A liter of ethanol should fall by R$ 0.19 as a measure to maintain competitiveness, says government

Ethanol prices may have a reduction of R$ 0.19 per liter, on average, with the constitutional amendment 123/2022, which re-established the tax advantage of biofuels over fossil fuels, according to estimates by the Ministry of Mines and Energy released this week. Tuesday (19).

The amendment is part of the so-called PEC of benefits, approved last week by the National Congress. The bill also calls for states and the federal government to return to preferential levels of taxation on biofuels seen before May 15, when another law changed how fuels would be taxed.

According to the government’s calculations, with the new legislation, the average price of ethanol in the country would rise from R$4.57 per liter to R$4.38.

On Monday (18), São Paulo, Minas Gerais and Paraná released ICMS reductions on hydrous ethanol, in a measure that should make it more competitive at the pumps in important markets for the biofuel competing with gasoline.

In a note, the ministry noted that the estimate does not consider the possibility, also arising from the recently approved amendment, of reducing the price of biofuel to states that grant ICMS tax credits.

According to the government, this proposal could further reduce the average price of a liter of hydrated ethanol, to up to R$4.04.