Required Report - public distribution

Date: 8/20/2008

GAIN Report Number: CO8014

CO8014

Colombia

Bio-Fuels

Annual

2008

Approved by:

R.Todd Drennan

U.S. Embassy

Prepared by:

Leonardo Pinzon

Report Highlights:

The Colombian government issued its policy framework for biofuels production and

announced it will temporarily import 500,000 liters of ethanol per day to blend with gasoline 

to reduce its gasoline consumption and to ease gasoline price increases. Colombia will 

expand ethanol production to 1.45 million liters from sugarcane and will produce 550 million 

liters of biodiesel from palm oil by the end of 2009.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Bogota [CO1]

[CO]

USDA Foreign Agricultural Service

GAIN Report

Global Agriculture Information Network

Template Version 2.09
GAIN Report - CO8014 Page 2 of 6

UNCLASSIFIED USDA Foreign Agricultural Service

Table of Contents

Executive Summary.............................................................................................3

Production ..........................................................................................................3

Consumption.......................................................................................................5

Trade..................................................................................................................5

Stocks ................................................................................................................5

Policy .................................................................................................................6

Other Relevant Reports .......................................................................................6
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UNCLASSIFIED USDA Foreign Agricultural Service

Executive Summary

Colombia’s blending requirements are for 10 percent ethanol for gasoline and 5 percent 

biodiesel for diesel. Current ethanol production made from sugarcane has reached 1.05 

million liters per day, which only covers 70 percent of total domestic needs. A new ethanol 

production plant which also uses sugarcane will begin producing by 2009 and will add

400,000 liters per day to Colombia’s production. Pilot programs are underway to produce 

ethanol from different feedstocks. Biodiesel started to be blended with fossil diesel in 2008 

and it is expected to cover a mandatory 5 percent mix, using a total of 500,000 litters per 

day by the end of 2009. All biodiesel in Colombia is produced from palm oil and the sector 

expects to be exporting biodiesel by the year 2010. 

On March 31, 2008, the Colombian government through the National Council for Social and 

Economic Policy (CONPES) agreed on a policy framework for biodiesel production. The

document includes the creation of a National Biofuels Commission headed by the Ministry of 

Agriculture, which will allow for tax exemptions for feedstocks used in biofuels for fifteen 

years. It will also guarantee a minimum price to biofuel producers, develop infrastructure for

biofuels transportation, and promote scientific research for alternative fuels. 

The Colombian Government announced that it will allow up to 500,000 liters per day in 

ethanol imports to cover local blend needs and reduce increased gasoline prices. 

Production

Currently, Colombia produces ethanol from sugarcane and biodiesel from palm oil. Sugar 

mills and palm oil producers have the most organized and developed producer associations 

and scientific research centers. Ethanol production started in late 2005 and palm oil biofuel

production in late 2007. The regulations established a blend at 10 percent ethanol with 

gasoline and 5 percent biodiesel with fossil diesel. Current Ethanol production covers 70 

percent of the local needs to comply with the mandated blending and biodiesel would reach 

the 5 percent only by 2009 if there are no delays in the facilities’ installation. 

Ethanol: Of the 13 sugar mills in Colombia, 5 of these plants produce the total current 

ethanol capacity with an output of 1.05 million liters per day. These five plants are owned by 

sugar mills situated in the Cauca river valley in southwestern Colombia. There is a new 

project underway called the Riopaila sugar mill that will add 300,000 liters of production per 

day. An extension is also underway at the Manuelita plant to expand production by 100,000 

liters/day, which will bring Colombia’s ethanol output up to 1.45 million liters per day by the 

end of 2009. 

Ethanol production/Consumption/trade (million liters)

2005 2006 2007 2008*

Ethanol

Beginning stocks 0 5 15 10

Production 29 269 275 299

Imports 0 0 0 60

Total supply 29 274 290 359

Exports 0 0 0 0

Consumption 24 259 275 335

Ending stocks 5 15 15 24

* estimate
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UNCLASSIFIED USDA Foreign Agricultural Service

Research and feasibility studies for new sources of ethanol production with different feed 

stocks, sugar beets, yucca and others have been developed. However, there is concern that 

there will not be enough supply of these feedstocks to maintain biodiesel production, and this 

has created a barrier for investment in the ethanol sector. Small-scale pilot production plants 

operating with the government support have not yet entered into production.

Biodiesel: Biodiesel production started in November last year. The first plant reaches a 

capacity of 50,000 a year, and belongs to palm oil producer Oleoflores. A new plant entered 

into production in April 2008 that added 36,000 tons per year to the production capacity. 

Two new plants will enter into operation during the second half of 2008 and two more plants 

in the beginning of 2009. By next year, Colombia will have a palm oil biodiesel production 

capacity of 486,000 tons (550 million liters) per year. 

Recently updated projections from the Colombian Ministry of Energy estimate domestic 

biodiesel demand at 839,000 liters per day. Biodiesel in Colombia must comply with current

mandatory requirement of 5 percent for biodiesel blending. According to this forecast, 

coverage of local needs will still be pending by the end of 2009, and their previous projection 

for Colombia to be able to export biodiesel surpluses has been revised. 

Biodiesel production/Consumption/trade in Millions of Liters

2007 2008* 2009**

Biodiesel

Beginning stocks 0 1 7

Production 9 146 550

Imports 0 0 0

Total supply 9 147 557

Exports 0 0 0

Consumption 8 140 540

Ending stocks 1 7 17

*estimate **forecast

Pure ethanol in Colombia is produced with sugarcane and processing plants for ethanol are 

located as part of the production complex of sugar and now ethanol production plants. All 

Colombian biodiesel is produced from palm oil. 
GAIN Report - CO8014 Page 5 of 6

UNCLASSIFIED USDA Foreign Agricultural Service

Quantity of Feedstock Use in biofuel Production in Metric Tons

2005 2006 2007 2008

Biodiesel 

Vegetable Oil 

Soybean oil

Rapeseed Oil

Palm oil 8,300 211,000 

Coconut oil

Animal Fats

Recycled Vegetable oil

Other

Ethanol

Corn

Wheat

Sugarcane 386,000 3,586,667 3,666,667 3,986,667 

Sugar beat

Rye

Molasses

Wood

Cassava/tubers

Consumption

Colombia has mandated a 10 percent ethanol blend with gasoline and 5 percent blend biodiesel with fossil diesel. Currently, Colombian ethanol production covers only 70 percent of 

the country’s needs and Colombian biodiesel production fulfills only 20 percent of total

required mix. In addition, the biodiesel minimum blend requirement will increase to 10

percent by 2010. Current production does not cover the minimum requirements.

Trade

on May 27, the Colombian government announced that it will temporarily authorize the 

national oil company (ECOPETROL), to import 2,500 barrels per day (500,000 liters), which

will supply those regions where the actual local production capacity cannot be covered while 

the local production expands to cover the local demand. ECOPETROL needs more adequate 

storage facilities before imports may take place. 

Stocks

Since minimum blend requirements are not being covered in Colombia, stocks merely consist 

of working inventories.
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UNCLASSIFIED USDA Foreign Agricultural Service

Policy

On March 31, 2008, the Colombian National Council of Economic and Social Policy (CONPES)

set the policy and guidelines for promoting the sustainable production of biofuels in

Colombia. The CONPES document has the ability to make all its recommendations

mandatory. 

The main recommendations were:

1. To preserve the tax deductions for the biofuels agro-industry for at least 15 more years. 

2. By June 2008, the ministry of Energy will adjust the price regulation scheme to ensure 

that a minimum price is paid to producers. 

3. To create a commission where the Ministry of Agriculture, Ministry of Energy, Ministry of 

Agriculture, Ministry of Trade, Ministry of Environment and Social Protection and the 

National Planning Department will all have voting rights. The ministry of Agriculture will 

be accountable to promote and implement agreed upon policies.

4. To define a cost reduction program for biodiesel production.

5. To include infrastructure needs for the biodiesel market and the latest developments of 

Colombian plans to expand infrastructure.

6. To include into the regional transporting plans those that will help production and

commercialization of biodiesel where there are or will be biodiesel production plants. 

7. To evaluate the feasibility of building pipelines for transporting biofuels.

With this policy document, the biofuels sector has the policy framework that guarantees a 

minimum price to producers, tax exemption to feedstocks growers, a minimum price to 

producers and an overall commitment from the government to support biofuel production 

and development. 

 

Other Relevant Reports

www.dnp.gov.co

www.minminas.gov.co

www.fedepalma.org