Biofuel that is added to diesel is usually extracted from castor beans, soybeans and other oilseeds. The risk of feedstock for the domestic oil market being diverted to the new fuel was cited by biofuel experts. President Luiz Inaco Lula da Silva urged Brazilian industry to make sure feedstock for cooking oils for consumer use did not end up in the fuel.

Biodiesel will be produced by Petrobras, the state-controlled oil and gas exploration and production company. Scientists have said adding an extra 1 percent of biofuel to the diesel content will result in a higher quality product and reduce pollution. Biofuel content in diesel is scheduled to be raised to 5 percent, effective January 2010, from 4 percent at present.

Brazil, the largest country in South America, is a major consumer of diesel because its countrywide communications infrastructure depends heavily on trucking routes instead of railroads. Bounded by the Atlantic Ocean on the east, Brazil has a coastline of more than 4,655 miles, and current projections say energy consumption is set to rise dramatically as the economy grows.

Lula has said he is keen to reduce Brazil's carbon footprint with energy conservation measures and greener fuel uses, but analysts say the country faces an uphill task keeping that promise.

Lula indicated the increased extraction of biofuel for diesel from agricultural produce would lead to dramatic increases in agricultural production. Agriculture industry analysts say they expect huge increases in the cultivation of castor beans, dende palm coconuts, sunflower seeds, cottonseeds and soybeans. But they also warn the market can be subject to inflation as well as downward price pressures if enthusiastic farmers resort to overproduction.

Lula has said increased agricultural production will give Brazilian farmers "peace of mind" as they will be dealing with an assured customer, Petrobras.

Brazil is the world's eighth-largest economy at market exchange rates and the ninth largest by purchasing power parity. This is likely to change in Brazil's favor as the government attempts to steer the economy away from dependence on commodity exports to manufacturing, energy self-sufficiency and energy exports.

Not everyone is excited about biofuels usage rising worldwide. The impact on corn prices of corn-based ethanol production raised concerns across the United States. In a study for Foreign Affairs, the journal of the U.S. Council on Foreign Relations, C. Ford Runge and Benjamin Senauer warned that biofuels development had to be handled with caution as abuse or overuse of food resources for fuel production could lead to global starvation.

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