Brazil is one of the world's main ethanol producers, providing many opportunities to contribute to the decarbonization of various sectors and to the energy transition from fossil fuels to cleaner and more renewable alternatives. Today, in addition to being widely used in urban mobility, other segments of the economy already use biofuel for various applications, such as, for example, antiseptic and cosmetic products. At a global level, new demands and opportunities are also emerging, such as the aviation, navigation, hydrogen market, etc.

One of the most mature is the sustainable alternative for the aviation sector, with Sustainable Aviation Fuel. Based on a commitment signed by the International Civil Aviation Organization, the mandatory blend of sustainable fuel for airlines was determined from 2027 onwards, opening up great opportunities for ethanol.

When we talk about Sustainable Aviation Fuel, the governments of more than 100 countries, together with industry and civil society, have set the objective that aviation fuel in 2030 should be 5% less carbon intensive than aviation kerosene, used across almost the entire airline industry today. In this context, each government member of the council set an internal target. In Japan, for example, the goal is to reach 10% use of Sustainable Aviation Fuel by 2030.

The United States has already established 5 billion liters of Sustainable Aviation Fuel by 2030. Therefore, we will have a high demand from the aviation sector in the coming years.

Brazil, as a major global producer of ethanol, with approximately 35% of global production, has a great opportunity to be a protagonist in this market. The potential of the Sustainable Aviation Fuel market is four times greater than the global ethanol market, reaching around 400 billion liters.

Today, there are three main technologies for the production of Sustainable Aviation Fuel, Jet Alcohol, Hydroprocessed Esters and Fatty Acids and Fischer- Tropsch. In jet alcohol, the ethanol molecule is dehydrated, hydrogenated and oligomerized.

It is a process of linking molecules through their carbon and hydrogen chains to make the fuel more complex. Thus, it takes around 1.6 liters of ethanol to produce 1 liter of Sustainable Aviation Fuel.

Hydroprocessed Esters and Fatty Acid is a different technology, in which Sustainable Aviation Fuel is produced with vegetable oils, such as corn or soybean oil, to originate aviation biokerosene. Fischer-Tropsch is produced from biomass. All of these technologies are important and complementary, enabling the world to have a diversified matrix, with high volume and competitive scale to serve different markets.

In Jet Alcohol, the technology that will generate greater demand for ethanol, approximately two-thirds of the carbon footprint of Sustainable Aviation Fuel is in the feedstock (in ethanol) and one-third is in the upgrading process (transforming ethanol into aviation fuel).

Global mandates require that sustainable fuel emit 50% less than jet fuel, which emits 90 grams of carbon dioxide per megajoule . Therefore, it is necessary to make a product that has up to 45 grams of carbon dioxide per megajoule.

Promotion of Innovation and Technology:
However, market potential and available technologies alone are not enough. Support is also needed from the public, private and civil society sectors around the world. In the United States, for example, the government has several initiatives to encourage the production of Sustainable Aviation Fuel.

The Inflation Reduction Act, created by President Biden in August 2022, whose objective is to invest in the entire American economy, in energy security and climate, is beneficial for manufacturers.

In the program, there is the 40B tax credit (Sustainable Aviation Fuel Credit), in which the government provides $1.25 per gallon to manufacturers who produce a fuel, whatever it is, with at least a 50% reduction in GHG versus aviation kerosene.

The 45Z tax credit costs the producer up to $1.75, depending on the carbon footprint. The 40B is valid this year 2024, and the 45Z runs from January 2025 to December 2027.

Additionally, the United States Ministry of the Environment has a benefit linked to the environmental area, called Renewable Identification Number, allowing it to provide the producer of Sustainable Aviation Fuel with a value that can reach more than $ 2.00 per gallon.

These two incentives from the American government are an important example of how to stimulate the production of Sustainable Aviation Fuel. In the American market, incentives can reach 50% of the Sustainable Aviation Fuel producer's revenue.

Environmental requirements:

For Brazil to export ethanol and be a supplier of raw materials for the production of Sustainable Aviation Fuel in the United States, it will have to ensure that the corn and sugar cane used for production meet more stringent environmental requirements than those already are in force in Brazilian legislation.

It will be necessary, among others, to comply with a deforestation cutoff date of 2008, that is, more stringent than that of the Brazilian Forest Code. To access the American market, we will also have to comply with molecule segregation requirements for each plant until the product arrives in the United States, making the product more expensive and complicating shipping.

In the case of FS, to participate in this market, we need to buy corn a little more selectively.

The corn we buy in Mato Grosso, fortunately, already meets most of the environmental requirements. We will need to observe the cutoff date for legal deforestation, which is feasible.

FS’s socio-environmental policy and the 75% eligibility in RenovaBio already puts us in a very favorable starting scenario. Furthermore, today, through RenovaBio, we have a footprint of 17 grams of carbon dioxide per megajoule (80% lower than gasoline).

Added to this is that the FS just received ISCC certification Corsia, which certifies our ethanol for the production of Sustainable Aviation Fuel and as a low carbon product. To achieve this certification, we already need to comply, for example, with the 2008 cut-off date for zero deforestation.

We are also the first biofuel company in history to receive the Low LUC Risk requirement, attesting that our ethanol is tracked in this certification in collaboration with one of our second-crop corn suppliers, the GGF Group, which also meets the highest environmental requirements internationally.

Furthermore, it ensures that we purchase corn from areas that do not have carbon emissions linked to land use change. In other words, we were able to demonstrate that there is already second-crop corn in Mato Grosso, with productivity gains linked to low carbon and that it meets the most stringent environmental requirements internationally.

Brazilian ethanol will have a great opportunity imposed by the new demand for air transport. Starting next year, international technology promotion programs, for example, from the United States and Japan, will further stimulate ethanol exports for the production of Sustainable Aviation Fuel.

In Brazil, this market will begin to be stimulated through the legal framework of the Fuel of the Future, at a crucial moment for the whole world, when we need to move towards a more sustainable future. The use of sustainable aviation fuel is not just a trend, but an essential necessity for decarbonization in the airline sector. Ethanol, once again, should play a leading role in this industry.