The biodiesel market in Mexico: Challenges and perspectives to overcome in Latin-American countries

Abstract

• Pricing and control policy for biofuels needs to be independent from fossil fuels. • Biodiesel from used oils is the most competitive raw material. • Establishing quotes for mixing diesel with biodiesel is key to support its market. • Improving technology development in Mexico is crucial for biodiesel production. • Elimination of VAT and IEPS tax is a vital aspect of national policy on biofuel. The current energy policy in Mexico and government’s commitment are mostly focused on fossil fuels. This situation hampers the creation of conditions to develop and strengthening the Mexican biofuel market, although some recent efforts have been oriented in terms of quality regulations, and the production of pure biofuels. Promoting the production and consumption of biodiesel in Mexico requires addressing various challenges, involving technology development for biodiesel production, selection of best raw materials, regulation of the distribution, and commercialization of this biofuel. Here, the legal, institutional, technological and fiscal obstacles to establish a successful biodiesel market are analyzed in this paper, exploring the regulation for biofuels in Mexico, the national production and consumptions of biodiesel, and the value chain and production cost of biodiesel. This investigation is supported by the analysis of 150 interviews conducted with stakeholders in the energy sector.