Brazil Accelerates Biomethane Investments as Diesel Imports and Oil Risks Rise

Brazil could slash its diesel imports by 50% within the next ten years by scaling up biomethane production for heavy transport, the head of sugar and ethanol giant Copersucar said on Wednesday.

Speaking at the launch of the "BioRota" project in the Port of Santos, Copersucar President Tomás Manzano stated that the integration of biomethane — a renewable gas produced from organic waste like sugarcane vinasse — is an "irreversible path" for the country's energy matrix.

"The vinasse is already there at the ethanol mills; it is only a matter of time before the mills start producing [biomethane]," Manzano told reporters. "In time, we have no doubt that every mill in Brazil will have a biomethane plant."

Brazil currently imports approximately 20% of the diesel it consumes. Domestic energy security has become a heightened priority for both the government and the private sector as geopolitical tensions created by the war between Iran and US, which had threatened global oil supply routes and price stability.

LOGISTICAL SHIFT

Unlike conventional fossil gas extraction, Brazil’s biomethane industry is built around agricultural waste, landfill residues and animal manure — a decentralised model that industry executives argue creates both environmental and economic benefits.

The expansion has also begun attracting attention from traditional oil and gas companies. Across Europe, majors including Shell and TotalEnergies have already increased investments in biomethane infrastructure, viewing renewable gas as a strategic complement to fossil fuel operations.

Brazil may follow a similar trajectory, analysts say, though domestic oil companies remain heavily focused on pre-salt offshore reserves and conventional gas exploration.

Copersucar, a global leader in sugar and ethanol trading which sold 15.6 million tonnes of sugar in the 2024/25 season, is leading the charge with its BioRota initiative. The project has already replaced 15% of the company's diesel truck fleet with vehicles powered by biomethane derived from sugarcane waste.

The sustainable route connects mills in the interior of São Paulo state to export terminals in Santos. According to company data, switching from diesel to biomethane can reduce greenhouse gas emissions by up to 90% while lowering logistical costs. Copersucar estimates the project already replace 5 million liters of diesel between April of 2024 and March of 2026, avoiding over 8,000 tonnes of CO2 emissions.

REGULATORY MOMENTUM

The industry's optimism follows recent regulatory steps by Brazil’s National Energy Policy Council (CNPE), which established a formal mandate for emissions reductions in the natural gas market.

Brazil currently has 19 authorized biomethane plants, with another 50 awaiting approval. ABiogás internal studies suggest the country could see more than 100 new plants by the end of the decade.

Anhother major factor shaping the industry’s outlook is Brazil’s sweeping tax reform, due to take effect from 2027. Under the proposed framework, renewable fuels such as biomethane are expected to receive substantial tax advantages compared with fossil fuels.

Industry executives say the reforms could reduce tax rates on biomethane by up to 90% relative to fossil gas, significantly improving project economics and accelerating investment decisions.

Furthermore, biogas is democratic, because it allows small and medium-sized businesses to participate in energy production in a way that was never possible in the traditional oil and gas industry. This, for an industry that only a few years ago struggled for mainstream recognition, points to the scale of today’s ambitions marks and to a dramatic shift in Brazil.

BILLION-DOLLAR INVESTMENTS

Environmental licenses for biogas and biomethane projects more than triple in São Paulo state. The number increased by 235% between 2024 and 2025, according to a survey obtained exclusively by Broadcast.

Adding to the momentum, bioenergy firm Atvos announced a 2.36 billion reais ($410 million) investment to build three new industrial units in Mato Grosso do Sul. The plan includes two corn ethanol plants and what is projected to be one of the world's largest biomethane facilities.

The Atvos project aims to produce 500 million liters of corn ethanol annually across the two new sites, while the biomethane plant will utilize vinasse and filter cake to generate renewable gas, strengthening the circular economy model in Brazil's agricultural heartland.

Corn Ethanol Disrupts Brazil’s Fuel Market as Vibra Ends Copersucar Partnership and Redefines Ethanol Strategy

Brazil’s fuel distribution market is undergoing a structural transformation driven by the rapid expansion of corn ethanol, a shift that has prompted Vibra Energia to terminate its partnership with Copersucar in Evolua Etanol, a joint venture created in 2022.

Evolua Etanol was established as a 50-50 partnership between Copersucar, one of Brazil’s largest sugarcane groups, and Vibra Energia, the country’s leading fuel distributor. The goal was to secure ethanol supply for Vibra’s nationwide network of fuel stations, covering both anhydrous ethanol blended into gasoline and hydrous ethanol sold directly to consumers.

Under the agreement, Vibra was required to purchase all its ethanol exclusively from Evolua, while Copersucar’s associated sugarcane mills were obligated to sell their ethanol production to the joint venture. The model ensured supply stability on one side and guaranteed product offtake on the other.

Corn Ethanol Undermines Sugarcane-Based Model

However, the partnership lost competitiveness as corn ethanol rapidly gained market share in Brazil. Over the past few years, corn ethanol production has expanded sharply, benefiting from lower production costs, greater price stability and increasing geographic reach beyond the Center-West region.

As corn ethanol became more widely available, Vibra found itself constrained by the exclusivity clause, unable to purchase cheaper and more competitive ethanol from producers such as FS and Inpasa, the latter now Brazil’s largest corn ethanol producer. This limitation reduced Vibra’s flexibility in sourcing fuel and weakened the economic rationale of the partnership.

The original expectation was that Evolua would allow Vibra to stockpile ethanol during the sugarcane off-season, between December and March, and sell it at higher prices. In practice, increased corn ethanol supply during the same period kept prices stable, eliminating this advantage.

Strategic Shift to Gain Market Share

With corn ethanol expanding into new regions, including Maranhão, Bahia and Pará, Vibra also faced constraints in supplying the North and Northeast markets. The inability to access these new production hubs ultimately led the company to exit the joint venture.

According to Vibra’s leadership, the decision is not a retreat from ethanol but a strategic move to increase competitiveness. The company aims to consolidate its position as Brazil’s largest ethanol distributor and potentially surpass Raízen, which currently shares market leadership but faces financial challenges and remains heavily dependent on sugarcane ethanol.

By shifting away from exclusive reliance on sugarcane-based supply, Vibra gains greater flexibility to benefit from corn ethanol’s expansion, lower costs and logistical advantages.

Corn Ethanol Drives Structural Change in Brazil

Industry projections indicate that by 2034, corn ethanol production in Brazil could match sugarcane ethanol output, with both reaching approximately 25 billion liters. However, while sugarcane ethanol growth is expected to stagnate, corn ethanol continues to expand rapidly, supported by Brazil’s position as the world’s third-largest corn producer and by strong demand for biofuels.

The rise of corn ethanol is reshaping Brazil’s fuel distribution market, influencing investment strategies, supply chains and competitive dynamics. As production grows and prices face downward pressure, distributors with diversified sourcing strategies are better positioned to gain market share.

Vibra’s exit from Evolua Etanol highlights how the corn ethanol boom is redefining long-standing business models, and signaling a new phase for Brazil’s biofuels industry.