Market Overview

The Brazil biofuel market reached a size of USD 13.9 Billion in 2025 and is expected to expand to USD 28.8 Billion by 2034. The market is projected to grow at a CAGR of 8.44% during the forecast period 2026-2034, driven by rising demand for ethanol and biodiesel. Government policies supporting biofuel blending, rising production capacities, and increased international demand for sustainable energy are fueling this growth. Explore the Brazil Biofuel Market for detailed insights.

Study Assumption Years

• Base Year: 2025
• Historical Years: 2020-2025
• Forecast Period: 2026-2034

Brazil Biofuel Market Key Takeaways

• The Brazil biofuel market size reached USD 13.9 Billion in 2025.
• The market is anticipated to grow at a CAGR of 8.44% between 2026 and 2034.
• The forecast period for this market analysis is 2026-2034.
• Ethanol dominates the market due to Brazil’s position as a global leader with ethanol production reaching 35.4 billion liters in 2023, a 15.5% increase from the previous year.
• Biodiesel sector growth is driven by government mandates increasing blend percentages to 20% by 2030.
• Significant investments are being made in advanced biofuels, especially cellulosic ethanol, with capacity expansions like Raizen's 440 million liters annual output plant.
• Flex-fuel vehicles prevalently boost ethanol consumption locally, supported by blending mandates and incentives.

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Market Growth Factors

The​‍​‌‍​‍‌​‍​‌‍​‍‌ biofuel market in Brazil is undergoing a significant transformation in a positive direction because of the rise in ethanol production, which places the country as a leader in biofuel global output. In 2023, the production of ethanol went up to 35.4 billion liters, which is a 15.5% increase over the production of the previous year. Anhydrous ethanol, which is mixed with gasoline, went up by 13.5%, while hydrated ethanol, which is sold in its pure form, went up by 16.8%. The South region was the main contributor to ethanol production with 17.2 billion liters, which is 48.5% of the total production of ethanol. The market for automobiles is mainly composed of flex-fuel vehicles, which is great for consumers as they may opt for either ethanol or gasoline, thus increasing the consumption of the latter. The blending mandates imposed by the government as well as the incentive policies are the main factors that keep this sector alive and kicking.

Brazil's biodiesel market is booming at a fast pace, mainly due to the government's mandate which is supportive and gradually increases the blend of biodiesel in diesel fuel. The House of Representatives in Brazil gave the green light to the bill to move the biodiesel blending limit to 20% by 2030 with 15% in 2025 as the starting point in March 2024. The proposal envisages a fuel quality traceability system besides allowing higher voluntary biodiesel use. The measures on offer are a response to the energy transition, economic growth, and lessening of the reliance on fossil fuels. A higher concentration of biodiesel in the mixture also creates room for the rising of the demand for the raw materials that are the feedstocks, such as the soybean, which is the main source of biodiesel in Brazil.

There is an increasing amount of money that is being put into the advanced biofuels that include second-generation options such as cellulosic ethanol. Raizen has opened its second unit of cellulosic ethanol in Sao Paulo in May 2024, with the annual production capacity of 440 million liters, supported by a 1.2 billion reais investment that meets the demand mostly coming from Europe. The production of cellulosic ethanol is from the leftover agricultural materials, not from the food crops, thus the resource usage is more efficient and the product is more sustainable. These advanced biofuels contribute to the reduction of the greenhouse gases and to the continuity of energy supply thus, in fact, they position Brazil as a leader in the next generation of biofuel ​‍​‌‍​‍‌​‍​‌‍​‍‌technology.

Market Segmentation

Type Insights:

• Biodiesel: A primary segment driven by government mandates for increasing diesel blends, mainly sourced from soybeans.
• Ethanol: Dominant biofuel type in Brazil, produced mainly from sugar crops and coarse grains, with rising domestic and international demand.
• Others: Includes other biofuel types contributing to the overall market.

Feedstock Insights:

• Coarse Grain: Used as a feedstock for ethanol production among other biofuels.
• Sugar Crop: Major feedstock for ethanol, especially sugarcane, key to Brazil’s ethanol dominance.
• Vegetable Oil: Primarily used for biodiesel production, notably soybean oil.
• Others: Additional feedstock categories contributing to the biofuel market.

Regional Insights

The Southern region of Brazil is the dominant ethanol producer, contributing 17.2 billion liters or 48.5% of the country’s total ethanol output. The region leads the market due to its established production infrastructure and favorable conditions. This significant share highlights the strategic importance of the Southern region in Brazil's biofuel market development and growth.

Recent Developments & News

In October 2024, Grupo Potencial announced a $108.86 million investment to expand biodiesel production at its Parana facility, increasing annual output from 900 million to 1.62 billion liters, aiming to be the world's largest soy oil-based biodiesel producer. In August 2024, the Brazilian government allocated approximately $1.09 billion (R$6 billion) towards biorefineries development for sustainable aviation fuel and marine biofuels, supported by BNDES and FINEP. June 2024 saw Mubadala Capital's announcement to invest $13.5 billion in Brazil's biofuels over the next decade, including the Acelen biofuels project and Petrobras refinery conversion.

Competitive Landscape

The competitive landscape of the industry has also been examined along with the profiles of the key players.

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