restricted by the FQD, but commercial production of this hydrocarbon is only expected in 2015. In May 2010 Portuguese blender Galp has announced a partnership with Brazilian Petrobras to produce renewable diesel from palm oil feedstock from Brazil. Total proposed production is around 320,000 m3 per year in two plants.

March 2012

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