Brazilian senate approves 27.5% ethanol inclusion rate in gasoline, up from 25%; will not solve issue of subsidized gasoline price undercutting ethanol producer P(L), says one analyst 9/04/2014

Brazilian Senate Approves Higher Ethanol Mandate as Demand Wanes

 

 

By Vanessa Dezem

     Sept. 3 (Bloomberg) — Senators in Brazil approved a bill

increasing the mandatory amount of ethanol added to gasoline

sold at service stations in the country as demand for the

alternative fuel declines.

     The minimum ethanol content in the country’s gasoline blend

will be raised to 27.5 percent from 25 percent, the Senate said

on its website yesterday. The bill still needs to be ratified by

President Dilma Rousseff.

     Ethanol producers have criticized government policies

limiting gasoline price increases as drivers increasingly favor

the fossil fuel over ethanol. Most cars in Brazil have so-called

flex-fuel engines that can run just on ethanol or a mix of the

alternative fuel and gasoline, giving drivers the ability to

choose. Service stations typically have ethanol pumps standing

next to the ones with the gasoline-ethanol blend.

     “Marginal increases to the blend rate do not solve the

fundamental pricing issue that results from having to sell

ethanol cheaper due to subsidized gasoline,” Alejandro Zamorano

Cadavid, an analyst at Bloomberg New Energy Finance in New York,

said by e-mail. “From producers’ point of view, you are being

given the opportunity to sell more ethanol at a price that has

been too low for years.”

     The government last boosted the proportion of ethanol in

the gasoline mix in April of last year, to 25 percent from 20

percent.

     The bill senators approved yesterday also increases a cap

on the optional amount of biodiesel that can be mixed into

fossil diesel to 6 percent from 5 percent.

 

 

 

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