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Brazil Biofuel Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Brazil Biofuel Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

  • March 2022
  • 95 pages
  • ID: 6249297
  • Format: PDF
  • Mordor Intelligence LLP


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The Brazil biofuel market is expected to rise at a CAGR of more than 3.48% during the forecast period, reaching the production level of 50.87 million cubic metrs by 2027 from 41.18 million cubic meters from 2020. The COVID-19 pandemic had significantly impacted the Brazilian biofuel industry in 2020. Ethanol production witnessed a negative impact as the restriction was imposed just before the sugarcane harvest on April 1st. Factors such as concerns about the environment, peak oil, energy security, fuel diversity, and sustainability are likely to drive the biofuel market in the country. However, decline in feedstock supply for ethanol, which is expectyed to be a restraint on the market.

Key Highlights
Ethanol is likely to dominate the biofuel market owing to the massive production of Ethanol in the country.
New and emerging end-users insdutries for biofuel consumption, such as power generation, aviation and marine, are expected to create a multitude of opportunities in the country’s biofuel market in the forecast period and beyond.
Increasing share and consumption of biofuel in transportation sector are likely to propel Brazil’s biofuel market during the forecast period.

Key Market Trends

Ethanol is Likely To Dominate the Market

Ethanol is a renewable biofuel as it is made from biomass. Today’s most common ethanol production uses yeast to ferment the starch and sugars in sugarcane, corn, and sugar beets.
As of 2021, approximately 70% of the total ethanol production in Brazil came from sugar cane as feedstock, and the remaining 30% came from corn, molasses, and cane straw.
Ethanol is usually mixed with gasoline, which allows flexible fuel for vehicles. Brazil is the second-largest global ethanol producer after the United States, and most of the cars in Brazil may run on a blend of gasoline and ethanol or pure ethanol.
In 2021, Brazil remained the second largest leader in ethanol production, despite the pandemic-induced reduction in the overall output. According to the National Agency of Petroleum, Natural Gas and Biofuels, in 2021, Brazil’s share of total global production increased slightly to 5.89% producing 29.98 million cubic meters of ethanol compared to 28.31 million cubic meters in 2017.
Furthermore, according to the US Department of Agriculture, in 2020, Brazil was the largest sugarcane producer, producing an estimated 757 million metric tones of sugarcane. Since sugarcane represents a significant portion of ethanol content, increasing sugarcane production is likely to increase the demand for ethanol during the forecast period.
However, the corn-based biofuel in Brazil has increased its share of the country’s ethanol mix in recent years, mainly due to increased production capacity concentrated in the country’s Mato Grosso and Goias states, coupled with harsh weather conditions and fires seen in 2021 have compromised planting activities and damaged sugar cane roots. Several corn ethanol plants have been announced in recent years to reduce the dependence on sugarcane.
For instance, in March 2022, ICM and Agribrasil signed an agreement to develop a greenfield dry-mill grain ethanol production facility in Mato Grosso, Brazil. The new plant is likely to have a grinding capacity of approximately 1,700 metric tons of corn per day. It is likely to produce over 260 million liters of anhydrous ethanol per year. In addition to ethanol, the plant is expected to produce over 9,000 metric tons of corn distillers oil and over 185,000 metric tons of standard distillers dried grains with solubles (DDGS).
Therefore, owing to the above points, ethanol segment is expected to dominate the Brazil biofuel market during the forecast period.

Increasing Share and Consumption of Biofuel in Transportation Sector is Likely to Drive the Market

Brazil is among the largest consumers of biodiesel across the globe. Biodiesel, also known as Fatty Acid Methyl Ester (FAME), is produced from animal and plant oils and fats. According to Petroleum, Natural Gas and Biofuels National Agency (ANP), approximately 13% of biodiesel produced is made from animal fat and around 75% from soybean oil.
The country currently has 51 authorized biodiesel production plants, out of which 45% are in the Centre-West region with a surplus soybean supply.
The domestic consumption of biodiesel remains highly regulated by the Brazilian government. It is a function of two variables, including the mandatory biodiesel blend rate and the overall diesel consumption.
Also, there are two primary policies, the National Alcohol Program and the Brazilian Biodiesel Production Use Program (PNPB), that focus on the consumption and production of biofuels in the nation. Under the National Alcohol Program, to make the nation less dependent on oil imports, the country focuses on producing hydrous ethanol dedicated to vehicles driving the consumption of biofuels.
Similarly, the Brazilian Biodiesel Production and Use Program (PNPB) focuses on the federal implementation of biodiesel production and use. The diesel oil sold to the consumers contains a certain percentage of biodiesel imposed by the law driving the demand and consumption of the biodiesel market in the nation.
Furthermore, as per the United States Department of Agriculture (USDA) Foreign Agricultural Service, biodiesel consumption has increased rapidly over the years in Brazil from 2.6 billion liters in 2011 to about 6.2 billion liters in 2020.
In addition, rising technological development in the automotive industry and the growing production of biodiesel have given rise to the development of biodiesel-fueled engines. Brazil has the world’s largest fleet of biofuel-powered cars and heavy vehicles. This is likely to raise the demand for biodiesel-powered heavy vehicles during the forecast period.
Therefore, owing to the above points, increasing share and consumption of biofuel in transportation sector are likely to drive the market during the forecast period.

Competitive Landscape

The Brazil biofuel market is moderately consolidated. Some of the key players in this market include Brasil Bio fuels, BP Bunge Bioenergia SA, Atvos Agroindustrial Investimentos S/A, Raizen S.A., and Humberg Agribrasil Comercio e Exportacao de Graos SA.

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