Brazil expected to require nearly US$7bn in ethanol production investments

Investments in ethanol production in Brazil are expected to reach approximately 39.5bn reais (US$6.7bn) between now and end-2034, increasing installed capacity by over 10Bl (billion liters), according to federal energy research company EPE.

During the 10-year period, total ethanol capacity is forecast to jump to 68.2Bl.  

EPE's 10-year energy expansion plan PDE 2034, approved this month, says sugarcane ethanol production capacity will grow from 48.8Bl in 2024 to 51.5Bl in 2034, corn ethanol from 8.6Bl to 15.5Bl, and second generation ethanol from 200Ml to 1.2Bl.

Over the decade, three new sugarcane ethanol plants with combined capacity of 380Ml are expected to begin operations.

Expansions at 36 existing plants will add 2.3Bl, while second-generation ethanol (E2G) capacity is expected to increase 1.2Bl at 14 production units.

Regarding corn ethanol, the plan outlines the construction of 19 new units (3.6Bl) and expansions of seven (0.8Bl).

Additionally, there are indications of potential new units and/or expansions totaling around 3Bl.

Supply

EPE estimates that ethanol supply from sugarcane will reach 32.6Bl by 2034, up from 27.5Bl in 2024 and 2025.

Second-generation ethanol production, using a small portion of the bagasse and straw generated, is expected to reach 1.2Bl by then, while corn ethanol production is projected to reach 14.3Bl – up from 7.3Bl in 2024 and 8.3Bl in 2025.

As a result of domestic production and anhydrous ethanol imports – due to seasonal opportunities – total ethanol supply is expected to grow at an annual rate of 3.8%, reaching 48.5Bl by 2034.

Demand

Domestic demand for fuel ethanol (anhydrous and hydrous) is projected to rise from 31.5Bl in 2024 to 44.5Bl in 2034, for an annual growth rate of 3.5%.

Brazilian ethanol exports are expected to grow 3.7% from 2.7Bl in 2024 to 2.8Bl in 2034, while imports are projected to remain stable at 0.5Bl.

But the level of exports and imports – with potential impacts on investments in new biofuel production capacity – may be affected by the trade disputes between Brazil and the US, which is the second largest buyer of Brazilian ethanol and the main ethanol exporter to Brazil.