Brazil is set to flood the world market with sugar as the transition to electric vehicles slashes demand for crop-based biofuels, according to a study led by an influential industry executive.
Demand for ethanol, made mostly from sugar cane in Brazil, will likely start to decline in 2030 as EVs become more widespread, said Soren Jensen, the former chief operating officer of top sugar trader Alvean, who authored the study together with Mariana Perina Jirousek. That will leave millers in the world’s top sugar exporter with no option but to make more of the sweetener.
The shift in Latin America’s biggest economy is a blow for the world sugar market, with the pain of global surpluses and lower prices set to be felt in places like Thailand and India, which have a higher cost of production. It’s also a setback for producers including Raizen Energia SA and BP Plc, which have recently expanded their capacity to produce ethanol.