Brazil to cut gasoline imports with rollout of E30 ethanol blend

Starting August 1, a new gasoline blend containing 30% anhydrous ethanol — known as E30 — will go into effect. The measure, part of the Future Fuel Law, aims to reduce Brazil’s dependence on fossil fuel imports, strengthen the ethanol supply chain, and deliver environmental benefits.

The introduction of E30 is expected to cut annual gasoline consumption by up to 1.36 billion liters, enabling Brazil to cease being a net importer of the product. According to the Ministry of Mines and Energy (MME), imports could decrease by 760 million liters annually, resulting in a potential export surplus of up to 565 million liters.

Data from Argus, based on importer estimates, indicate an immediate decline of up to 125,000 m³ per month in gasoline imports. In the first half of 2025, Brazil imported approximately 1.04 million cubic meters of gasoline, a 12% decrease compared to the same period in 2024, according to the Ministry of Development, Industry, and Trade (MDIC).

“In August, we should already begin to see lower volumes, as importers have backed away from negotiations throughout July. In addition to reduced demand, the current arbitrage window is also not favorable for imports,” said Gabrielle Moreira, fuel specialist at Argus.

According to the MME, which is coordinating the transition, the new ethanol content will partially replace fossil gasoline, reducing import needs and easing exchange rate pressures on fuel prices.

“In addition to reducing Brazil’s dependence on imported gasoline, the measure should lower consumer prices and positively impact inflation. It also stimulates ethanol demand, reduces emissions from the transport sector, and boosts investment in the sugarcane and ethanol production chain,” the ministry said in a statement.

Approval of E30 followed tests led by the MME and conducted by the Mauá Institute of Technology, which confirmed the blend’s technical viability for gasoline-only cars and motorcycles.

The National Association of Motor Vehicle Manufacturers (Anfavea), which participated in the working group coordinated by the MME, deemed the results positive. According to Gilberto Martins, Director of Regulatory Affairs at Anfavea, the tests involved vehicle technologies representative of Brazil’s current fleet. They showed no adverse effects on engine durability or performance, provided fuel quality standards are met.

“E30 is seen as a relevant step in the energy transition. Ethanol is already a well-established solution in Brazil, with widely recognized environmental benefits, especially in terms of CO₂ emissions across its production cycle,” said Martins.

He also emphasized that Brazil already has the necessary distribution and refueling infrastructure in place, and that flex-fuel technology, which allows the use of 100% ethanol, supports this transition.

Regarding the possibility of raising the ethanol blend to 35%, as allowed by law, Anfavea advocates for new technical testing to ensure safety and compatibility with both current and future vehicle models.

With the new blend, the government expects an increase of up to 1.46 billion liters in anhydrous ethanol consumption. According to Hugo Cagno Filho, president of the National Bioenergy Union (UDOP), the sector is ready to meet this new demand.

“The industry has been preparing since 2024. Much of the added demand for anhydrous ethanol will be met by the booming corn ethanol industry, which continues to expand year after year. Furthermore, sugarcane ethanol plants have room to boost anhydrous output without expanding cane acreage — simply by adjusting the production mix between sugar and ethanol, and between hydrous and anhydrous ethanol,” he said.

Despite the optimism, the industry believes it is still too early to assume the policy will prompt new investments in ethanol production. Current capacity is considered sufficient to meet the expected increase of 800 to 900 million liters for this harvest. However, the transition could introduce short-term volatility in the ethanol market.

“In the short term, the need to divert more feedstock to anhydrous ethanol will likely push up prices for hydrous ethanol. This is happening during a delayed sugarcane harvest, marked by reduced ratoon cane and rainfall that disrupted crushing between April and May,” cautioned Moreira of Argus.

According to Luciano Rodrigues, director of sector intelligence at the Sugarcane Industry Union (Unica), the sugar-energy sector is equipped to meet the additional demand brought on by E30. He estimates an increase in demand of around 1.5 billion liters per year — a volume that the sector can already produce.

“The sector already has the installed capacity to meet this volume, drawing on both sugarcane and corn ethanol production, in addition to new facilities under construction and planned expansions. The growth of corn ethanol alone would be enough to meet this initial increase in demand,” said Rodrigues.

Source: O Globo

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