Brazil’s sugar industry sitting on huge untapped biogas potential, says report

  • Gas
  • September 9, 2026

Brazil’s sugar industry has the potential to produce 41.4 billion cubic metres of biogas a year, but less than 2% of that potential is currently being realised, according to a new report from Instituto MBCBrasil – an independent non-profit organisation that promotes sustainable transport solutions.

The report identifies the sugar-energy sector as one of Brazil’s biggest opportunities to expand biogas and biomethane production, with sugarcane residues offering a potential source of renewable gas for transport, industry and other energy applications.

Brazil has 345 sugar mills in operation, almost 92% of them in the Centre-South region, while the sector processes hundreds of millions of tonnes of sugarcane each year.

In the 2024 to 25 season, around 680 million tonnes of sugarcane were processed, producing 94 million tonnes of sugar and 38 billion litres of ethanol.

The process also generated around 380 billion litres of vinasse – a liquid byproduct from fermentation – most of which is currently recycled onto sugarcane fields as a source of potassium, other nutrients and organic matter.

However, the report says vinasse can also be combined with other residues from ethanol production, including filter cake and harvest residues, to produce biogas and biomethane.

That leaves more than 40 billion cubic metres of annual biogas potential largely untapped, despite the sector already having large volumes of feedstock and established processing infrastructure.

The opportunity stands out in São Paulo, where the report estimates biomethane potential at between 8.5 billion and 15.5 billion cubic metres per year, depending on the feedstock considered.

Around 60 sugar mills in the state are located within 20 km or less of a natural gas pipeline, potentially allowing biomethane to be connected to existing infrastructure and used by industrial customers or as a transport fuel.

The market is already beginning to develop, with biogas or biomethane projects operating at Usina Cocal in Narandiba, Raízen in Guariba and São Martinho in Pradópolis.

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A sugarcane plant operating in Brazil ©Shutterstock

Four other projects were in implementation as of 2024, while similar facilities were being developed at sugar-ethanol companies in other states, including Adecoagro in Mato Grosso do Sul.

One application is industrial gas substitution. The report highlights a project involving Yara’s fertiliser plant in Cubatão, São Paulo, where biomethane produced from vinasse is being used to replace fossil natural gas in the production of green ammonia and ammonium nitrate.

The model could allow sugar mills to inject biomethane into São Paulo’s gas network, with the gas then supplied to industrial users elsewhere in the state.

The potential extends beyond the sugar industry, with agricultural and food-processing waste providing another source of renewable gas.

Dutch-French crop merchant Louis Dreyfus Company is developing a biogas plant at its citrus-processing facility in Bebedouro, São Paulo, which is designed to produce more than 50,000 cubic metres per day of biogas from citrus effluent. 

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The company says the plant will be the largest in the world of its kind and is expected to reduce CO2 emissions from the industrial site by more than 20%.

Brazil’s regulatory framework is also beginning to create additional demand for renewable gas.

The 2024 Fuel of the Future Law established a programme to reduce greenhouse gas emissions from the natural gas market through biomethane. For 2026, the National Council of Energy Policy set the reduction target at 0.5%, to be achieved through the participation of biomethane in natural gas consumption.

A Biomethane Guarantee of Origin (CGOB) represents 100 cubic metres of biomethane injected into the grid or sold, allowing the environmental attribute of the gas to be traded separately from the physical molecule.

The framework has now moved into implementation, with Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) issuing rules in 2026 covering individual biomethane targets and certification for the issuance of CGOBs.

Despite the scale of the opportunity, infrastructure and economics remain barriers to wider deployment.

Brazil’s gas pipelines remain concentrated near the coast, while greater use of biomethane in heavy-duty transport would require additional refuelling infrastructure inland.

The report also says biomethane remains more expensive than CNG and diesel in some scenarios, meaning further policy support may be needed to drive uptake.

   

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