Building Resilience in Brazil’s Biofuel Market

Wed, 09/05/2018 - 12:12
Brazil, Latin America and Caribbean

Brazil has a longstanding, successful biofuels program and a well-developed flex-fuel market. Gasoline and ethanol options are widespread at fueling stations across the country, and most new cars are flex-fuel vehicles that can run on any mix of gasoline and ethanol. Brazil’s sugarcane industry has benefited from the resulting increase in ethanol demand. A recent study of the impact of flex-fuel cars on retail fuel markets in Rio de Janiero concludes that increased flex-fuel car penetration corresponds with lower prices for gasoline and ethanol, suggesting that Brazil’s biofuels program broadly benefits consumers financially regardless of whether they have flex-fuel or gasoline-powered vehicles. The program also supports key climate goals, including Brazil’s INDC target of reducing greenhouse gas emissions by 43% below 2005 levels by 2030. To support this goal, the country aims to make biofuels constitute18% of its energy mix by 2030.Highlighted below, and profiled in this case study, are good practices and actions supporting positive outcomes from Brazil’s biofuels program.

  • Increased flex-fuel car penetration has resulted in lower prices for gasoline and ethanol.
  • The program has provided fuel choices to customers while achieving environmental benefits.
  • The program’s economic benefits have spilled over to those who have not adopted flex-fuel cars.
  • Brazil is building on its strong, foundational biofuels program to help the country achieve its INDC target.
Institutions involved

PUC-Rio Department of Economics, São Paulo School of Economics - FGV & the Centre for Economic Performance (London), Climate Policy Initiative (CPI)

Source details
Climate Policy Initiative (CPI)