The bill would create a program called RenovaBio, mandating fuel distributors gradually increase the amount of biofuels they trade every year.

The approval is a victory for the agricultural sector in Brazil, which campaigned heavily for it. The bill is also expected to help the country meet its pledge under the Paris climate agreement to reduce emissions.

The bill was presented in the lower house early in November and passed a few days later. It goes now to President Michel Temer, who is expected to sign the bill into law.

Elizabeth Farina, president of cane industry group Unica, said lawmakers quickly approved the program because of its benefits to the environment and public health.

The ethanol sector expects the program to double demand for the fuel in the country in 10 years, reducing the need to import petroleum-based products.

As a secondary result, RenovaBio will also create Brazil's first carbon market, since fuel distributors who fail to meet their mandates every year will have to buy emissions reduction certificates known as CBios to comply.

But the program was not unanimously supported within Temer's government. Finance Ministry officials were reluctant to back the new policy, fearing higher costs for companies and fuel consumers and possibly inflation pressures.

Despite the approval, much has yet to be defined regarding the program, such as the exact mandates for biofuels use every year from 2020, the expected year of implementation, and 2030, when the first phase of RenovaBio should end.