Brazil Temporarily Raises Ethanol Blend in Gasoline from 30% to 32%

On July 14, Brazil’s National Council for Energy Policy (CNPE) approved a temporary increase in the mandatory anhydrous ethanol blend in gasoline from 30% to 32%. The measure will remain in effect for 180 days and may be extended for an additional identical period. The market had previously expected the policy to take effect by the end of June, but its announcement was delayed due to multiple postponements or cancellations of CNPE meetings. This marks another adjustment following the previous increase from 27% to 30% in August 2023. The change is expected to reduce Brazil’s annual gasoline import demand by approximately 900 million liters. The decision took into account significant volatility in international crude oil and fuel markets. Brazil’s Ministry of Mines and Energy stated that E32 gasoline performs comparably to lower-ethanol blends and will not significantly affect normal vehicle operation. Industry data indicate that the higher ethanol blend will boost the share of sugarcane-based biofuels in processing volumes and accelerate the expansion of corn-based ethanol production. Recently, geopolitical tensions in the Middle East have driven up international oil prices, increasing Brazil’s gasoline import costs and supply uncertainty, thereby strengthening calls within the industry to raise ethanol blending ratios. The Brazilian Sugarcane Industry Association (UNICA) noted that this move will help increase the share of domestic renewable fuels, enhance energy security, reduce reliance on imported gasoline, and stabilize fuel supply expectations. According to UNICA’s estimates, the new blend ratio will generate an additional annual ethanol demand of roughly 1 billion liters in Brazil and lay the groundwork for a future transition to a 35% blend. However, local fuel retailers and import associations have expressed concerns that a higher ethanol content could negatively impact engine performance and component longevity, potentially raising vehicle maintenance costs. Meanwhile, the National Corn Ethanol Union (UNEM) welcomed the adjustment, stating it reinforces market expectations for a future shift toward an E35 standard. UNEM said it will closely monitor the implementation of E32 and related technical studies to prepare for subsequent upgrades.