Brazil is Developing an Ethanol Power Plant Pilot Project Utilizing the Country’s Abundance of Sugarcane Ethanol and Available Ethanol Infrastructure: Meanwhile, Ethanol Trade/Tariff Imbalances Between the U.S. and Brazil Are Being Corrected by New U.S. Reciprocal Tariffs

      The implementation phase of the world’s first utility-scale engine designed to run almost entirely on ethanol is complete and ready for real-world testing in Brazil. The Suape II power plant in Pernambuco is being developed by the energy company Suape Energia and Finnish technology firm Wärtsilä. The demonstration plant will determine whether ethanol can serve as a viable fuel for dispatchable electricity generation. The project is taking advantage of Brazil’s abundance of sugarcane ethanol and associated infrastructure, which has been used for vehicle transport for decades. The project will determine whether ethanol is competitive with other dispatchable power sources such as natural gas. As a biofuel, ethanol also has a lower carbon footprint than natural gas, so that is a factor as well. The project was initially announced early in 2025 and is just now getting to the testing and validation phase.

     Interesting Engineering notes:

“According to Suape Energia and Wärtsilä, the project uses a modified Wärtsilä 32M engine capable of operating on ethanol derived primarily from Brazilian sugarcane. The demonstration will involve thousands of hours of testing over the coming years, providing data on performance, reliability, emissions, and economics.”

“Brazil is uniquely positioned to test the concept. The country is the world’s largest producer and user of sugarcane ethanol and has spent decades building infrastructure for ethanol production, storage, and transportation. However, most of that fuel has traditionally been consumed in the transportation sector.”

     Brazil is well-suited to using sugarcane ethanol to advance its energy transition goals. It is both the global leader in sugarcane ethanol production and consumption. The ethanol sector in Brazil is huge and currently valued at about $20 billion. Many “flex-fuel” cars in Brazil run on  a mandatory blend of at least 30 percent ethanol, and up to 100 percent ethanol. The policy has helped Brazil avoid some of the worst of the recent oil & gas supply shocks.

     On June 2, 2026, the U.S. Trade Representative proposed a 25% tariff on all Brazilian goods, including ethanol. It is unclear how long such a designation would last since the Trump administration’s tariffs have been limited by the courts. As detailed below by Ethanol Producer Magazine, ethanol-specific reciprocal tariffs by the U.S. on Brazilian ethanol have an important basis since Brazilian tariffs on U.S. ethanol had disrupted a once balanced trade of ethanol between the two countries.

“Brazil has discontinued its previously balanced tariff treatment and failed to reciprocate U.S. tariff treatment of ethanol,” the USTR wrote. “In 2010, Brazil took steps to facilitate bilateral trade in ethanol by suspending a 20% tariff on imports of ethanol. In a similar spirit of promoting bilateral ethanol trade, the United States allowed the “blender” tax credit for U.S. ethanol producers and the $0.54/gallon surcharge on ethanol imports to expire the following year. Bilateral trade in ethanol subsequently flourished, with U.S. exports of ethanol to Brazil steadily increasing until Brazil abruptly departed from this reciprocal treatment in 2017. At that time, Brazil instituted a duty-free tariff rate quota (TRQ) of 600 million liters, with imports above that amount subject to a 20% tariff. This came after a successful lobbying campaign by the Brazilian sugarcane and ethanol industries, which claimed that ethanol imports jeopardized domestic Brazilian ethanol production. Since then, Brazilian tariffs on ethanol have fluctuated, but have been set at 18% since February of 2023. Brazil has the ability to evaluate and change its ethanol tariff on a monthly basis, which further contributes to uncertainty in the market. Brazil has therefore abandoned bilateral cooperation to promote ethanol trade, choosing instead to establish non-reciprocal and unfair conditions for trade in this critical product.”

“These actions by Brazil have denied fair and equitable market opportunities for U.S. ethanol producers,” USTR continued. “Imports of U.S. ethanol into Brazil have generally declined since Brazil reinstated its tariff on ethanol. In 2025, U.S. exports to Brazil totaled $96 million, an 87% decrease from the peak export value of $761 million in of 2018. Additionally, in 2024, U.S. ethanol import market share in Brazil had fallen to 54%, from a high of nearly 100% in 2018. At the same time, Brazilian ethanol exporters have continued to benefit from relatively open U.S. market access. In 2024, U.S. imports of ethanol from Brazil amounted to approximately $203 million dollars, while U.S. exports of ethanol to Brazil that same year amounted to only $53 million.”

     They go on to compare ethanol trade balances between the U.S. and Canada to the ethanol trade imbalance between the U.S. and Brazil to further make the case that the Brazilian tariffs have been unfair to the U.S. Brazil has had open and unfettered access to U.S. ethanol markets while impeding the ability of the U.S. to sell ethanol to Brazil.

     The Renewable Fuels Association also showed support for USTR’s findings:

“We agree with USTR that Brazil’s ethanol trade policies are unreasonable and restrictive, and we support the Trump administration’s efforts to level the playing field,” said Geoff Cooper, president and CEO of the RFA. “The U.S. ethanol industry would prefer to return to days of free and open two-way trade with Brazil. But the Brazilians have instead chosen to enforce punitive tariffs and technical barriers that have resulted in lost market opportunities and financial harm to U.S. producers. Thus, the Trump administration has no choice but to respond in kind.”

     The U.S. may also offer more support for ethanol, with the House narrowly passing a bill to codify year-round sales of E15 ethanol fuel with a 15% ethanol blend, a win for the corn lobby and for agricultural states. The bill will now have to go through the Senate, where its future is uncertain.

     The International Energy Agency reported that in 2023, biofuels accounted for roughly 700 TWh of electricity, projected to rise to approximately 1,250 TWh by 2030.

  

 

References:

 

Brazil launches world-first engine built for ethanol-powered grid electricity. Kaif Shaikh. Interesting Engineering. June 2, 2026. Brazil launches world-first engine built for ethanol-powered grid electricity

Brazil launches world-first ethanol-powered grid engine. Haley Zaremba. Oil Price U.S. June 4, 2026. Brazil launches world-first ethanol-powered grid engine

USTR proposes to set 25% tariff on most goods from Brazil. Ethanol Producer Magazine. June 2, 2026. USTR proposes to set 25% tariff on most goods from Brazil | Ethanol Producer Magazine

Brazil launches world’s first ethanol power plant to turn sugarcane into electricity: Ethanol has been recognized as a central element of Brazil’s energy landscape. Kapil Kajal. Interesting Engineering. March 26, 2025. World’s 1st ethanol power plant launched, to turn sugarcane into energy