Technical Note No.5 An introduction to the biofuels sector in Latin America and the Caribbean

The energy transition toward a sustainable future requires the incorporation of renewable and low-emission alternatives that gradually replace fossil fuels. In this regard, Latin America and the Caribbean (LAC) is strategically positioned to lead this transformation, thanks to its abundant natural resource potential, the technical expertise of its human capital, and its solid experience in the agricultural sector.

In the regional context, low-carbon biofuels are emerging as a key solution for the decarbonization of critical sectors such as land, air, and maritime transport, where dependence on fossil fuels remains high. Produced from various biomass sources—such as sugarcane, corn, palm, and agricultural and forestry residues—these fuels offer substantial reductions in net carbon emissions when assessed through a comprehensive life cycle approach.

Their compatibility with existing energy and transport infrastructure, without requiring significant modifications to engines or distribution systems, positions biofuels as a technically viable and immediate alternative to combat climate change. Furthermore, their production generates important environmental and socio-economic benefits: it drives rural development, creates jobs, boosts agricultural economies, and fosters technological innovation, providing the region with unique competitive advantages.

In 2023, global liquid biofuel production reached 180,544 thousand m³ (IICA, 2024), with LAC contributing 27% of that total, equivalent to 47,827 thousand m³. Brazil was by far the regional leader, accounting for nearly 25% of global production and 93% of LAC’s total output (SieLAC, 2024). In the region, bioethanol and biodiesel represented 81% and 19% of liquid biofuel production, respectively, with per capita consumption reaching approximately 69 liters in 2023.

Despite this progress, the implementation of biofuels in LAC faces several challenges. Factors such as the low energy density of biomass, the geographic dispersion of resources, land use competition, and the absence of robust public policies constrain their potential. Additionally, hard-to-decarbonize sectors—such as aviation and maritime transport—require advanced and innovative technological solutions that demand greater investment and international cooperation.

Looking ahead, achieving carbon neutrality in the energy sector by 2050 will require a significant increase in regional liquid biofuel production. It is estimated that production must grow by approximately 360% compared to 2023 levels, nearly quadrupling current output to reach 172,990 thousand m³ in LAC.

This technical note analyzes the current state of low-carbon biofuels in Latin America and the Caribbean, identifying key opportunities and challenges to maximize their impact on the energy transition. The goal is to position biofuels as a sustainable, competitive, and essential tool in both regional and global efforts to mitigate climate change.

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