It’s been over a year since the European and Colombian negotiating teams finished the terms of the free trade agreement. This should be implemented by now but is on hold because of a Colombian alternative fuels decree some years ago.
At the end of the 20th century, the Andean country saw its oil fields beginning to dry up and the Planning Department implemented a national policy under which the country had to research new energy alternatives to end oil dependence. As a result of this policy, sugar cane growers (and those of cassava and sugar beet) invested in technology to process the crops into ethanol and African palm oil into biodiesel.
Go deeper with GlobalData
In the middle of the last decade, the country began to mix 10% ethanol with petrol and about 7% palm oil with diesel fuel with one attractive stimulus to incentivise investments: the country pays double the price per gallon to producers of biofuels compared with what is paid for fossil fuel products.
Next, in 2007, the government of the day mandated that, after 2008, the mix must grow to 20% ethanol and palm oil, by 2010 40%, by 2012 60%, by 2014 80% and, by 2016, 100%.
Needless to say, the measure was repealed because there was no study about the mixes’ viability and the impact on the present fleet.
The Europe FTA negotiations were also on so there were objections there as well.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataBesides, some private studies made by certain European car brands showed the mixes were inconsistent city by city, a factor that could seriously affect an engine used country-wide. The mix disparity is due to biofuel production variances across Colombia.
According to Oliverio García, president of the Andemos car importers’ group, “the producer’s interests pushed government to release another decree whereby after next year (2013) the mixes must increase according to some technical standards established by a local study headed by a small Colombian university: they tested higher mixes on a Euro II diesel truck and an old petrol car with a reconditioned engine with good results but they have forgotten that the ACEA mix limits (10% ethanol and 7% palm oil) are the accepted norms for Euro V emissions technology”.
There is so far no European official comment on the latest Colombian decree but biofuels producers are warning they have already made investments to supply the country so the government must keep its word on increasing the mixes.
“If Colombian authorities insist on imposing the higher mixes by decree, the matter could go to the WTO because fuel mixes are subject to that organisation’s control,” said García.
With the present mixes, there’s so far no evidence of vehicle damage but, if they rise, there could be problems with fuel line corrosion and wax sedimentation in fuel tanks.
