BRAZIL – Brazil is expecting its ethanol production to drop by 16% as sugar-based ethanol plants are diverting toward sugar production, according to a report from the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS).

Total ethanol production is estimated at 31.35 billion litres, down from 37.38 billion litres in 2019. Consumption for use as fuel is estimated at 27.68 billion litres, a decrease of 18% from the previous year. The FAS said this is due to social distancing measures and the economic downturn related to the coronavirus (COVID-19) pandemic.

Biodiesel production, which is tightly regulated by the government, is estimated at 6.27 billion litres, an increase of 6% compared to 2019. The increase is due to the higher biodiesel blend-mandate (B12) and the projected estimate for diesel consumption (52.9 billion litres). Biodiesel trade is nearly inexistent, the FAS said.

The drop in consumption for hydrous and anhydrous ethanol is estimated at 19% and 17%, respectively. Ethanol exports for 2020 are estimated at 1.9 billion litres, whereas imports are estimated at 1.5 billion litres, the FAS said.

“If realized, this would amount to one-fifth of the country’s ethanol production by 2028 based on EPE’s long-term modeling of the ethanol market under RenovaBio prior to the pandemic,”

Foreign Agricultural Service

Corn ethanol production is steadily growing, with total ethanol production from corn in 2020 estimated at 2.5 billion litres, an increase of 1.17 million litres compared to revised figure for 2019, the FAS said.

Ethanol from corn represents approximately 8% of total ethanol production. Brazil should produce 8 billion litres of corn ethanol by 2028.

“If realized, this would amount to one-fifth of the country’s ethanol production by 2028 based on EPE’s long-term modeling of the ethanol market under RenovaBio prior to the pandemic,” the FAS said.

There are currently 11 plants producing ethanol from corn in Brazil, mainly in the state of Mato Grosso, but also in Goias and Parana.

Nine units are full-plant type (dedicated corn-only plants) and two units are flex-plants (producing ethanol from sugarcane and corn). These plants have a joint production capacity to produce 2.50 billion litres of corn ethanol per year.

There are two full-plants and one flex-fuel plant under construction, which should start operations in one to two years. They are all located in Mato Grosso and have a combined production capacity of 1.4 billion litres of corn ethanol per year.

“The potential for corn ethanol expansion remains limited by local fuel demand, profitability, and logistic challenges,” the FAS said. “Demand is currently limited to corn producing areas in the Center-West, but it could potentially reach other North-Northern states in Brazil.”

Industry sources report that seven other corn-ethanol plant projects (all full-plants) are at different stages of development. If all these ongoing projects are built as planned, overall combined corn ethanol production capacity will be roughly 5.5 billion litres per year.

The Renovabio Program (a new Brazilian biofuels policy) officially went into effect last December and it is designed to support Brazil’s 21st Conference of the Parties (COP21) goals.

On April 27, 2020, the Brazilian Stock Exchange (B3) started to trade Decarbonization Credits (CBios) as prescribed under the program.

However, the COVID-19 pandemic and the expected negative impact in the Brazilian ottocycle fuel consumption (gasoline and ethanol) in the next couple of years, forced the Ministry of Mines and Energy (MME) to propose the review of compulsory targets under RenovaBio.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE