The Billion Dollar Bet in Belém
Brazil is no longer just a participant in the renewable energy conversation. It is now the primary price setter for the decarbonization of the global skies. On November 17, 2025, during the opening sessions of COP30 in Belém, the Brazilian administration finalized the regulatory framework for Law 14.993/2024, known as the Fuel of the Future. This is not a mere policy suggestion. It is a hard mandate requiring a 1 percent reduction in greenhouse gas emissions from air travel starting in 2027, scaling aggressively to 10 percent by 2037. The math is relentless. To meet these targets, Brazil must produce approximately 6 billion liters of Sustainable Aviation Fuel (SAF) annually by the end of the decade. This represents a massive industrial pivot that leverages the nation’s existing ethanol infrastructure, which currently processes over 650 million tons of sugarcane per harvest. For investors, the alpha lies in the Alcohol-to-Jet (AtJ) pathway, a technology that converts ethanol into synthetic kerosene, effectively decoupling the aviation industry’s reliance on Brent crude price volatility.
Quantifying the Green Premium
The economic barrier to SAF adoption has always been the price spread between fossil-based Jet A1 and renewable alternatives. As of November 19, 2025, the spot price for conventional jet fuel at the Guarulhos (GRU) hub stands at approximately $2.38 per gallon. In contrast, SAF produced via the HEFA (Hydroprocessed Esters and Fatty Acids) pathway remains priced at a staggering $5.90 per gallon. This 148 percent premium is the primary friction point for airlines like LATAM and Azul. However, the Brazilian strategy focuses on the AtJ pathway to drive costs down. By utilizing the existing 35 billion liters of ethanol production capacity, analysts suggest that domestic SAF production costs could drop to $3.80 per gallon by 2028. This would narrow the green premium significantly, making Brazilian exports the most competitive in the Atlantic basin. The data suggests a massive shift in capital expenditure. Petrobras recently announced a $1.5 billion investment in its REPAR refinery to co-process soybean oil and tallow, aiming for a 100 percent renewable feedstock stream by mid-2026.
Technical Pathways and Feedstock Wars
The battle for SAF supremacy is being fought over feedstocks. While Europe focuses on Used Cooking Oil (UCO), Brazil is leveraging its massive supply of soybean oil and sugarcane ethanol. According to the latest commodity reports, Brazil’s soybean harvest for 2025 is expected to exceed 160 million metric tons, providing a surplus that can easily be diverted to fuel production without threatening food security. The Alcohol-to-Jet pathway is the specific technological edge. Unlike HEFA, which is limited by the availability of fats and oils, AtJ can scale as long as there is fermentable sugar. Companies like Raízen have already secured ISCC CORSIA certification, allowing them to export SAF that meets the strict environmental criteria of the International Civil Aviation Organization (ICAO). The technical mechanism involves the dehydration of ethanol into ethylene, followed by oligomerization and hydrogenation to create a drop-in fuel. This fuel can be blended up to 50 percent with conventional kerosene without requiring any modifications to existing aircraft engines like the CFM LEAP or the Pratt & Whitney GTF.
Comparative Economics of Aviation Feedstocks
To understand the competitive landscape, we must look at the yield and cost metrics of various feedstocks available in the Brazilian market as of Q4 2025.
| Feedstock | Yield (Liters/Hectare) | Carbon Intensity (gCO2e/MJ) | Current Market Status |
|---|---|---|---|
| Sugarcane Ethanol | 7,000 – 8,000 | 20 – 30 | Highly Mature |
| Soybean Oil | 500 – 600 | 50 – 65 | Abundant Supply |
| Corn Ethanol | 3,500 – 4,000 | 40 – 55 | Expanding Rapidly |
| UCO (Used Cooking Oil) | N/A | 10 – 15 | Supply Constrained |
The Logistics of Decarbonization
Infrastructure is the bottleneck. The Brazilian interior is productive but disconnected. Moving ethanol from the center-west states like Mato Grosso to the coastal export terminals in Santos or Paranaguá adds significant logistical costs. In the 48 hours leading up to November 19, 2025, logistics firms have reported a 4 percent increase in rail freight rates, driven by the surging demand for energy exports. The success of the SAF mandate depends on the integration of the pipeline network. Logum Logistics is currently expanding its ethanol pipeline to connect directly to the main fuel hubs. This reduces the carbon footprint of the fuel itself, a critical factor for airlines looking to maximize their carbon credits under the CORSIA framework. The market is also watching the Brazilian Real (BRL). At 5.15 BRL to the USD, the export margins for SAF are highly attractive, but any further weakening of the currency could inflate the cost of imported catalysts and specialized refinery equipment needed for AtJ conversion plants.
The next critical milestone occurs on January 15, 2026. This is the deadline for the first round of bids for the National SAF Incentive Program, which will allocate 5 billion BRL in low-interest loans for refinery retrofits. Market participants should monitor the volume of these bids to gauge the true speed of industrial adoption. If the major players like Raízen and Vibra Energia oversubscribe the program, the 2027 mandate will not only be met but likely exceeded, positioning Brazil as the undisputed warehouse of the global green fuel market.
