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09 May 2019, EMIS Insights Industry Report Extract

Brazil Biofuel Sector 2019/2023

Sector Overview

Brazil is the world’s second largest producer of ethanol and biodiesel, and a pioneer in developing biofuels as an economically viable alternative to fossil fuels. The main biofuels in the country are sugarcane ethanol – comprising anhydrous ethanol for blending with gasoline and hydrous ethanol for direct use in flex-fuel vehicles – as well as biodiesel, made from vegetable oils and animal fats. As a result, pure fossil fuels are not available to the end consumer, due to the mandatory biofuel blend. In 2018, gasoline had a mandatory content of 27% anhydrous ethanol, while diesel contained 10% of biodiesel.

Sector Snapshot

In the 2017/2018 crop year, Brazil’s biofuel sector returned to growth, with a 5.1% y/y rise in production to 32.8mn m3. This was the result of robust performance of the domestic biodiesel industry and a recovery in the production of ethanol. The increase in the share of ethanol in the production mix of local sugarcane mills, provoked by the downward trend in international sugar prices since end-2017, coupled with the higher price competitiveness of the biofuel compared to gasoline, were the major factors behind the rebound of the domestic ethanol industry in 2017/2018. During the year, ethanol output rose by 2.2% y/y to 27.9mn m3. The best-performing segment was hydrous ethanol, with a rise in production by 5.3% y/y to 16.5mn m3, favoured by a higher contribution of ethanol in the sugarcane production mix and robust domestic demand.

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