Brazil: the "Fuel of the Future" law introduces biomethane targets in gas trading

Brazil adopted on 8 October 2024 Law No. 14.993, known as "Combustível do Futuro" (Fuel of the Future). It is a package covering several kinds of renewable fuels, including biomethane. For the gas market, it is one of the largest regulations in Latin America imposing on market participants an obligation to increase the share of renewable gas.

What the legislative debate envisaged

Reports of the work in the Senate from early September 2024 indicate that the bill provided for a gradually rising obligation to reduce greenhouse gas emissions in natural gas trading through a share of biomethane: initially 1% from 2026, with the possibility of raising it to 10%. During negotiations, flexible gas power plants, run in periods of water crisis, were also added to the group of entities covered by the mechanism. It was estimated that reaching 10% would require production of about 850,000 m³ of biomethane a day. The association of large energy consumers Abrace assessed the additional cost for gas consumers at about 658 million reais (about USD 117 million) a year. The exact parameters of the mechanism in force should be checked in the text of the law.

The package also concerns other biofuels – including higher ethanol and biodiesel blends and incentives for sustainable aviation fuels – but in the context of Substraty.pl the biomethane thread is the most important.

Why Brazil

The country has huge feedstock resources: residues from the sugar and ethanol industry (including vinasse from ethanol production from sugar cane), animal manure from livestock farming and municipal waste. Most biogas comes from wastewater treatment plants, landfills and the sugar and ethanol industry. A law establishing demand for biomethane is meant to break through the barrier of low interest among gas consumers.

Significance for the industry in Poland

Two conclusions matter for the European and Polish sector. First, a mechanism of an obligatory biomethane share in gas trading is an alternative to subsidies from the budget: the cost is borne by gas consumers, not taxpayers. This is a model that is also discussed in Europe (e.g. biomethane quotas in supplies). Second, Brazil will compete for investors and technology suppliers (upgrading, compression, liquefaction), so the development of this market affects equipment prices and the availability of suppliers' production capacity.

In Polish conditions the Brazilian example shows that the details are decisive: who the obligated entity is, how the emission reduction is calculated and whether biomethane from different sources (agriculture, waste, wastewater treatment plants) is treated equally.

What next

Implementation of the law required implementing acts, including regulations from the oil and gas agency. 2026 – the first year of the obligation – will show whether the supply of biomethane keeps pace with the targets set.