Brazilian Senate Approves Higher Ethanol Mandate

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.

To contact the reporter on this story:
Vanessa Dezem in Sao Paulo at
vdezem@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Carlos Caminada, Sylvia Wier

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