Biofuels and ethanol in Brazil

At the end of 2017, Brazil established the National Biofuels Policy (RenovaBio), with the objective of contributing to the decarbonization of Brazil’s transportation matrix in accordance with the commitments made under COP21.

To achieve this, the World Trade Organization (WTO) refers that the program takes into account the relationship between energy efficiency and the reduction of greenhouse gas emissions.

The program is based on three main instruments: annual carbon intensity reduction targets (CO2/MJ) for a minimum period of 10 years; certification of biofuels according to their efficiency in reducing greenhouse gas emissions; and decarbonization credits (CBio).

Biofuels

Based on these instruments, the environmental costs of fossil fuel use are converted into revenues for biofuel producers, providing efficiency incentives for their sustainable growth.

In 2021, the program avoided the emission of 24.4 million tons of greenhouse gases due to the trading of 24.4 million decarbonization credits by fossil fuel distributors, reaching approximately 98% of the target set for that year.

On the other hand, during the last five-year period, Brazil maintained its position as the world’s second largest ethanol producer and exporter after the United States, although production declined 8.6% year-on-year in 2021, to 188.5 million barrels, due to droughts that affected the sugarcane crop.

Average annual ethanol production growth over the 2011-2020 period was 3.7 percent.

Ethanol

In 2020, the state of São Paulo accounted for 44.8 percent of national production, and its relative share decreased 11.9 percent compared to 2019.

In addition, according to the WTO, the national production of anhydrous ethanol was 10.3 million cubic meters in 2020, which is 1.5% less than in 2019.

The average annual growth of anhydrous ethanol production during the 2011-2020 period was 1.7 percent.

At the same time, anhydrous ethanol production decreased 9.5 percent to 22.6 million cubic meters, equivalent to 68.8 percent of domestic ethanol production.

Average growth over the 2011-2020 period was 4.7 percent.

Overall, the ethanol fuel industry continued to depend on sugar production, subsidies and the evolution of international oil prices.