Brazil looks to raise ethanol blending to 32%

Brazil is weighing a proposal to increase the ethanol blending rate in gasoline from 30% to 32% in the first half of the year, as elevated global crude oil prices prompt the government to strengthen domestic biofuel consumption.

The proposed hike is expected to boost ethanol demand significantly, encouraging sugar mills to divert a larger share of sugarcane toward fuel production. Industry estimates indicate that the proportion of cane used for ethanol could rise to around 54%, compared to 51% in the previous season.

The timing of the move is critical, coinciding with the start of Brazil’s sugarcane harvesting season—a period when mills make key decisions on allocating cane between sugar and ethanol production based on market dynamics.

With increased cane diversion and continued expansion in corn-based ethanol production, Brazil’s total ethanol output is projected to reach between 44 billion and 44.5 billion litres this season. This would mark a record high, reflecting an estimated 15% increase over the previous year.

The policy under consideration underscores Brazil’s broader strategy to reduce reliance on fossil fuels, cushion the impact of volatile oil prices, and reinforce its position as a global leader in biofuels.

Domestic and global energy companies are investing heavily on biofuels in Brazil. Recently, global energy conglomerate BP held that it is exploring the development of at least nine (9) biogas projects in Brazil. Indian ethanol conglomerate Praj Industries announced that it will be supplying technology for Brazilian biofuel company Be8 for its plant in the South American country. Both Be8 and Praj signed a license agreement to establish their first ethanol plant in Passo Fundo, Rio Grande do Sul, Brazil.