Brazil, the world’s second-largest producer of ethanol, is set to increase the percentage of biofuel in gasoline as part of efforts to support the industry amid rising supply, reported Bloomberg.
Authorities are recommending that the ethanol blend in regular gasoline be raised to 30%, up from the current 27.5%. The proposal follows technical tests backed by the Ministry of Mines and Energy, which confirmed that the higher blend would not harm car engines.
The increase was initially included in a law passed by Congress last year. While final approval from the National Energy Policy Council is still pending, it is expected to be granted later this year as the agency is likely to follow the recommendations of the technical study.
According to consultancy firm Datagro, the new blend would boost ethanol demand by 1.3 billion litres annually.
The move is also expected to lower demand for gasoline, potentially reducing Brazil’s reliance on fuel imports. This could lead to lower gasoline prices for consumers, and the country may even have surplus fuel available for export, Energy Minister Alexandre Silveira said on Monday.
The decision comes at a time when biofuel supply is increasing, with new corn-processing ethanol plants coming online. Industry group Unem reports that 12 new ethanol production units are either being planned or under construction. While ethanol production from corn is growing, most of Brazil’s supply still comes from sugarcane.
Datagro President Plinio Nastari noted that some sugarcane mills may shift to ethanol production to meet the rising demand. This is particularly likely for mills outside São Paulo, the country’s largest sugarcane-producing state, where exporting sugar is more costly due to the longer distance to major ports.
