Brazil to increase diesel bio-fuel content to 5% next January

The measure, which takes effect in January 2010, is expected to raise the production of bio-diesel in Brazil to 2.4 billion litres next year, but Lula da Silva cautioned the industry should not rely on edible soy oil as the main feedstock to make it, so it would not impact on food supplies.

Brazil is a pioneer in bio-fuel. It has used its status as the world's top sugar producer to promote cane-derived ethanol for automobiles. Its flex-fuel cars, launched in 2003, incorporate technology enabling them to run solely on ethanol, gasoline, or any mixture of both.

With an under-developed rail network and huge cargoes of agricultural and mineral production travelling thousands of kilometres by road to the country's ports, diesel consumption is a major cost for Brazil's industries.