Brazil's Lula launches 'Fuel of the Future' program to reduce emissions

The administration of President Luiz Inacio Lula da Silva launched its "Fuel of the Future" program in the government's latest effort to expand the use of renewable fuels and reduce emissions in Latin America's largest economy as part of the global energy transition.

"The measure brings a series of initiatives to promote sustainable, low carbon mobility that will help Brazil meet international targets to reduce greenhouse gas emissions," the Mines and Energy Ministry said Sept. 14. The measure was sent to Brazil's Lower House, where congressional debate on the bill will start.

The Fuel of the Future program continued the Lula administration's efforts to expand Brazil's use of renewable energy and biofuels, which had trended downward under lackluster policies implemented by the previous administration of former president Jair Bolsonaro. The program, which replaces previous initiatives such as the RenovaBio program for biofuels, includes measures to increase the country's ethanol blending mandate, reduce airline emissions and establish national policies for green diesel, synthetic fuels and carbon capture and storage.

"We need to integrate public policies, provide incentives for renewable energies and attract investments to make biofuels competitive versus fossil fuels," Mines and Energy Minister Alexandre Silveira said during a signing ceremony. "We can't just be exporters of commodities and importers of processed products."

Brazil's advantaged position in biofuels and renewable energy sources would allow the country to "promote decarbonization at the lowest cost to society," the minister added.

Two of the Fuel of the Future program's key initiatives will result in substantial changes to current fuel consumption, according to government and industry officials.

The measure proposed an increase to the volume of anhydrous ethanol blended with gasoline at the pump to 30%, up from 27.5% currently, the ministry said. In addition, the range of Brazil's ethanol-gasoline blending mandate would be raised to 22%-30%, up from 18%-27.5% currently.

The program also includes creation of a national program for sustainable aviation fuel, or SAF, that will require airlines to reduce greenhouse gas emissions in 2027-2037, the ministry said. Airlines will be required to reduce emissions a minimum of 1% in 2027 through gradually increased blending of SAF with jet fuel. The emissions-reduction target will rise to a minimum of 10% by 2037.

New national policies

The program also will establish the creation of much-needed regulatory regimes for new national policy programs for green diesel, synthetic fuels and carbon capture and storage, the ministry said. Brazil currently lacks adequate regulatory regimes for the segments.

State-led oil company Petrobras has called for clearer regulations on green diesel, which includes co-processing diesel made from crude with renewable components such as soy oil and beef fat at the company's refineries. Petrobras is in the process of increasing output of diesel containing 5% renewable content at the Refinaria Presidente Getulio Vargas, or REPAR, in Parana state to 12.3 million liters/d from 5 million l/d currently.

Petrobras also plans to install co-processing plants at the Refinaria Presidente Bernardes, or RPBC, and Refinaria de Paulinia, or REPLAN, in Sao Paulo state and the Refinaria Duque de Caxias, or REDUC, in Rio de Janeiro state. The company also plans a plant dedicated to produce SAF and diesel with 100% renewable content at RPBC.

Brazil's National Energy Policy Council, or CNPE, will establish minimum green diesel obligations for each year during the 2027-2037 period, according to the ministry. Diesel sold at the pump is currently blended with 12% biodiesel, with the biodiesel mandate expected to rise to 15% by 2026.

The program also will create regulations for production of synthetic fuels, or e-Fuel, in an effort to kick-start the industry in Brazil, the ministry said. Brazil's National Petroleum Agency, or ANP, would be tasked with establishing rules and specifications related to the production and distribution of synthetic fuels.

The government also wants to unlock investments in carbon capture and storage in Brazil, with the ANP expected to establish rules and regulations for the industry, the ministry said. The ANP would authorize companies to collect, compress and transport carbon dioxide for injection into underground reservoirs for isolation.

Brazil expects the new regulatory regime to help establish a domestic carbon capture and storage industry, developing dedicated projects and increasing investments in new technologies, the ministry said.

Petrobras is currently the country's leader in carbon capture and storage and has utilized the process at offshore oil fields since 2008, according to the company. Petrobras expects to reinject a total of 40 million metric tons of carbon dioxide back into reservoirs by 2025.