By Brazil Stock Guide – As Brazil looks to align its fuel markets with global decarbonization trends, sustainable aviation fuel (SAF) has emerged as a central pillar of its long-term strategy. The CNPE studies position SAF not only as an environmental solution, but as a potential industrial opportunity — though one still constrained by economics, scale and regulatory uncertainty.
SAF is seen as the most viable short- to medium-term pathway to reduce emissions in aviation, particularly because it is a “drop-in” fuel — meaning it can be used in existing aircraft and infrastructure without requiring major modifications. Depending on feedstock and production pathways, SAF can reduce lifecycle CO₂ emissions by up to 80% compared to conventional jet fuel.
Yet the economic reality remains a major obstacle. Current SAF production costs are estimated to be two to three times higher than traditional aviation fuel, making large-scale adoption dependent on policy support, incentives and demand mandates.
Emerging ecosystem
Brazil enters the SAF race with structural advantages.
The country has a well-established biofuels industry, abundant feedstock availability — including sugarcane, soybean oil and waste-based inputs — and integrated energy players capable of scaling production.
Companies such as Raízen (RAIZ4), a joint venture between Cosan (CSAN3) and Shell, and Acelen, backed by Mubadala, are exploring SAF production pathways leveraging existing refining and bioenergy assets. Petrobras (PETR3; PETR4) has also signaled interest in low-carbon fuels as part of its broader energy transition strategy.
On the demand side, airlines including LATAM Airlines, Gol (GOLL4) and Azul (AZUL4) are expected to play a central role, as global aviation commitments increasingly require carriers to reduce emissions intensity.
Structural challenges
Despite these advantages, the CNPE reports highlight a series of barriers to SAF development:
- high production costs relative to fossil jet fuel
- lack of large-scale production facilities
- uncertainty around long-term demand signals
- absence of a fully defined regulatory framework
- need for certification and international alignment
These constraints create a classic “chicken-and-egg” problem: producers need guaranteed demand to invest, while airlines need affordable supply to commit to long-term offtake agreements.
Policy design as a catalyst
The reports emphasize that SAF will not scale organically — at least not in the near term.
Key proposals include:
- introduction of blending mandates over time
- fiscal incentives for SAF production and investment
- development of certification frameworks aligned with global standards
- integration with Brazil’s broader biofuels policy ecosystem
- support for pilot projects and early-stage production
One example already cited is the Refinaria Riograndense, which produced an experimental SAF batch in 2024, signaling early technical viability but still far from commercial scale.
Market implications
For energy companies, SAF represents both an opportunity and a risk.
Players such as Raízen (RAIZ4) and Acelen could leverage existing assets to enter a high-growth segment, potentially capturing value as global demand expands. However, capital intensity and uncertain returns remain key challenges.
For Petrobras (PETR3; PETR4), SAF could become part of a broader repositioning strategy, balancing its legacy oil business with new energy initiatives.
For airlines, the equation is more complex. While SAF is essential for meeting environmental targets, higher fuel costs could pressure margins unless supported by policy mechanisms or passed on to consumers.
Global context
Brazil’s SAF strategy is also shaped by international developments.
Regions such as the European Union and the United States are moving ahead with mandates and subsidies, creating a global market that could influence pricing, investment flows and trade dynamics.
In this context, Brazil faces a strategic choice: move early and position itself as a competitive SAF producer, or risk lagging behind more aggressive policy frameworks.
Execution risk
As with other segments in the CNPE studies, the challenge is not identifying the solution — but implementing it.
SAF requires coordination across multiple stakeholders, including regulators, producers, airlines and investors. It also requires long-term policy stability, something that can be difficult to sustain in volatile political environments.
What comes next
SAF sits at the intersection of energy policy, industrial strategy and climate commitments.
If Brazil succeeds in building a competitive SAF market, it could unlock a new growth frontier in its energy sector. If not, the country risks remaining a price taker in a global market shaped by others.
This is Part 4 of the series “Brazil’s Fuel Reset.”
Next: maritime fuels — where infrastructure, regulation and global trade define the path to decarbonization.
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