The modern world is trying to reduce the impact that daily human activities have on the environment by using more environmentally friendly resources. In this respect, the production and use of ethanol has gained more importance. In this regard, Guatemala has the potential to provide the necessary biofuel to supply the entire local market and become the number one exporter of ethanol in Central America. In relation to the topic, Guatemala has the Decree-Law 17-85 on Fuel Alcohol, which establishes the regulatory framework for ethanol production and local consumption. Nevertheless, this regulatory framework is unclear and confusing. Despite the willingness to increase the number of distilleries to increase the production of ethanol, if the framework does not provide the adequate structure to secure the investments and the consumption in the local market, the development of this industry might be restricted. In this sense, a comparative analysis between the current legislations of Guatemala and Colombia is done, to determine the impact that the regulatory frameworks have in the production of ethanol in each country. This allowed concluding that given that Guatemala and Colombia have certain similarities in the sugarcane industry, Guatemala can take Colombia’s industrial experience as an example to initiate the establishment of its ethanol industry; and, that it is necessary for the Government of Guatemala to reshape or to create a new legislation that encourages the production and use of ethanol in the gasoline used in the automobiles in Guatemala.