1. The mistake of predicting LPG's demise from the capitals' point of view
Every debate on the future of LPG in Brazil makes the same methodological mistake: it starts from the experience of wealthy metropolitan neighborhoods to project the fate of a sector that exists, essentially, to supply the Brazil that doesn't appear in that experience. Induction cooktops in Pinheiros and Leblon reflect a real trend. But they are not the real Brazil.
With nearly 100% formal electrification, Brazil still shows significant energy poverty — and the contradiction is resolved once one distinguishes access from affordability. Firewood combined with LPG still supplies more than half of residential consumption, and cooking accounts for nearly half of the energy used in homes, making it the service most dependent on traditional sources.
The gas cylinder reached places where the power grid arrived first — and stayed even after the grid arrived. This says something important about the nature of the product and about the nature of the demand that sustains it.
2. The cylinder as last-mile social infrastructure
LPG is not just a fuel. It is social infrastructure. Brazil has 19 authorized distributors and around 59,000 legalized resellers, responsible for the reach of supply — present in 100% of Brazilian municipalities. No piped-gas network reaches where the cylinder reaches. No electrification program can, in the short term, replace the last-mile logistics this chain has built over decades.
The Gás do Povo Program, in effect since November 2025, already benefits roughly 15 million families across all 27 Brazilian states — approximately 50 million people with access to cooking gas through the network of accredited resellers. The scale of this program is only viable because the distribution and resale infrastructure already existed. The State did not build it — it found it ready-made and used it as a vehicle for public policy.
The scale of the Gás do Povo Program — 15 million families, 50 million people — is only viable because the distribution and resale infrastructure already existed. The State did not build it. It found it ready-made and used it as a vehicle for public policy.
3. The three horizons: longevity with transformation
A forward-looking analysis of the sector must work with three distinct horizons, each with its own dynamics.
| Horizon | Scenario | Dynamics |
|---|---|---|
| 2026–2035 | Essential and structurally resilient sector | Demand anchored in energy poverty, irreplaceable reach and public subsidy policy. No substitute technology will have sufficient scale within a decade. |
| 2035–2045 | Onset of selective compression | Electrification advances in metropolitan areas. Natural gas penetrates industrial regions. The cylinder market holds volume but loses share in specific segments and geographies. |
| 2045–2055 | Structural reconfiguration, not disappearance | The sector does not disappear — it transforms. Larger, more efficient operators replace the fragmented model. The cylinder continues. The average operator of 2045 will be different. |
4. Natural gas and the circularity trap
To understand why LPG lasts longer than the market imagines, one must understand why natural gas struggles to replace it in the residential segment — especially in regions where the cylinder still dominates.
Brazil's natural gas problem is not on the supply side. The country has gas. The pre-salt fields produce, reserves grow. The problem is on the demand side. Or rather: in the circularity that prevents that demand from forming.
To expand the residential pipeline network into a new region, future demand must justify the infrastructure investment. But demand only materializes once the infrastructure exists. Without breaking this cycle — through state subsidy, a large industrial anchor, or sufficiently high urban density — the pipeline's payback doesn't add up. The investor doesn't come in. The network doesn't expand.
Natural gas would have to build the network before it could attract the consumer. Bio-LPG already has the network. It only needs the product. LPG infrastructure is the most strategic asset in Brazil's last-mile energy transition — and the market hasn't priced that in yet.
5. Bio-LPG: the transition that preserves infrastructure
There is a scenario that pessimists about the future of LPG rarely consider: one where the product changes but the chain stays. Renewable Liquefied Gas — RLG, or bio-LPG — is chemically identical to fossil LPG. Same molecular structure, same performance, same application. The difference lies in origin: residual biomass, vegetable oils, and agro-industrial and urban waste, instead of petroleum.
And the most relevant consequence for the debate on the sector's future is this: it is a drop-in fuel, requiring no adaptation of LPG stoves. This means the arrival of bio-LPG does not destroy the distribution and resale chain. It gives it new meaning. The same cylinders, the same trucks, the same 59,000 resellers — with a renewable product moving through the same infrastructure.
The movement has already begun. In 2025, Brazil registered its first commercial batch of industrially produced bio-LPG, via the Fluid Catalytic Cracking (FCC) route, at the Riograndense Refinery, in a partnership between Ultragaz, Petrobras and Braskem. Copa Energia projects commercial-scale production by 2029.
The question sector operators should be asking is not "will bio-LPG replace fossil LPG?" but rather: when bio-LPG arrives at scale, who will distribute it? The most likely answer is: the same agents who distribute conventional LPG today. As long as they're still operating.
6. The steel bottleneck: the inefficiency the sector hasn't solved
There is a critique of LPG's operating model that has circulated in the sector for decades and has never found a definitive answer. It is not regulatory. It is not technological. It is physical.
Of every P13 cylinder delivered, more than half of the weight transported is steel.
The P13 holds 13 kg of gas and weighs between 14.5 and 15.5 kg empty. Across 33 million monthly deliveries, this represents a chronic and measurable logistical inefficiency — in freight cost, transport emissions and reseller margin — embedded in the final price to the consumer. An estimated 125 to 140 million P13 cylinders currently circulate in the Brazilian market: every month of operation moves roughly a quarter of the entire national fleet, carrying the same unfavorable ratio of steel.
The structural optimization of the LPG chain will, at some point, need to address this equation. There is no simple solution: steel containers exist for technical and safety reasons that cannot be ignored. INMETRO and ANP regulation of cylinders is rigid and justified. But the debate over lighter alternative materials, over larger-scale point-of-consumption refilling models, and over rationalizing the circulating stock of cylinders is a debate the sector can no longer keep postponing.
The operator that manages to reduce the cost of steel — without compromising safety — captures margin, expands competitiveness, and is better positioned to receive the renewable fuel that will arrive through the same containers.
What the sector needs to do today
What separates the operators that will survive selective compression from those that will be squeezed by it is the ability to act now, before the regulatory environment settles and the market prices in what is still an opportunity. Four areas are decisive:
- Streamline logistics to reduce the structural inefficiency of steel — through route optimization, stock consolidation, or evaluation of lighter containers compliant with INMETRO and ANP standards.
- Prepare the chain for bio-LPG, signing long-term contracts with renewable producers and positioning operations to absorb the drop-in product once commercial scale arrives — projected for 2029 by first movers.
- Diversify the customer base toward non-residential segments — commercial, industrial and agricultural — that still value the cylinder's reach and show lower sensitivity to electrification over a ten-year horizon.
- Press public authorities so that the energy transition remains technologically neutral — not biased toward electrification as the only legitimate path.
7. The regulatory frontier: what the ANP still prohibits — and what LNG has already opened
There is a dimension of the LPG regulatory debate that remains systematically absent from market analyses: the ANP still prohibits four uses of the product. Article 25 of ANP Resolution 957/2023 expressly prohibits the use of LPG in engines of any kind (except forklifts and industrial cleaning equipment), saunas, boilers and pool heating. This prohibition dates back to CNP Resolution 11/1978 — issued at the height of the second oil shock, when Brazil imported nearly 86% of the oil it consumed — and was reiterated for decades without substantive review.
The ANP itself has recognized the anachronism. RIA 2/2025/SDL-CREG/SDL/ANP-RJ, approved in June 2025 under Regulatory Action 4.17, concluded — after a multi-criteria analysis with nine internal evaluators — that the most appropriate alternative is the immediate release of all uses. External dependence has fallen, the GASLUB Hub began operations in September 2024, and EPE (Brazil's Energy Research Office) projects demand growth of just 0.3% per year even with full liberalization.
The most sensitive case is vehicular use — the true regulatory taboo of Brazilian LPG. While 28.3 million vehicles run on autogas worldwide (led by Turkey, South Korea, Poland and Italy), and eight of the ten largest global manufacturers produce factory-built LPG vehicles, Brazil maintains a prohibition that goes beyond the regulatory sphere: Article 1, item II, of Law 8,176/1991 classifies the use of LPG in motor vehicles as a crime against the economic order. A law born of the context of the 1990 invasion of Kuwait remains in force in 2026. A repeal bill has been pending in the Chamber of Deputies since 2019, with no resolution yet.
The connection to the malleable-infrastructure thesis is direct: a vehicular-LPG filling station needs no pipeline and no high-voltage grid. It needs LPG — and LPG already reaches 100% of Brazilian municipalities. The circularity that paralyzes natural-gas vehicles simply does not exist for LPG.
In this context, a regulatory precedent produced by the ANP itself in an adjacent segment deserves attention. The RIA on regulating access to essential natural-gas infrastructure (Action 2.12 of the 2022-2023 Agenda, proceeding SEI 48610.205614/2022-48), approved in December 2023, applied for the first time, in a structured way, the essential-facilities doctrine to natural gas downstream in Brazil, in light of a diagnosis of extreme concentration (HHI of 9,795 in the Southeast and 9,806 in the South/Midwest, with Petrobras holding 99.3% of national processing capacity). This precedent matters to the LPG sector because the diagnosis that justified intervention in LNG terminals is similar — the question is whether, and when, the transposability of that principle might come to be recognized.
Conclusion: the sector won't end. It will select.
Brazilian LPG has fundamentals that distinguish it from European markets frequently cited as a reference for the fuel's decline. Social heterogeneity, continental scale, the absence of infrastructure for alternatives among low-income populations, and the cylinder's structural role as an energy-access public policy create an exit barrier that no electrification forecast can eliminate within a foreseeable horizon.
The circularity trap of natural gas protects residential LPG longer than the market estimates. The arrival of bio-LPG may not destroy the chain — it may renew it. And the inefficiency of the cost of steel is, at the same time, the main point of vulnerability and the greatest opportunity for competitive gain for operators who know how to address it.
The LPG reform was suspended. The debate on the sector's future was not. The operator that monitors this movement ahead of time will not just survive the selection process. It will be positioned to shape it.
Legal notice. This article is exclusively informational and academic in nature, reflecting the author's personal analysis and opinion on the LPG sector and its regulatory environment. It does not constitute legal advice, an investment recommendation, or a formal opinion of the firm on specific cases, nor should it be interpreted as an opinion applicable to third parties' specific situations. The financial and quantitative estimates presented here were calculated from public sources — notably ANP RIA 2/2025/SDL-CREG/SDL/ANP-RJ, data from EPE and ANP's SIMP system — using the author's own methodology, with simplifying assumptions made explicit in the text; they are approximate in nature and do not replace specialized technical studies. Forward-looking scenarios reflect current expectations and are subject to revision in light of subsequent events. Reproduction of this content, in whole or in part, is permitted provided the source and author are cited.