Insight Focus
The US and Brazil continue trade talks on ethanol. Brazil’s rapid biofuel expansion, however, is said to be facing challenges. While Brazil advances domestic biofuel targets under the Fuel of the Future law, the US Senate has pushed back against Trump’s 50% tariffs on Brazilian imports.
Ethanol at Centre of Recent US-Brazil Trade Negotiations
Meeting recently in Malaysia, Brazilian President Luiz Inácio da Silva and US President Donald J. Trump held discussions about ongoing trade negotiations. Brazil is optimistic about the next steps in these negotiations with the US, according to a government release.
Geraldo Alckmin, Minister of Development, Industry, Commerce and Services, said the meeting between the nations in Malaysia was positive and set the stage for progress. In recent months, the two nations have clashed over trade policy, including Brazil’s ethanol trade practices, which several biofuel industry groups have alleged are unfairly restrictive to US ethanol.
In July, the Office of the US Trade Representative (USTR) launched a trade investigation into Brazilian trade practices, including “digital trade and electronic payment services; unfair, preferential tariffs; anti-corruption interference; intellectual property protection; ethanol market access; and illegal deforestation.”
Industry groups also pointed to the US’ lack of access to Brazil’s low-carbon fuel regulation, RenovaBio, and alleged “false sustainability” claims that have made Brazilian ethanol more competitive in export markets. Since August, the US has imposed a 50% tariff on all Brazilian imports.
New Investigation Reveals Brazil’s Biofuel Challenges
A recent investigation by Reporter Brasil examined the role played by biofuels expansion in deforestation, labour abuse and land conflict. Approved in October 2024, Brazil’s biofuels bill incentivises greater biofuels production. The report, based on fieldwork, legal records, and supply-chain mapping, paints a more complex picture of an industry that Brazil plans to showcase as the cornerstone of its decarbonisation strategy.
Since launching the Proalcool program in 1975, Brazil has positioned itself as a global pioneer in renewable fuels. Today, it produces more than 37 billion litres of ethanol and 9 billion litres of biodiesel annually and aims to generate 2.8 billion litres of SAF by 2035.
Trump’s Tariffs on Brazil Face Senate Pushback
While Luiz Inácio da Silva and Donald Trump were meeting in Asia, the US Senate opposed President Trump on tariffs, voting 52–48 to terminate the national emergency he declared to impose 50% tariffs on most Brazilian goods in July.
Five Republican senators joined the Democrats in the vote. This was the first of three expected resolutions aimed at blocking Trump’s tariffs on Brazil and Canada, as well as his broader global tariff measures.
Meanwhile, Brazil’s Ministry of Mines and Energy (MME) formed a technical committee to evaluate the feasibility of higher biofuel blends in the country’s energy mix. The MME said in a press release that the subcommittee’s work will be centred on two topics: evaluating biodiesel blends between 15 and 25% and gasoline blends containing 30 to 35% ethanol.
The subcommittee will be responsible for conducting studies and submitting a proposal for implementing the Fuel of the Future law passed last year. “This initiative strengthens the agenda for a just, secure and inclusive energy transition led by the Brazilian government, stimulating innovation, energy security and the decarbonisation of the transportation sector,” the ministry said.
The Fuel of the Future law established higher domestic biofuel blending targets for biodiesel and ethanol, as well as a target to reduce GHG emissions from natural gas.
Source: Demarest
