A study by mckinsey consultancy on renewable consumption by 2050 points out that growth in the share of sustainable fuels in transport energy demand can reach 7% and 37%, depending on levels of climate ambition among countries.

In all scenarios, analysts expect sustainable fuels -- with emphasis on green diesel (HVO), bioethanol and synthetic fuels (which don't use biomass) -- to play an increasingly important role in the transportation segment, including hard-to-decarbonize sectors such as aviation.

According to the survey, growth in demand by 2035 will be driven mainly by road transport, reaching 290 million tons in the most ambitious scenario, while aviation plays an increasingly important role from then on.

In the short term, they will help countries meet their greenhouse gas (GHG) emissions reduction targets, while electrification rushes to gain larger slices of the market.

"Even in a world with rapid absorption of electric vehicles -- where they account for about 75 percent of total vehicle sales by 2030 -- achieving regulatory ghg reduction targets for transportation may require a significant contribution from sustainable fuels," the study says.

While in the light segment the acceptance of battery electric vehicles (BEVs) is increasingly strong, in heavy transport, such as trucks and buses, electrification should still take time to gain scale.

"Before electrification is completed, meeting GHG reduction targets in most countries will require the use of sustainable (both bio-based and synthetic) fuels directly in existing fleets," mckinsey experts added.

Boost in aviation

Sustainable fuels —APS' -- mixed with fossil kerosene in conventional engines may be the only viable option for limiting GHG emissions.

"The limitations of aircraft design restrict the decarbonization potential of alternative propulsion technologies such as electric battery and hydrogen."

No for nothing, the SAF has increasingly mobilized investments and appeared in commitments of the air sector.

French aircraft manufacturer Airbus has already begun to take off its first aircraft capable of using 100% sustainable fuel.

The U.S. company Boeing signed an agreement earlier this year with EPIC Fuels to acquire 7.5 million liters of SAF produced from inedible agricultural waste, to be mixed in the percentage of 30% with conventional aviation fuel.

And The Brazilian Embraer announced this week the intention to develop the SAF production chain with Raízen.

In addition to aircraft manufacturers, airlines such as Latam and GOL see sustainable fuels as the most viable solution to decarbonize their operations.

Investments gain strength

With a potential market of $40 billion to $50 billion of investment (of which about 70% are already post-final investment decisions), projected capacity by 2025 is 46 million tons.

However, more investments of between $1 trillion and $1.4 trillion are needed by 2040 to meet decarbonization commitments and regulated demand, McKinsey warns.

"In the coming decades, business plans may need to consider integrated production logic with volumes shifting from road to aviation, where production profitability is designed to depend on the balance between supply and demand, raw material availability and consumer attractiveness," he adds.

In Brazil, everything is uncertain

Government and Congress have not yet been able to define a policy for the insertion of green diesel and SAF in the matrix, and the signs of the management of Jair Bolsonaro to the market are that, in doubt, whenever tightening, the first to lose is decarbonization.

In the case of biofuels, it started with biodiesel, which to alleviate the impact on the price of diesel - now more expensive than gasoline - had its mandate reduced. It's supposed to be at 14%, that's 10%.

Now you can reach RenovaBio, the National Biofuels Policy. Last Friday, the Ministry of Mines and Energy published a note with a recommendation from the committee that takes care of RenovaBio to postpone the fulfillment of environmental targets by fuel distributors.

The recommendation was motivated by the price of CBIO, a title that distributors need to acquire on the stock exchange to offset their emissions, which reached a record of R$ 200 in recent weeks. After the release of the note, the value plummeted to R$ 123 on Tuesday (19/7). CNN

The decision has not yet been taken, it needs to go through the National Energy Policy Council (CNPE). But it has already sparked an alert in the biofuels sector, which points to risks to the credibility of the national carbon market and legal uncertainty.

"A rule change in the middle of processes is never appropriate. This does not match the liberal economy, with respect for predictability and with legally consolidated situations. But we need to understand the rationale behind that note. At first it doesn't seem to make any sense and it doesn't have any legal viability in this regard," says Evandro Gussi, president of Unica (ethanol industry association).

"Much more than legal uncertainty, it seems to have a governance instability of the program and that's a bad sign. It shows negative signals to the biofuels industry that organizes its investments, among other factors, based on the expectations of the decree [which regulates RenovaBio's goals]," explains lawyer Isabela Morbach, from Manesco Advogados.

Still about SAF

Mercedes announced on Wednesday (20/7) that it will invest in sustainable aviation fuel as part of efforts to reduce carbon emissions and become carbon neutral by 2030. With the announcement, the German automaker becomes the first sports team in the world to commit to SAF.

The commitment targets scope 3 (indirect) emissions. The German automaker expects to reduce nearly 50% in the carbon footprint of air travel made by employees during the Formula 1 season, which has 22 races on different continents, such as Europe, Asia, the Americas and Oceania.

Source: epbr