May 04, 2023

Brazil Considering Increasing Ethanol Blended into Gasoline to 30%

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazil's Minister of Mines and Energy announced last week the formation of a working group to study the impact of increasing the amount of ethanol blended into gasoline from the current 27% to 30% (E30).

If the blend is increased 3%, it would utilize an additional 1.3 billion liters of ethanol and reduce carbon dioxide emissions by 2.8 million tons per year. The increased blend would further reduce petroleum imports, help decarbonize the transportation sector, and reduce pollution in Brazil's big cities.

The city of Sao Paulo for example is one of the 10 most populated cities in the world and one of the 50 worst for transportation. Before ethanol started to be blended into gasoline, Sao Paulo was also one of the most polluted cities in the world, but that has all changed. Ethanol now accounts for 40% of the fuel used in the city and Sao Paulo is now not even in the top 1,500 most polluted cities in the world.

Brazil started producing flex-fuel vehicles that could utilize gasoline, gasoline blended with ethanol, or pure ethanol more than 20 years ago. Every gas station in Brazil offers all three types of fuel and drivers of flex-fuel vehicles can choose to fill their tank with whichever fuel is lowest price.

Traditionally, ethanol in Brazil was produced from sugarcane, but starting in 2017, corn started to be used to produce ethanol. Today, approximately 19% of Brazil's ethanol is derived from corn and that percentage increases every year. Most of Brazil's corn ethanol is produced in west-central Brazil, especially the state of Mato Grosso, which is Brazil's largest producer of soybeans, corn, cotton, and cattle.

The increased production of corn ethanol has helped support corn demand and corn prices for farmers in west-central Brazil.