Argentina is weighing a significant overhaul of its biofuels sector that would raise the minimum share of ethanol and biodiesel in gasoline and diesel, create a regulatory pathway for advanced fuels such as sustainable aviation fuel and renewable diesel, and shift more of the country’s biofuel output toward domestic consumption. The proposal, currently under debate in the Argentine Senate, seeks to replace the existing Biofuels Law (Law 27.640) with a more liberal framework that has garnered broader political and industry backing than previous reform attempts.
The centerpiece of the reform is an increase in the national blend mandate. Under the plan, the required ethanol mix in gasoline would rise from 12 % to 15 %, while the biodiesel share in diesel would climb from 7.5 % to 10 %. These mandates define the minimum volume of biofuel that fuel distributors must blend with petroleum products, a mechanism designed to support domestic biofuel producers and reduce reliance on fossil fuels.
Advanced biofuels framework
Beyond traditional ethanol and biodiesel, the proposed legislation would establish rules for advanced biofuels. It would create a regulatory framework for sustainable aviation fuel (SAF), hydrotreated renewable diesel (HDRD), hydrogen and biomethane. These fuels are seen as key to meeting Argentina’s climate target of limiting greenhouse‑gas emissions to 375 million tonnes of CO₂‑equivalent by 2030, a goal that leans heavily on expanding low‑carbon alternatives in the transport and industrial sectors.
According to a report from the US Department of Agriculture (USDA) attaché in Buenos Aires, Argentina already grants tax exemptions for biofuels, but the official purchase prices set under the current blend mandate are administered by the Energy Secretariat. The USDA note warns that periodic delays in adjusting those prices have eroded profitability, especially for small and medium biodiesel producers that depend on the national mandate.
Ethanol production and domestic consumption
The outlook for ethanol is particularly bright. Forecasts show Argentina’s ethanol output reaching a record 1.35 billion liters in 2026, although this remains far below Brazil’s production of more than 40 billion liters. About 60 % of the Argentine ethanol is derived from corn. Domestic consumption is also projected to hit a record 1.28 billion liters in 2026, an increase of 8.5 % over 2025. The proposed blend change, which lets distributors voluntarily negotiate up to 15 % ethanol in gasoline, could add roughly 100 million liters of demand this year and push the effective blend rate close to 13 %.
Because roughly 95 % of Argentina’s ethanol is earmarked for the local market, exports are expected to fall to 80 million liters in 2026, down from 131 million liters in 2025, with Brazil remaining the principal destination. For Brazil, the shift means less Argentine ethanol available for trade and more corn being diverted to fuel within Argentina, a dynamic that could tighten regional supply balances.
Biodiesel outlook and trade constraints
The biodiesel sector presents a mixed picture. Production is forecast to rise 8 % year‑on‑year to about 1.2 billion liters, while domestic consumption is expected to jump 20 % to 960 million liters, bringing the average blend to roughly 7.2 %. Despite this growth, industry estimates suggest plants would operate at only about 27 % of their installed capacity, indicating that the sector is far from utilizing its full industrial potential. Trade restrictions also loom: since 2018 the United States has effectively barred Argentine biodiesel with combined anti‑dumping and countervailing duties of approximately 130‑160 %, a measure not slated for review until 2028. The European Union remains the main export market, benefiting from a 2019 agreement that grants Argentine biodiesel a minimum import price and an annual duty‑free quota of 1.36 billion liters.