Thursday, November 7, 2024

Big Oil Eyes Brazil as Major Hub for Clean Jet Fuel

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(Bloomberg) — A global push to decarbonize air travel has groups from Big Oil to sovereign wealth funds betting on Brazil to become a top global center for green jet fuel.

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Brazil is becoming a magnet for investment as countries race to grab a share of what promises to be a fast-growing market, with Shell Plc and Abu Dhabi’s Mubadala Investment Co. considering new sustainable aviation fuel plants in the country. That’s in part because Latin America’s biggest economy is the world’s second-largest producer of ethanol, which can be used to produce SAF.

Agriculture powerhouse Brazil has an abundance of cheap crops to make biofuels, providing the nation a leg up on competitors including the US. Many of Brazil’s supplies also rank better in terms of carbon emissions, key to meeting requirements for SAF production.

“Brazil is in a very privileged position to be the world’s SAF hub,” said Bruno Serapião, chief executive officer of sugar cane group Atvos Agroindustrial SA. The Mubadala-backed company is currently considering investing in an SAF unit that will use the alcohol-to-jet technology, converting ethanol into aviation fuel.

SAF is one of the few pathways the aviation industry has at its disposal to curb its carbon footprint, which accounts for about 2.5% of global emissions. Interest in green jet fuel is picking up, driven by policy support, particularly in the European Union and the US, but demand far exceeds available supply and is forecast to continue growing.

Ricardo Mussa, chief executive officer of sugar and ethanol company Raizen SA, said Brazil’s ethanol production puts it in a strong position to be a major exporter of SAF.

“For every liter of SAF, we need 1.7 liters of ethanol, so the best place to produce would be in the origin, in Brazil,” Mussa said at Bloomberg New Economy at B20 in Sao Paulo last week.

Production of green aviation fuel in Brazil has the potential to reach around 50 billion liters (13.2 billion gallons) by 2030 with further investments in agriculture, according to preliminary data from a study carried out by Airbus, LATAM Airlines Group SA and the Massachusetts Institute of Technology. That’s similar to the US’s potential output, but Brazil is set to be a bigger exporter, with American production being consumed domestically.

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