A global push to decarbonize air travel has groups from oil majors to sovereign wealth funds betting on Brazil to become a major global hub for green jet fuel.
Brazil is becoming a magnet for investment as countries race to capture a share of what promises to be a fast-growing market, with Shell and Abu Dhabi’s Mubadala Investment considering new sustainable jet fuel plants in the country . This is partly due to the fact that Latin America’s main economy is the world’s second largest producer of ethanol, which can be used to produce SAF.
An agricultural powerhouse, Brazil has an abundance of cheap crops to produce biofuels, giving the country an edge over competitors, including the US. Many of Brazil’s supplies are also better rated in terms of carbon emissions, critical to meeting SAF production requirements.
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“Brazil is in a very privileged position to be the world center for SAF,” said Bruno Serapião, CEO of sugar and ethanol producer Atvos Agroindustrial. The company, backed by Mubadala, is currently considering investing in a SAF unit that will use alcohol-to-jet technology, converting ethanol into aviation fuel.
SAF is one of the few ways the aviation industry has at its disposal to reduce its carbon footprint, which represents around 2.5% of global emissions. Interest in green jet fuel is increasing, driven by political support, especially in the European Union and the US, but demand far exceeds available supply and is forecast to continue to grow.
Ricardo Mussa, CEO of sugar and ethanol company Raizen, said Brazil’s ethanol production puts it in a strong position to be a major SAF exporter. “For every liter of SAF, we need 1.7 liters of ethanol, so the best place to produce it would be at the origin, in Brazil,” said Mussa at Bloomberg New Economy at B20 in São Paulo last week.
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Production of green aviation fuel in Brazil has the potential to reach around 50 billion liters by 2030, with more investment in agriculture, according to preliminary data from a study carried out by Airbus, LATAM Airlines Group and the Massachusetts Institute of Technology. This is similar to potential US production, but Brazil is expected to be a larger exporter, with US production being consumed domestically.
Companies and authorities in Brazil hope that SAF produced from the country’s ethanol will be more effective than other agricultural product-based alternatives. This is largely due to the way international standards for the cleanliness of global air travel are being drafted.
According to data from the International Civil Aviation Organization, Brazilian sugar cane ethanol has lower carbon emissions compared to other SAF ingredients such as soybean oil or US corn-based ethanol. This means that SAFs produced in Brazil would likely be more efficient in helping airlines reach targets to reduce their carbon emissions. “The more demanding the emission reduction plans, the higher the carbon price, the better positioned Brazil will be,” said Marcelo Moreira, partner at consultancy Agroicone.
Brazil is already sending ethanol to North American plants that transform it into SAF. Now it wants to build its own jet fuel plants. Government-backed lines of credit and new mandates forcing airlines to decarbonize are helping the industry.
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Still, Brazil has to compete with big incentives provided by President Joe Biden’s landmark climate legislation, the Inflation Reduction Act.
“There is a risk that Brazilian ethanol will be exported to be converted into SAF anywhere else in the world and that we will have to import SAF,” said the CEO of BP Bioenergy, Geovane Consul. Brazil needs to work to ensure this does not happen, he said.
In response to these concerns, President Luiz Inácio Lula da Silva earlier this month approved “Future of the Future” legislation that creates broader mandates for biofuels. Projects to boost infrastructure in the country are now moving at a faster pace than some similar U.S. efforts.
FS Bioenergia, one of Brazil’s leading ethanol producers, backed by US-based Summit AG Advisors, said this month it will proceed with a carbon capture project to supply what it claims will be the first carbon-negative ethanol. Meanwhile, Summit Carbon Solutions is facing delays in its U.S. carbon capture and storage pipeline.
The groups that dominate global fuel markets have long established connections with ethanol manufacturers in Brazil.
Raízen, a joint venture between Shell and Brazil’s Cosan, announced plans to build an aviation fuel factory. Britain’s BP also recently targeted aviation fuel markets as part of its strategy, after acquiring shares sold by Bunge Global in a former Brazilian ethanol joint venture.
While many Brazilian SAF projects are still in their infancy, equipment supplier Honeywell International believes about four to five new plants could “come to market very soon,” said Ken West, the company’s CEO of energy and sustainability solutions.
