Panama’s National Assembly will begin debating a landmark biofuels bill in January 2026. The proposed law, a cornerstone of the country’s energy transition strategy, aims to mandate a 10% ethanol blend in gasoline nationwide.
Approved by the Cabinet Council and formally presented to the legislature, the initiative seeks to reduce fossil fuel dependence and cut transportation emissions. The legislative process will start in the Commerce and Economic Affairs Commission, setting the stage for a major policy shift.
Establishing a Legal Framework for Energy Security
Officials from the National Energy Secretariat (SNE) emphasized the bill’s primary goal is to create a clear and secure legal structure. This framework is designed to introduce biofuels without disrupting energy reliability or consumer prices. The project has completed its executive phase and now awaits parliamentary scrutiny.
“The project has already completed its stage in the Executive Branch and now it is up to the Assembly to begin its analysis. We hope the discussion will advance starting next January, which will allow for the establishment of the legal bases for its implementation,” the SNE stated. [Translated from Spanish]
From an energy perspective, biofuels offer an immediate tool for lowering emissions. They require no modifications to the existing vehicle fleet. Their adoption would also improve air quality and diversify the national energy matrix.
Economic Boost and Agricultural Expansion
Panama currently farms about 22,000 hectares of sugarcane. Industry projections indicate that area could double to 45,000 hectares to meet future ethanol demand. Starting with an E10 fuel standard would significantly cut imported fuel volumes. It simultaneously fosters a locally produced alternative energy source.
The Industrial Association of Sugarcane of Panama (Azucalpa) recently outlined the program’s expected benefits. Its president, Rodrigo Cardenal, called the bill the result of extensive inter-institutional and technical work.
“The National Biofuels Program represents a historic opportunity for Panama. It is a responsible public policy, without subsidies, without an increase in consumer price, and without fiscal sacrifice,” Cardenal asserted. [Translated from Spanish]
The association estimates the program could generate over 30,000 direct and indirect jobs. These would be concentrated in rural areas, boosting agricultural production and local economies. The legislative path forward will be managed by the commission handling asuntos econ.
Phased Implementation and International Alignment
If passed, the law outlines a 22-month period before bioethanol becomes available at service stations. Investments, hiring, and expansion of planted areas, however, would begin immediately after legislative approval. The proposed model blends domestic ethanol production with imported supplies. This hybrid approach ensures initial availability while local production capacity scales up.
The E10 mandate would apply to both 91 and 95 octane gasoline. This move aligns Panama with international best practices already adopted by more than sixty countries. Establishing a robust legal frame is seen as critical for attracting the necessary investment for this and other large-scale projects.
Panama’s push for a biofuels law signals a concrete step toward its environmental commitments. It also promises to reshape parts of its agricultural and energy sectors starting next year.