Brazil Biofuel Market - Growth, Trends, Covid-19 Impact, And Forecasts (2023 - 2028)

Brazil Biofuel Market - Growth, Trends, Covid-19 Impact, And Forecasts (2023 - 2028)

The Brazilian biofuel market is expected to record a CAGR of more than 3.48% during the forecast period, reaching a production level of 50.87 million cubic meters by 2027. The COVID-19 pandemic significantly impacted the Brazilian biofuel industry in 2020. Ethanol production was impacted negatively due to the restrictions imposed just before the sugarcane harvest on April 1. 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, ethanol feedstock supply decline is expected to restrain the market.

· Ethanol is likely to dominate the biofuel market due to the country's massive ethanol production.

· New and emerging end-user industries for biofuel consumption, such as power generation, aviation, and marine, are expected to create many opportunities in the country’s biofuel market in the forecast period and beyond.

· Increasing share and biofuel consumption in the transportation sector are likely to propel Brazil's biofuel market during the forecast period.

· 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 sugarcane as feedstock, and the remaining 30% came from corn, molasses, and cane straw.

· Ethanol is usually mixed with gasoline, which allows a flexible fuel for vehicles. Brazil is the second-largest global ethanol producer after the US, and most of the cars in Brazil 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 ton 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 in 2021, which 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 ton of corn per day. It is expected to produce over 260 million liters of anhydrous ethanol per year. In addition to ethanol, the plant is expected to produce over 9,000 ton of corn distiller oil and over 185,000 ton of standard distiller dried grains with solubles (DDGS).

· Therefore, the ethanol segment is expected to dominate the Brazilian biofuel market during the forecast period due to the above factors.

· 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 has 51 authorized biodiesel production plants, 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.

· There are also two primary policies, the National Alcohol Program and the Brazilian Biodiesel Production Use Program (PNPB), that focus on the nation's consumption and production of biofuels. Under the National Alcohol Program, to make the nation less dependent on oil imports, the country is focusing 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 consumers contains a certain percentage of biodiesel imposed by the law, thus, driving the demand and consumption of the biodiesel market in the nation.

· Furthermore, as per the US Department of Agriculture (USDA) Foreign Agricultural Service, biodiesel consumption 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 developments 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 factors, the increasing share and consumption of biofuel in the transportation sector are likely to drive the market during the forecast period.

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

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