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The government of Thailand looks set to increase the mandatory biodiesel blending rate of palm oil amid falling palm oil prices, according to a report by the United States Department of Agriculture (USDA).

The Thai government’s reduction of the mandatory biodiesel blending rate from 10% to 7% at the beginning of last year led to an 18% drop in demand, the USDA’s Foreign Agricultural Service (FAS) report said.

For diesel fuel, mandatory blending rates dropped as low as B5 in a bid to curb diesel prices between February-September 2022.

Biofuel consumption in Thailand was expected to rise by 6% to 2.96bn litres this year due to increasing demand from the transportation sector, according to the USDA’s Foreign Agricultural Service (FAS)’s Thailand Biofuels Annual.

The new Alternative Energy Plan (AEDP) 2022 had set a biofuel consumption target of approximately 2.95bn litres by 2037, comprising 1.57bn litres of biodiesel and 1.38bn litres of ethanol, the 6 June report said.

For sustainable aviation fuel (SAF), a target blending rate of 1% was set for 2025, with the aim of reaching 5% by 2034.

“Limited supplies of used cooking oil (UCO) that meet the International Civil Aviation Organization’s (ICAO) standards will be the main constraint in achieving these targets. The alternative feedstocks for SAF production will be from excess supplies of ethanol after domestic demand for fuel ethanol reaches its peak in 2027,” the USDA said.