Tamaulipas is pushing ethanol growth. Developers near the Valley say fuel rules are still blocking the market

Tamaulipas officials are promoting new ethanol projects as part of a broader push to expand the state’s energy and biofuels industry, but developers say Mexico’s fuel regulations still make large-scale ethanol production financially difficult.

During a recent presentation before the Tamaulipas State Congress, Secretary of Energy Development Walter Julián Ángel Jiménez highlighted new sorghum-based ethanol projects capable of producing more than 350,000 liters per day, with future expansion plans tied to Altamira, a major industrial port city in southern Tamaulipas.

Industry leaders, however, argue Mexico’s ethanol market cannot grow until federal fuel regulations change.

Benito López, director of the Northern Tamaulipas Regional Agricultural Union and a representative of Bioenergéticos Mexicanos, or Biomex, said the biggest obstacle facing the industry remains NOM-016, the federal regulation governing ethanol blending limits in gasoline.

Biomex has become one of the region’s highest-profile examples of the challenge.

The Valle Hermoso-based agroenergy company — located less than an hour from Brownsville — has spent years developing a sorghum-based ethanol project that already includes industrial land, infrastructure and permits but remains unable to move forward commercially.

“What is really holding back ethanol production in Mexico is NOM-016,” López said.

Mexico currently allows ethanol blends of roughly 5.7% to 5.8% in gasoline.

In the United States, E10 gasoline — fuel blended with 10% ethanol — is standard. Countries including Brazil, Argentina, Paraguay and Uruguay require even higher blending percentages.

According to López, Mexico’s current limits prevent ethanol projects from becoming economically viable.

“That ethanol content is neither technically nor economically viable,” he said.

López said the U.S. fuel model starts with lower-octane gasoline that later receives a 10% ethanol blend to reach final octane requirements.

Mexico instead requires already-formulated gasoline, reducing ethanol’s competitiveness.

Biomex argues infrastructure already exists

López said Biomex represents one of Tamaulipas’ most advanced ethanol projects because much of the groundwork has already been completed.

The Valle Hermoso project plans to convert sorghum into ethanol — a fuel market many northern Tamaulipas producers view as critical as grain prices remain under pressure.

“The Biomex project already has everything. All investment made so far has been financed with equity capital; it has no debt,” López said.

According to López, the project already includes environmental permits, energy permits, warehouses, silos, offices, partially completed civil works and approximately 62 acres of industrial-use land.

Project partners collectively produce about 300,000 tons of sorghum annually and operate 49 grain collection centers capable of storing nearly one million tons.

Biomex estimates the project will require roughly 1.8 billion pesos — approximately $100 million — to complete.

About $12 million has already been invested.

Agricultural producers have also contributed roughly 50 million pesos — approximately $2.6 million — to satisfy Mexico’s Biofuels Law requirement that producers maintain at least 30% ownership participation in ethanol projects.

Distance matters in ethanol economics

Tamaulipas produces roughly 57.5% of Mexico’s sorghum, positioning northern Tamaulipas as one of the country’s strongest candidates for large-scale ethanol production.

But López said geography matters.

“All over the world, plants are located where the raw material is,” he said.

Northern Tamaulipas concentrates much of Mexico’s sorghum production.

Altamira, meanwhile, sits hundreds of miles farther south near Tamaulipas’ Gulf Coast industrial corridor.

According to López, transporting sorghum longer distances increases diesel consumption, freight costs and transportation emissions.

Those factors matter because Mexico’s regulations require greenhouse gas reductions and energy-efficiency benchmarks for ethanol projects to qualify as sustainable.

“There would be no way, if they place it in El Mezquital or Altamira, there would be no way to comply with this regulation because sustainability would be lost by transporting the raw material over such long distances,” López said.

López added ethanol projects face years of feasibility studies, environmental reviews, agricultural integration and permitting before construction begins.

“In the United States, they call this stage site development, and it takes at least three years. In Mexico, logically, it would take even longer due to bureaucracy,” he said.

Industry sees opportunity tied to Texas

López said stronger ethanol demand already exists across Latin America and the United States because fuel markets there require higher blending standards.

“The projects being developed in Latin America are viable because there is already a market demanding ethanol use,” he said.

He argued Tamaulipas’ proximity to Texas creates long-term opportunity for ethanol production and cross-border energy markets.

But he also warned many agricultural organizations remain financially strained.

“Farmers are highly undercapitalized and will have difficulty contributing resources to comply with the law’s 30% requirement,” López said.

Still, López maintained Biomex could move quickly if Mexico changes its fuel regulations.

“Once the regulation is modified to allow at least 10% ethanol blending in gasoline, the Biomex project will be the first one to be built,” López said.