SAO PAULO - An overhaul of Brazil's biofuels policy in coming days, aimed at cutting the country's carbon emissions, should boost demand for cleaner fuels, stabilize the volatile industry and accelerate a recent wave of mergers and acquisitions in the sector.

The new federal program, called RenovaBio, will give fuel distributors targets to cut emissions, which will force them to gradually increase biofuels volumes, according to policymakers, executives and analysts following discussions of the new law.

President Michel Temer will soon announce the program via presidential decree, the Agriculture Ministry said this week, and the law could go into effect next year as soon as new regulations are established.

RenovaBio could be a lifeline to Brazilian ethanol producers who have struggled in recent years to compete with cheap gasoline. It could also bolster sugar prices by encouraging mills to produce more ethanol and less sweetener.

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