Biodiesel production plants
Biodiesel production plants
Business Model Description
Invest in biodiesel production plants derived from vegetable oils for national consumption and/or export
Expected Impact
Increase the use of alternative energy sources that benefit the environment and reduce inequallities in the access
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Paraguay: Itapúa
- Paraguay: Alto Paraná
- Paraguay: Central
- Paraguay: Concepción
Sector Classification
Renewable Resources and Alternative Energy
Development need
58% of the electricity supply corresponds to hydroelectricity and 27% to biomass (firewood, charcoal, and vegetable residues). The remaining 15% are imported hydrocarbons because there is no oil or natural gas production in the country (I).
Policy priority
The Ministry of Public Works and Communications has developed an Energy Policy with a vision of "Meeting the energy needs of the population and all productive sectors, with criteria of quality, socio-environmental responsibility, and efficiency; energy becoming a factor of economic growth, industrial development, and social progress, within the framework of regional integration (II).
Gender inequalities and marginalization issues
The difficulty in extending conventional electricity networks to very remote rural areas, where the population without electricity access typically resides, is mainly due to technical and economic challenges (III).
Investment opportunities introduction
opportunities were identified to support the sustainable development of the forestry and biofuels subsector (III).
Key bottlenecks introduction
Producing by-products requires high investments mainly due to the need for specialized equipment and technology for processing into various by-products (IV).
Alternative Energy
Development need
58% of the electricity supply corresponds to hydroelectricity and 27% to biomass (firewood, charcoal, and vegetable residues). The remaining 15% are imported hydrocarbons because there is no oil or natural gas production in the country (I).
Policy priority
The Ministry of Public Works and Communications has developed an Energy Policy with a vision of "Meeting the energy needs of the population and all productive sectors, with criteria of quality, socio-environmental responsibility, and efficiency; energy becoming a factor of economic growth, industrial development, and social progress, within the framework of regional integration (II).
Gender inequalities and marginalization issues
The difficulty in extending conventional electricity networks to very remote rural areas, where the population without electricity access typically resides, is mainly due to technical and economic challenges (III).
Key bottlenecks introduction
Producing by-products requires high investments mainly due to the need for specialized equipment and technology for processing into various by-products (IV).
Pipeline Opportunity
Biodiesel production plants
Invest in biodiesel production plants derived from vegetable oils for national consumption and/or export
Business Case
Market Size and Environment
< USD 50 million
In Paraguay, exports of vegetable oils reached USD 210 million, an amount that for January-October 2008 has already been exceeded (3).
Indicative Return
10% - 15%
> The internal rate of return for biodiesel production in Paraguay in 2021 must be 10% to 15% to be profitable (4).
Investment Timeframe
Medium Term (5–10 years)
The construction of a biodiesel plant will take place in the first half of 2020 and the commissioning of the plant is expected to take about 30 months. The ECB Group's objective is a plant in full production by 2022 (5).
Market Risks & Scale Obstacles
Market - Volatile
Impact Case
Sustainable Development Need
Paraguay, despite being a great generator of clean energy, still uses a lot of polluting energy. According to the OECD, this dependence on fuels is related to the fact that the fleet of vehicles in Paraguay grew by 165% between 2007 and 2015 (6).
The contribution of carbon dioxide emissions from the energy sector reaches 14% at the national level. It is distributed in the following subsectors: transport 83.3%, manufacturing industries and construction 10.7%, industries of energy 0.05%, and residential and commercial 5.9% (7).
In the long term, the goal is biodiesel and ethanol for export to other countries.
Gender & Marginalisation
Inequalities in access to energy and electricity services in rural areas.
Expected Development Outcome
Increase the proportion of the population whose source of energy is biofuel
Increase the development of clean energies and reduce CO2 emissions and other polluting gases
Improve air quality, reducing the levels of particulate material and pollution present in the environment
Gender & Marginalisation
Reduce inequality in the access to energy and electricity services in rural areas
Primary SDGs addressed
7.1.2 Proportion of population with primary reliance on clean fuels and technology
7.2.1 Renewable energy share in the total final energy consumption
9.4.1 CO2 emission per unit of value added
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Indirectly impacted stakeholders
People
Outcome Risks
Increase in deforestation due to agricultural activity, if new portions of land are used, since biodiesel is produced from vegetable oils (9).
Impact Risks
Execution risks: The high cost of the raw material for the production of biodiesel (4).
Stakeholder risk: The high volatility of the investment due to the dependence on international prices of raw materials, as well as the price of biodiesel (4) .
Drop Off: Ignorance of the importance of biofuels (10) and the expansion of biofuel production may be limited by the amount of vegetable oils (11).
External risks: Number of vehicles with engines adapted to function 100% with biodiesel
Impact Classification
What
The result is likely to be positive, important and expected because the investment of plants for the production of biodiesel could reduce CO2 emissions
Who
The environment is neglected by the large amount of fossil fuels used daily
Risk
The model is based on good evidence and external factors such as the high availability of agricultural products
Impact Thesis
Increase the use of alternative energy sources that benefit the environment and reduce inequallities in the access
Enabling Environment
Policy Environment
The National Development Plan 2030: Its goals include promoting renewable energy, reforestation, and the sustainable management of urban and industrial waste (12).
The Energy Policy of Paraguay 2016-2040 - Guarantee energy security with criteria of self-sufficiency, efficiency, minimum cost, socio-environmental responsibility, accompanying the country's productive development (13).
Likewise, the Paraguayan Government's commitment to private investments has also been evidenced, such as the private investment of Omega Green, a biofuel plant on a 70-hectare property in Villeta (14).
Financial Environment
The Development Financial Agency (AFD) - PROCRECER - Financing for investment projects. It finances projects such as - Rural, industrial, commercial and service development projects (19).
Law No. 2. 748/05 “For the promotion of biofuels” - The natural or legal persons benefited by this Law will enjoy the benefits provided in Laws Nºs. 60/90 and 2421/04 (16).
Law 60-90 (investment law) protects investments of national and / or foreign origin (20).
Regulatory Environment
Law 294/93 Environmental Impact Assessment Law and its Regulatory Decrees No. 453/13 and No. 954 / 13- establishes the mandatory nature of the environmental impact assessment for all or activities that modify the environment and have a positive or negative impact (15).
Law No. 2,748 / 05 “On the promotion of biofuels” - This regulation is intended to promote the production of biodiesel with incentives for capital investments (16).
Decree N ° 7,412 / 06 - That regulates the Law for the promotion of biofuels, where the Ministry of Industry and Commerce (MIC) through the Undersecretariat of State for Commerce is in charge of the verification and approval of investors and the determination of national production (17).
Decree No. 4,562 / 15 - By which new technical specifications of petroleum-derived fuels for importation and marketing in the country are established and Resolution No. 1,336 of November 22, 2013 is repealed (18).
Marketplace Participants
Government
Ministry of the Environment and Sustainable Development (MADES), Ministry of Industry and Commerce
Multilaterals
IDB, USAID, Development Bank of Latin America (CAF), World Bank (WB)
Non-Profit
Unión Industrial Paraguaya ( UIP), Association for Integral and Sustainable Development
Target Locations
Paraguay: Itapúa
Paraguay: Alto Paraná
Paraguay: Central
Paraguay: Concepción
References
- (I) GIZ Paraguay. 2011. Ficha Técnica. https://www.bivica.org/files/eficiencia-energetica.pdf (II) Ministerio de Obras Públicas y Comunicaciones. 2020. Presentan hoja de ruta de la Política Energética del Paraguay en panel internacional. https://www.mopc.gov.py/index.php/noticias/presentan-hoja-de-ruta-de-la-politica-energetica-del-paraguay-en-panel-internacional (III) UNDP. 2020. The national human development report. Paraguay 2020. Energy and human development. https://www.undp.org/sites/g/files/zskgke326/files/migration/py/UNDP-PY-engINDH_Py_2020_Summary.pdf (IV) Grass Ramírez JF, Muñoz RC and Zartha Sossa JW. 2023. Innovations and trends in the coconut agroindustry supply chain: A technological surveillance and foresight analysis. https://www.frontiersin.org/articles/10.3389/fsufs.2023.1048450/full (V) Ministerio de Agricultura y Ganadería. 2010. Marco estratégico agrario directrices basicas 2009 - 2018. https://faolex.fao.org/docs/pdf/par144609.pdf
- (1) Agencia de Cooperación Internacional del Japón & Coordinación Interinstitucional y Multisectorial de Contraparte. 2011. Estudio para el Desarrollo Rural Integral dirigido al Pequeño Productor EDRIPP. https://openjicareport.jica.go.jp/pdf/12041745.pdf
- (2) Diego Díaz. 2019. Parques industriales pueden ser alternativa para conseguir eficienciahttps://infonegocios.com.py/plus/parques-industriales-pueden-ser-alternativa-para-conseguir-eficiencia
- (3) Unidad Técnica de Estudios para la Industria. 2008. Industria Frutihortícola. https://www.mic.gov.py/mic/w/industria/deei/pdf/Perfil_Sect/FrutasHortalizas.pdf
- (4) Entrevistas. 2021.
- (5) BNA Americas. 2019. Planta de biocombustible más avanzada del mundo se instalará en Paraguay. https://www.bnamericas.com/es/noticias/planta-de-biocombustible-mas-avanzada-del-mundo-se-instalara-en-paraguay
- (6) OCDE. 2018. Hacia un entorno sostenible en Paraguay. https://www.oecd-ilibrary.org/sites/9789264301924-9-es/index.html?itemId=/content/component/9789264301924-9-es
- (7) Jorge Méndez Rheineck et al. 2007. CAMBIO CLIMÁTICO: Riesgos, vulnerabilidad y adaptación en el Paraguay. https://www.undp.org/sites/g/files/zskgke326/files/migration/py/UNDP-Paraguay-Riesgos-2007.pdf
- (8) Última Hora. 2023. ¿Cuántos vehículos matriculados hay en Paraguay? https://www.ultimahora.com/cuantos-vehiculos-matriculados-hay-paraguay-n2908096
- (9) Hivy Ortiz. 2019. La primera causa de deforestación es la expansión agrícola y ganadera. https://es.mongabay.com/2019/10/hivy-ortiz-bosques-fao/
- (10) Ricardo Rozemberg. 2009. La industria de biocombustibles en el MERCOSUR. https://www.researchgate.net/publication/227489858_La_industria_de_biocombustibles_en_el_MERCOSUR
- (11) Ramiro Rodríguez Alcalá. 2009. Biocombustibles en el Paraguay como cadenas de valor industrial.https://www.redsudamericana.org/sites/default/files/doc/2008%20Libro%20Biocombustibles%20cap05.pdf
- (12) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (13) Gobierno del Paraguay. 2016. POLÍTICA ENERGÉTICA NACIONAL 2040. https://www.itaipu.gov.py/sites/default/files/u51/Decreto_Nro_6092_0.pdf
- (14) La Nación. 2021. Proyecto Omega Green inició obras de infraestructura para planta de biocombustible. https://www.lanacion.com.py/negocios/2021/11/16/proyecto-omega-green-inicio-obras-de-infraestructura-para-planta-de-biocombustible/
- (15) Congreso de la Nación Paraguaya. 1993. Ley No. 294. https://www.bacn.gov.py/leyes-paraguayas/2374/ley-n-294-evaluacion-de-impacto-ambiental
- (16) Congreso de la Nación Paraguaya. 2005. Ley No. 2748. https://www.bacn.gov.py/leyes-paraguayas/2537/fomento-de-los-biocombustibles
- (17) Gobierno del Paraguay. 2013. Decreto 7412. https://faolex.fao.org/docs/pdf/par122019.pdf
- (18) Gobierno del Paraguay. 2015. Decreto 4562. https://www.ssme.gov.py/vmme/pdf/decretos/DECRETO4562.pdf
- (19) Agencia Financiera de Desarrollo. S.F. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd
- (20) Congreso de la Nación Paraguaya. 1990. Ley 60/90. https://www.mre.gov.py/consulpar-rio-de-janeiro/application/files/6316/1608/8888/Ley_60_-_90_Incentivos_Fiscales_a_la_Inversion_Nacional_y_Extranjera.pdf