Brazil is strategically shifting its biofuel policy, increasingly relying on corn-based ethanol to meet escalating domestic demand for renewable fuels. This pivot comes as the nation implements a new government mandate to increase the ethanol blend in gasoline, while traditional sugarcane-derived ethanol production has largely stagnated due to market dynamics favoring sugar output. This evolving landscape highlights corn ethanol’s pivotal role in Brazil’s energy security and environmental objectives.
The Evolving Landscape of Ethanol Production
The Brazilian government recently approved a significant measure to raise the mandatory ethanol blend in gasoline from 27% to 30%. This increase is projected to necessitate an additional one billion liters of ethanol annually, placing considerable pressure on the country’s biofuel supply chain. Historically, Brazil has been the global leader in sugarcane ethanol production; however, output has remained flat since the early 2000s. This plateau is largely attributed to sugarcane growers’ economic preference for producing sugar, a commodity that continues to command competitive prices in global markets. According to Gabriel Barra, director and head of Latin American equity research for oil and gas, petrochemicals, and agribusiness at Citibank, “Sugar will continue to take a large part of this mix from sugarcane processing. Ethanol will most likely continue to lose this competition.”
The Ascendancy of Corn Ethanol
In contrast to sugarcane ethanol’s plateau, corn ethanol production in Brazil has expanded significantly, more than tripling in recent years, according to data from industry group UNICA. For the 2024/25 cycle, corn ethanol output in Brazil’s center-south region saw a nearly 31% increase year-on-year, reaching 8.19 billion liters. Guilherme Nolasco, president of the corn ethanol industry group UNEM, underscored the sector’s importance, stating, “Thanks to corn ethanol, we are increasing the blend to 30%. If it weren’t for this increase in production, we wouldn’t be able to implement this policy.” This robust growth provides the necessary capacity to support the government’s enhanced biofuel mandate, which officials are now promoting as a measure to potentially stabilize pump prices.
Future Outlook and Strategic Implications
Analysts and industry leaders express confidence in the sustained growth trajectory of corn ethanol. Citibank, for instance, forecasts Brazilian corn ethanol production to reach 16 billion liters by 2032, a projection echoed by UNEM, which anticipates the sector’s ability to double its current output by that year. UNEM further projects that corn ethanol’s share of Brazil’s total ethanol production will grow from its current 23% to 40% over the next decade. Amance Boutin, business development manager at consultancy Argus, views the decision to implement the new mandate from August as a strong signal of confidence in the corn ethanol sector’s capacity for continued expansion. Ultimately, as stated by Evandro Gussi, Chief Executive of UNICA, Brazil’s priority remains focused on fuels with low carbon emissions that do not compromise national food security, irrespective of their origin.
Oliver brings 12 years of experience turning intimidating financial figures into crystal-clear insights. He once identified a market swing by tracking a company’s suspiciously high stapler orders. When he’s off the clock, Oliver perfects his origami… because folding paper helps him spot market folds before they happen.