The Brazilian government has approved to raise ethanol blends in gasoline to 27% from the current 25% beginning 16 March, according to Energy Minister Eduardo Braga.
Unica, a local association that represents the sugarcane industry and ethanol producers, had asked the government more than a year ago to raise the ethanol blend. In past years, ethanol producers had been struggling because of higher production costs and gasoline subsidies. Since 2008 more than 80 of the country’s 400 sugar mills have closed.
Unica estimates that the higher blend creates an additional 1 billion litres of ethanol per year.
The government announced its decision after preliminary vehicle testing confirmed that the 27% blend was viable and would not have a negative impact on vehicle performance.
In January, the government also decided to increase gasoline taxes, effective 1 February, which should also help sugar mills recover their profit margins.