Brazil
Brazil’s biofuels industry, especially its production of sugarcane-based ethanol, has positioned the country as one of the world’s top biofuel producers. The country is well-positioned to capitalise on a growing market for special agricultural fuels. Its vast ethanol supply can serve as a key feedstock for both domestic and international SAF producers. Additionally, recent regulatory developments aimed at reducing aviation emissions are expected to boost domestic demand for SAF, presenting Brazilian ethanol producers with a significant opportunity.
GDP (Current Prices) USD (2023) | 2.174 Bn |
Real GDP Growth Forecast (2024-2028) | 2.07% |
10-year Govt Bond Yield (12-month rolling average) | 11.1% |
Country Credit Rating | BB |
Average Daily Flights | 2,531 |
Existing Fuel Consumption | 5.33 million metric tons |
Usage Mandate | Cutting airline emissions by 1% of
2026’s total emissions, rising up to
10% in 2037 (Effective January 2027) |
Projected SAF Capacity Under Development (MT/Year) | 950,000 by 2028 |
Policy Support |
Aviation Industry Backdrop
The Brazilian aviation market is among the largest in the Latin American region. In 2023, the total number of passengers using Brazilian aviation reached 113.0 million, registering a 15.3% year-on-year growth (Aviation Week, 2024). As of March 2024, domestic seat capacity had returned to 2019 levels by 96.0%, and international capacity had returned to 2019 levels by 96.5% (Aviation Week, 2024). The executive aviation business segment has a significantly strong position globally and is driven by Indigenous manufacturers like Embraer. The post-pandemic spike in demand for executive business aviation helped boost the industry. In this context, the jet fuel demand and spending can be assumed to play a critical role in the business.
Brazil government’s Energy Research Office (EPE) reported a compound annual growth rate (CAGR) of 22.0% in jet fuel demand between 2021 and 2023. The report also noted that in April 2024, jet fuel demand increased month-on-month for the first time since the pandemic outbreak. The growth was 0.1% compared to April 2019 and 9.1% compared to April 2023 (EPE, 2024).
There is a vast untapped potential in SAF, considering Brazil’s strong track record in biofuel production. It is the world’s second-largest biofuel producer after the US, led primarily by its sugarcane-based ethanol supply. It similarly leads in biodiesel (third largest globally) and has an established policy and regulatory framework in the biofuels industry (Energy Institute, 2023). A rich resource endowment in sugarcane and corn, together with an established manufacturing base, ensures competitive biofuel supplies. The most recent data available indicates that till 2022, biofuels contributed to 22.0% of the country’s total transportation sector energy (IEA, 2023).
SAF does not have a commercial presence in Brazil. There are just two SAF plants under development in the South American region — one is in Paraguay, owned by Brazilian group ECB and scheduled to be operational in 2024. The second one is in North Brazil, being developed through a partnership between Brasil BioFuels and Vibra, expected to commence production in 2025 (S&P Global, 2024).
Source: OECD.Stat, 2024
Note: Thousand tonnes of CO2-equivalent
Policy Regulation
It is only recently that regulatory attention has been focused on SAF. Historically, Brazil’s biofuel regulations have been focused on road transport fuels, especially gasoline and diesel (IEA Bioenergy, 2023). The regulatory mandates on compulsory ethanol blending in gasoline have been in place since the 1930s. Over the successive decades, the ethanol blend in Brazilian gasoline fluctuated and currently stands at 27.0%. The emphasis on biodiesel started in 1980, with a mandatory 30.0% blend based on vegetable oils or derivatives. The biofuel regulations were motivated initially to mitigate rising import dependence on gasoline and diesel and later to address transportation sector emissions. With SAF, there is a departure from the skew towards road transportation fuels. In doing so, the authorities are also aligning with the global practice of taking a holistic approach to managing the energy transition.
Brazilian regulatory authorities plan to introduce the SAF mandate, which will take effect in January 2027. The mandate will be based on an emissions reduction scheme, unlike the volume-based blending mandates in place for ethanol and biodiesel. While the nation’s current requirement for biodiesel mix into diesel is 14.0% (S&P Global , 2024), there is a statutory 27.0% ethanol blend requirement for gasoline (ET Energy World, 2022). The SAF mandate will target cutting Brazil’s aviation emissions by 1.0% (relative to emissions in 2026). This will progressively rise each year, reaching 10.0% by 2037 (IEA, 2023).
The regulation is getting closer to enactment. In March 2024, it received parliamentary approval under the National Sustainable Aviation Fuel Programme (ProBioQAV) aimed at promoting research, production 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 1% 2030 2031 2032 2033 2034 2035 2036 2037 and commercialisation of SAF. Notably, the draft regulations allow for alternate means to achieve the targeted emission reduction. Also, there could be exemptions for some operators who either have lower emissions than the targets or do not have access to SAF at any of the airports where they operate (Chamber of Deputies, 2024).
Different agencies and authorities will be involved in implementing and supervising the norms. The National Civil Aviation Agency (ANAC) will track annual emissions and monitor compliance. The National Agency of Petroleum, Natural Gas and Biofuels (ANP) will establish the values of total emissions equivalent in carbon dioxide per unit of energy produced by SAF. The values thus determined will help measure the decarbonisation against conventional aviation fuel.
Market Opportunity
The SAF market in Brazil is at a nascent stage and shows signs of gradually rising investor interest. Some of the leading global developers have begun securing land, feedstock, and other related resources for developing a manufacturing base. Brazil’s high ethanol production capability is a huge advantage for SAF developers. In April 2024, Brazilian company Raizen executed the first export shipment of ethanol for the US-based developer LanzaJet’s Georgia based SAF production facility (BNN Bloomberg, 2024). Currently, Raizen is exploring locations to set up an ethanol-based SAF production facility in Brazil with an annual capacity of at least 793,000 US gallons (Hydrocarbon Processing, 2024).
Brazil’s ethanol production offers export opportunities. Like Raizen, many of Brazil’s existing ethanol mills are certified to supply SAF feedstock that meets the required global standards. Some of the key entities in this regard are BP Bunge Bioenergia and Copersucar SA (Profarmer, 2024). In March 2024, the Brazilian corn-based ethanol producer FS received certification of compliance with global norms for SAF production feedstock. The certification proved that Brazilian ethanol produced from second-crop corn can be a low-carbon feedstock for the aviation sector (Argus, 2024). In November 2023, the ethanol producer Atvos announced its SAF market entry plans, with a planned investment of $324.0 million towards SAF production from 2028 based on the certified alcohol-to-jet pathway. The company expects to invest $324.0 million by the end of the 2025, and to invest similar amounts in 2026 and 2027 respectively (Argus, 2023).
In June 2024, BP announced its plan to acquire Bunge’s 50.0% interest in the joint venture entity BP Bunge Bioenergia. It is among the leading biofuel- producing companies in Brazil, with a targeted bio-ethanol production of 30,000 barrels per day by 2030 (BP, 2023). Once the acquisition is done, BP will achieve a significant scale in the Brazil-based sugarcane and ethanol business with enhancements through its trade and technology capabilities (BP, 2024). In June 2024, Copersucar and Geo bio gas & carbon signed a memorandum of understanding to develop the technology for converting biogas to SAF, based on the Fischer-Tropsch methodology. A demonstration plant could be set up by 2025 to this end (Bioenergy Insight, 2024).
The Brazilian market opportunity for SAF is dominated by ethanol, however, other technologies are also being considered. Synthetic or eFuel, for instance, is one segment in Brazil’s market that does not yet have a commercially viable proposition, but it has significant demand in the European market. A notable initiative in this direction is the planned development of a technology demonstration plant in Brazil to produce biosyncrude – a synthesised mixture from biogas and green hydrogen, which can then be used to produce SAF. The plant is funded by a €1.8 million grant from the German government, and marks the first of its kind in Brazil (Valor, 2024).
| Company | Collaborating Entities | Project Details |
|---|---|---|
| MeSAF | Aalborg Airport, Kosan Gas, Vertimass and European Energy | A pilot plant is to be established in Aalborg, which will start producing SAF from 2024. The SAF will be produced from CO2 and green hydrogen and will pave the way for Denmark’s first 100.0% SAF-fuelled domestic flight route (Kosan Gas, 2023) |
| First commercial eFuels-for- aviation plant in Denmark | Arcadia eFuels, Sasol, Topsoe, KGAL GmBH | Once operational in 2026, the plant will deliver eFuels for the Danish and European aviation markets. The plant will be located in Vordingborg and will produce ~100.0 million litres of eFuels annually (Biofuels International, 2023) (Renewables Now, 2023) (KGAL GmbH & Co., 2023) |
| Green Fuels for Denmark | $Ørsted, DSV, Maersk and DFDS, Copenhagen Airports, SAS, Topsoe, Neste, HOFOR , BIOFOS, CTR and VEKS | Major Power-to-X (PtX) project; large-scale production of sustainable eFuels (Bioenergy International, 2022) (Ørsted, n.d.) |
| eSAF facility | Metafuels AG, European Energy | Synthetic sustainable aviation fuel (eSAF) facility near Padborg in southern Denmark; the facility will produce approximately 4.4 million litres of eSAF per year (Biofuels International, 2024) |
| First large- scale SAF storage | DCC & Shell Aviation | In September 2023, a record quantity of SAF was supplied at Oiltanking Copenhagen’s terminal at Prøvestenen, with an aim to establish a large inventory of SAF. This storage facility will act as the central hub for ensuring a consistent and reliable supply of SAF to meet the needs of key stakeholders across the Danish aviation sector (Mabanaft, 2023) (Flightchic, 2023) |
| Pilot SAF project at Baltic Eagle Wind Farm | Vestas, HeliService, DCC & Shell Aviation Denmark A/S (SAF provider) | The pilot project entails Vestas technicians and jack-up vessel crew using helicopters partly powered by SAF to transport themselves to and from the Baltic Eagle wind farm during the construction phase of 50 offshore wind turbines. The project is scheduled to take place in September 2024. (Navingo, 2024) (Vestas, 2024) |
Outlook
As one of the largest producers and consumers of ethanol and biodiesel, the Brazilian market is ideally positioned to lead global ethanol-based SAF production. Increased domestic consumption of SAF due to the introduction of the 2027 SAF mandate paired with high international demand for ethanol- based SAF will open new avenues for increased production and export. According to estimates, about 20.0%—30.0% of SAF production by 2030 could be sourced from ethanol, for which about 9.0 billion—12.0 billion litres would be required annually. Even if Brazilian producers are not the primary supplier, they will play a key role considering their current share in the global ethanol trade (Valor Agri, 2024).
The US SAF market is important for Brazilian mills. With firm guidelines on incentives still pending, US- based SAF producers may primarily turn to Brazilian imports as their main source of ethanol in the short term. Japan, which targets 10.0% SAF blending by 2030, presents another promising export market for Brazilian ethanol producers. Simultaneously, many existing SAF producers are already testing and exploring ways to lock in ethanol supplies for future SAF production (Valor Agri, 2024).
Despite the clear demand, investment commitments may require incentives. Brazil does not have any subsidies or similar support for prospective developers and investors, and this may need to be revisited. With a negligible current domestic production base and few global-scale entities, the market is far from maturity and would need added support to ensure there are timely investments in expanding production capacity.