RenovaBio should boost ethanol production in 2020

Cepea, January 15, 2020 – This year, the Renovabio Program (a new Brazilian biofuels policy) should allow ethanol production to increase sharply in the domestic market. RenovaBio should come into full force in January 2020, and many of the necessary decisions for the program to be implemented have already been made.

 

The use of other types of raw material (besides sugarcane) in ethanol production, such as corn, should also favor the Brazilian ethanol market. Agents from the sector believe ethanol production from corn will increase substantially – the share of ethanol produced from corn in the total national output should surpass 10% in the next two years.

 

In Mato Grosso, the number one corn-ethanol producing state in Brazil, three (out of 15) refineries are flex – which means that they use sugarcane and corn to produce ethanol – and two produce the biofuel only from corn. Soon, some other refineries from this state should start crushing corn to produce ethanol, while others should be built only for this purpose.

 

ETHANOL’S COMPETITIVENESS – Ethanol prices should continue lower than that for gasoline in the main producing and consuming states from Brazil. The gap between the quotes for these two fuel types (considering energy performance), in turn, will depend on the population’s purchasing power. It is worth to mention that when the population’s purchase power increases, fuel consumption grows too, due to both higher vehicle purchases and use of the existing ones.

 

INTERNATIONAL MARKET – EPA, the Environmental Protection Agency from the United States, has reduced estimates for Brazilian imports of sugarcane ethanol. Now, only 60 million gallons of the Brazilian ethanol are forecast to be imported, which accounts for a small share of the total biofuel to be used by the North American fleet.

 

Currently, the United States, the European Union and Brazil consume around 85% of the world’s ethanol – other 60 countries have already introduced ethanol into their energy matrix.

 

Asia may change this consuming pattern in the mid-term, mainly due to the use of vehicles in populous nations – and which already face environmental issues. However, only a sharp increase in the Brazilian ethanol production may lead Brazil to the group of the main supplying countries to the Asian market. Currently, the Brazilian ethanol production is only enough to supply the domestic market – Brazil exports and imports similar amounts of the biofuel.

 

(Cepea-Brazil)

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