Biofuels gain momentum in Brazil

The Brazilian government is working to accelerate the development of the biofuels sector in the country, in line with what is set out in the Future Fuel Law, which could require 58 billion reais (US$11.4 billion) in investment in additional production capacity.

After announcing that the decision on increasing the mandatory ethanol blend in gasoline will be made in the coming weeks, the Ministry of Mines and Energy (MME) approved the testing plan for biodiesel blends in diesel above 15% (B15).

To this end, 30 million reais were made available through the National Fund for Scientific and Technological Development (FNDCT) to increase the capacity for mechanical and chemical testing in the country.

“We are strictly following the approved testing plan, ensuring legal and regulatory certainty for the sector, preserving the quality of the fuel that reaches consumers, and making sure that the evolution of the blends takes place without impacts on the Brazilian fleet. Our goal is to pave the definitive path toward B25,” said the MME minister, Alexandre Silveira, in a statement to the press.

The Future Fuel Law provides for increasing the ethanol blend in gasoline to up to 35% and the biodiesel blend in diesel to up to 25%. Today, the blends are, respectively, 30% and 15%.

SAF

The legislation also establishes mandatory emission reduction targets for the aviation sector, requiring the increasing use of SAF (sustainable aviation fuel). The initiative aligns with international aviation decarbonization targets, such as the CORSIA program of the International Civil Aviation Organization (ICAO).

In December 2025, Petrobras began producing SAF through the co-processing of renewable feedstock at Brazilian refineries. The product is compatible with the existing supply infrastructure and with aircraft in operation, which allows its gradual adoption by the market without the need for technical adaptations.

According to the government, Petrobras's SAF has international sustainability certification, ensuring compliance with environmental standards recognized globally.

Another company that has its eye on SAF is Acelen Renewables, which has just signed a memorandum of understanding (MoU) with the International Air Transport Association (IATA) to collaborate on strategic initiatives related to aviation’s energy transition and the development of the SAF market.

The group company Mubadala Capital is currently developing, in Bahia, one of the largest renewable fuel projects in the world, with more than US$3 billion invested in its first integrated unit.

The project includes a biorefinery designed to annually produce 1 billion liters of SAF and hydrotreated vegetable oil (HVO), in addition to the development of an agricultural chain based on the cultivation of macaúba, prioritizing degraded areas.

Biomethane

In April this year, the National Council for Energy Policy (CNPE) approved a resolution that sets a 0.5% emissions reduction target to be met by producers and importers of natural gas through the participation of biomethane in their consumption.

Recently, the Certificate of Origin Guarantee for Biomethane (CGOB) also came into force, and in 2027 it will be the turn of the Brazilian Emissions Trading System (SBCE) – factors that will ensure traceability, monetization of avoided emissions, and international recognition of the fuel’s sustainability.

“This new regulatory environment creates conditions to attract investments, expand distribution infrastructure, and consolidate biomethane as one of Brazil’s main bets on the path to a low-carbon economy,” said Yuri Schmitke, president of Brazil's energy recovery association Abren, during the 3rd Regional Methane Summit, held on June 8 and 9 in Brasília.

In 2025, Brazil had 52 biomethane plants in operation, responsible for the consumption of approximately 34% of all biogas used for energy in the country. The volume of biogas destined for biomethane production reached around 4.6 million cubic meters per day (Mm³/d), or 1.6 billion cubic meters per year, within a national biogas market that reached 4.96 billion cubic meters per year in 2025.

Citing data from the Energy Research Company (EPE), Schmitke pointed out that the expansion potential is significant, as demand for biomethane could reach 7 billion cubic meters per year before 2035, driven by the decarbonization targets established by the Future Fuel Law.

The Brazilian Biogas and Biomethane Association estimates that Brazil is in a position to increase its biomethane production more than 100-fold, with investments of approximately 350 billion reais.

Schmitke emphasized that, despite the national potential, the development of energy recovery projects from waste, biogas, and biomethane still faces significant economic challenges in Brazil. 

“Since these are capital-intensive, long-term projects, the high interest rates in the country significantly increase financing costs and hinder the feasibility of new investments”.

(The original version of this content was written in Portuguese)