Brazil has a long history of using biofuels in the transport sector, especially due to the 40 years widespread use of ethanol and almost 20 years of biodiesel. Nevertheless, more efforts are needed to reduce even further the carbon emissions of the transport sector. In addition to ethanol, gaseous fuels such as biogas and biomethane are gaining ground due to their great potential to be obtained through biomass processing. To prospect the potential use of biomethane as a vehicle fuel in Brazil, compressed natural gas (CNG), another methane-based fuel with similar composition to biomethane, was tested and had its performance and emissions compared to hydrous ethanol and Brazilian gasoline at three different operating conditions in two different compression ratios: 3.0 bar, 6.0 bar and 9.0 bar IMEP at 1800 rpm, exploring compression ratios of 11.6:1 and 14.3:1. With CNG, engine operation at MBT was possible with both compression ratios. Ethanol presented border knock near MBT for the highest compression ratio and load, while the gasoline spark timing was knock-limited for both compression ratios at the highest load. Indicated efficiency of CNG was higher than that of gasoline and lower than that of hydrous ethanol. ISCO emissions were lower for CNG, while ISTHC and ISNOX were similar to gasoline. Due to the lower LHV of biomethane, a reduction in the ISNOX value could be expected with possible increase in methane slip. Regarding cost, biomethane is the fuel with the cheapest operating cost per kWh when considering the final price for industrial consumers in Brazil. It is still difficult to estimate large-scale production cost of biomethane, but its use in partial replacement of CNG would still be able to keep fuel market competitiveness, while reducing the carbon footprint.