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Brazil is considering increasing the ethanol blending rate in gasoline from 30 per cent to 32 per cent in the first half of the year, as higher global oil prices push the government to boost domestic biofuel use.
The move is expected to increase demand for ethanol and shift more sugarcane towards fuel production. Industry estimates suggest that the share of cane used for ethanol could rise to about 54 per cent, up from 51 per cent in the previous season, American AG Network reported.
Analysts said the timing of the proposal aligns with the start of the harvesting season, when mills decide how much cane to allocate between sugar and ethanol.
Mauricio Muruci of Safras & Mercado said the current market conditions make it an opportune moment for such a decision, with mills still finalising their production mix.
With higher allocation of cane to ethanol and continued growth in corn-based ethanol, total output in Brazil is projected to reach between 44 billion and 44.5 billion litres, marking a record level and an increase of around 15 per cent compared to last season.
The proposed policy reflects Brazil’s strategy to reduce dependence on fossil fuels while supporting its large sugarcane-based ethanol industry.