Brazil's fuel for the future law set to spark US$47bn investments

Brazilian President Luiz Inácio Lula da Silva signed the fuel for the future bill into law on Tuesday, which the government claims is the biggest transport and mobility decarbonization program on the planet. 

It is estimated that the initiative will unlock investments of 260bn reais (US$47bn) in various areas, which will prevent the emission of 705Mt of CO2 by 2037. 

“Brazil is the country that will lead the greatest energy revolution on Earth, with no competition. What other country can rival Brazil in wind, solar, hydroelectric power, or green hydrogen?,” Lula said during the signing ceremony. 

The sustainable fuels to be produced by the new industry include green diesel, ethanol, biomass, biomethane and sustainable aviation fuel (SAF). 

According to a study by Oliver Wyman, the fuel for the future program could create additional annual demand of 11.7Bl (billion liters) of liquid biofuels and 3.4Bm3 (billion cubic meters) of biomethane, as well as requiring up to 58bn reais of investment in additional production capacity.

INVESTMENTS ANNOUNCED

During the ceremony, several companies announced investments that will be made possible by the law. Raízen will invest 11.5bn reais in setting up nine second-generation ethanol plants (E2G) and Inpasa has pledged to invest 3.4bn reais over the next 18 months, with the amount being split between two ethanol plants and the construction of a biorefinery in Luís Eduardo Magalhães, Bahia state.

The Potencial group has announced investments of 3bn reais in the biodiesel production chain, in particular the expansion of the Lapra plant in Paraná, which will become the largest single-plant biodiesel producer in the world. 

FS Agrisolutions will set up a carbon capture and storage (CCS) plant associated with ethanol in Lucas do Rio Verde, Mato Grosso, while Be8 has committed to investing 400mn reais in a biodiesel plant in Uberaba, Minas Gerais.  

Virtu GNL, Eneva and Edge have signed a letter of commitment to create a green corridor for the transportation of liquefied natural gas (LNG), with investments of 1.3bn reais in the first stage. It will be 3,000km long and link Santos port in São Paulo to São Luís port in Maranhão state. 

To set up a bioenergy research center, Shell – in partnership with Raízen and Senai in São Paulo – will invest 120mn reais.

REPERCUSSION

In a press release, local petroleum, natural gas and biofuels institute IBP said that the new law brings important changes by introducing new biofuels and decarbonization programs, ensuring technical feasibility assessments as a requirement for advancing biodiesel blends.

The IBP regretted, however, that the renewable portion of biomass co-processing in diesel production for the purposes of meeting the blends was not included. 

Regarding the decarbonization program through a biomethane purchase mandate, aimed at natural gas producers and importers, IBP registered its concern about the effects of this public policy on the price and competitiveness of natural gas, as well as its possible overlaps with other mandates and policies, such as national biofuels policy Renovabio and the carbon market.

Brazil’s green hydrogen industry association ABIHV said that fuel for the future adds to the legal framework for green hydrogen, signed in August, to consolidate Brazil's potential to lead the global energy transition.

São Paulo agriculture federation Faesp stressed the importance of the event for agriculture and the Brazilian economy, since the law will boost the production of renewable fuels, such as green diesel and biomethane, expanding market opportunities and generating new jobs in rural areas. 

The organization said that it is developing the national sugarcane center of excellence in Ribeirão Preto, São Paulo, which will involve research into the new fuels, as well as providing training for professionals linked to the sector.