Brazil signs SAF mandate, adopts world's first policy-based book-and-claim system
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HIGHLIGHTS
ProBioQAV establishes SAF certification, book-and-claim mechanism
ANP, Anac given 240 days to issue implementing regulations
Government also establishes regulatory framework for CCUS
Brazil signed a decree on Aug. 12 regulating its National Sustainable Aviation Fuel Program, or ProBioQAV, establishing the rules for the country's SAF emissions-reduction mandate and creating what the government says is the world's first book-and-claim mechanism incorporated into public policy.
The SAF decree was one of four regulations signed by President Luiz Inácio Lula da Silva and Mines and Energy Minister Alexandre Silveira covering different areas of Brazil's energy transition. The other measures regulate carbon capture, utilization and storage, or CCUS, low-carbon hydrogen and the opening of the electricity market to low-voltage consumers.
The ProBioQAV regulation establishes rules covering SAF production, certification, commercialization and traceability, as well as compliance with greenhouse gas emissions-reduction targets for Brazil's domestic aviation sector.
Under Brazil's Fuel of the Future law, the targets will begin in 2027 and gradually increase to a 10% reduction in aviation emissions in 2037. Unlike a conventional volumetric blending mandate, the program establishes emissions-reduction requirements for airlines.
The decree also establishes the National Sustainable Aviation Fuel Certification Program, requiring certification of SAF produced domestically or imported into Brazil and providing for traceability of the fuel and its environmental attributes throughout the supply chain.
Brazil formalizes book-and-claim
Among the most significant provisions is the creation of the SAF Sustainability Certificate, or CS-SAF, based on a book-and-claim methodology.
The mechanism allows the environmental attribute associated with SAF to be traded separately from the physical fuel, potentially allowing SAF to be supplied where logistics and production economics are most favorable while its emissions-reduction attributes are transferred to another participant.
According to the government, the mechanism is designed to improve SAF's logistical viability, facilitate its use across Brazilian airports and provide a system for registering, tracing and verifying emissions reductions. Brazil will become the first country to adopt book-and-claim as the basis of a public policy for the sector, the Mines and Energy Ministry said.
The announcement confirms comments made earlier on Aug. 12 by Laís Forti Thomaz, chief of staff of the Ministry of Mines and Energy's National Secretariat for Petroleum, Natural Gas and Biofuels, during an energy industry event in São Paulo state.
"We are going to be the first country to have book-and-claim in a normative act," Thomaz said. "That is already settled; we managed to include it in the decree."
Thomaz also said the government was working with the Finance Ministry to establish a dedicated Mercosur Common Nomenclature, or NCM, classification for SAF, while participating in international discussions aimed at "greening the Harmonized System."
"SAF has to have differentiated tax treatment because it uses renewable biomass, and it has to receive that differentiation internationally as well," she said.
Brazil's oil regulator, ANP, and civil aviation regulator, Anac, will have 240 days to issue the complementary rules necessary to make ProBioQAV operational.
The government estimates Brazilian SAF production could reach 2.1 billion liters/year by 2030 and 3.6 billion liters/year by 2035. ProBioQAV alone could avoid more than 8 million metric tons of CO2 emissions over 10 years, while total SAF production could eventually reduce emissions by as much as 7.4 million metric tons/year, according to the Mines and Energy Ministry.
CCUS framework advances
A separate decree signed on Aug. 12 establishes conditions for carbon capture, pipeline transportation and geological storage activities in Brazil, regulating provisions of the 2024 Fuel of the Future law and creating a regulatory framework for CCS and CCUS projects.
The framework places the ANP in charge of authorizing activities through two stages: research and evaluation of potential storage areas, followed by operations. It also establishes requirements covering monitoring and the closure of storage projects.
The Mines and Energy Ministry, with support from state-owned energy research company EPE, will also develop a national infrastructure plan identifying and guiding the development of carbon capture, transportation and geological storage areas. The plan will be reviewed every two years.
The regulation encourages infrastructure sharing between projects through open-access, transparency and non-discrimination provisions, potentially supporting the development of multi-user CCUS hubs.
It also recognizes different carbon capture and storage technologies and requires operators to demonstrate the stability of stored CO2 before a project can be formally closed. Monitoring must continue for at least 20 years.
The CCUS framework could have particular relevance for Brazil's biofuels industry as producers explore carbon capture as an additional pathway to reduce the lifecycle carbon intensity of renewable fuels.
The government also signed regulations implementing Brazil's low-carbon hydrogen policy and opening the free electricity market to low-voltage consumers.
Separately, Brazil was confirmed this week as co-chair of the Council of the Global Biofuels Alliance alongside India. Brazil will also join Italy and Kenya on the organization's Executive Committee. The GBA, founded in 2023, comprises 34 countries and 14 international organizations and aims to expand biofuel production and consumption, market development, technical cooperation and sustainability initiatives.
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Authors: Gabriela Brumatti gabriela.brumatti@spglobal.com | Vinicius Damazio vinicius.damazio@spglobal.com | Monique Murer monique.murer@spglobal.com | Ana Paula Candil ana.candil@spglobal.com
Editor: Marieke Alsguth | marieke.alsguth@spglobal.com
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