Brazil to study increase in ethanol-gasoline pump blend to 30%: minister

Brazil will study a potential increase to the volume of anhydrous ethanol blended with gasoline sold at the pump, the latest move by the administration of President Luiz Inacio Lula da Silva to expand biofuels consumption and reduce greenhouse-gas emissions.

Mines and Energy Minister Alexandre Silveira plans to propose studies that would increase the ethanol-gasoline pump blend to 30% from 27.5% over a series of years at the next meeting of Brazil's National Energy Policy Council, or CNPE. The CNPE, which is Brazil's lead policymaking body for energy matters, held its first meeting in March and is expected to meet again in the second half of 2023.

"This increase should take place in a gradual manner, with visibility and transparency," Silveira said during an April 28 event to kick off Brazil's sugarcane harvest in Minas Gerais state. The CNPE will create working group, with technical studies evaluating the increase carried out together with the automotive and ethanol industries, he added.

"The increase in the ethanol mandate is going to contribute to the country's energy security, with the reduction in gasoline imports, and to the energy transition, with the reduction of greenhouse-gas emissions," Silveira said.

The plan to increase Brazil's ethanol pump mandate reinforced Lula's plans to expand the government's RenovaBio program, a wide-ranging support program for the biodiesel and ethanol industries that aims to increase the country's consumption of biofuels in order to meeting climate targets under the Paris accords. The program had suffered setbacks under the previous government, including a reduced volume of biodiesel blended with diesel sold at the pump.

"The objective of RenovaBio is to reduce carbon intensity in our fuels matrix by 10% by 2030, with greater utilization of biofuels such as ethanol, biodiesel and biomethane," Silveira said.

Brazil also plans to expand the use of biofuels through the government's Future Fuel program, which is expected to be sent to Congress for debate in the near future, Silveira said. That includes stimulus measures for automakers to build more flex-fuel cars and light trucks as well as incentives to produce sustainable aviation fuel, or SAF. One of SAF's primary raw materials are byproducts from sugarcane-based ethanol production, he noted.

According to Silveira, Brazil has the potential to produce up to 9 billion liters of SAF for year. That would top the 7 billion liters of jet fuel currently consumed in Brazil each year.

Biodiesel increase

The latest move to boost biofuels consumption followed an increase to the volume of biodiesel blended with diesel sold at the pump, which rose to 12% from 10% on April 1. The higher mandate ended several years of volatility for biodiesel producers, which suffered through oscillations in the biodiesel blend during the pandemic amid concerns about prices for biodiesel raw materials such as soy and beef tallow.

Under the increase passed by the CNPE on March 17, additional future increases to the biodiesel blend were also approved. That returned Brazil to a firm timeline for adopting higher biodiesel blends over the next few years.

The biodiesel blend will increase to 13% in April 2024, 14% in April 2025 and 15% in April 2026, according to the Mines and Energy Ministry. Under the previous iteration of the RenovaBio program, Brazil had been expected to increase the volume of biodiesel in diesel sold at the pump to 15% on March 1. The biodiesel-diesel blend was held at 10% for much of 2022 and the first three months of 2023.

The higher pump blends for diesel and gasoline should also lead to reduced imports of the two fuels, with increased consumption of the two biofuels directly substituting for imported barrels of diesel and gasoline, according to the Mines and Energy Ministry. The ministry estimated that higher biodiesel blend, for example, should reduce diesel imports by 1.3 billion liters in 2023 and up to 4 billion liters in 2025.

Brazil imports about 25% of the country's diesel demand and about 15% of gasoline consumption because of a domestic refining shortfall, according to the ANP. Diesel and gasoline, respectively, are Brazil's top two refined products in terms of consumption.