Brazil SAF decree risks isolating a multibillion-dollar export opportunity

Why it matters: Brazil holds natural advantages in SAF production (low-carbon ethanol, degraded land for energy crops, established agribusiness logistics), yet the decree that should accelerate the sector appears designed almost exclusively for the domestic market. If the CS-SAF certificate fails to gain recognition under ICAO’s Corsia framework, producers may find that their environmental attributes are worth far less abroad than at home, precisely when global mandatory demand begins to ramp up.

What changes for Brazilian airlines and producers

For airlines operating domestic routes (GOL, Azul, LATAM on cabotage), the decree offers flexibility: they can comply by purchasing physical SAF or by acquiring CS-SAF certificates, which decouple the molecule from its sustainability attribute. In a country where SAF infrastructure at airports is virtually nonexistent, book and claim is a practical necessity. But the certificate’s value depends on scarcity and regulatory rigor. If the domestic target stays at 1% until 2027 and available supply far exceeds that threshold, certificate prices could start low, offering limited revenue incentive for producers to prioritize the Brazilian market.

For SAF producers (companies building HEFA plants from oils and fats, or AtJ facilities converting ethanol), the real margin sits in exports. With projected capacity exceeding 5 billion liters and domestic demand near 1.1 billion liters at the 10% mark, the surplus is massive. The problem is that the CS-SAF was not designed with Corsia eligibility as a guiding principle. Corsia demands strict criteria on additionality, lifecycle emissions accounting, and land-use change risk. A domestically oriented certificate that does not meet those thresholds cannot be traded internationally, which means producers would need to seek separate certification for export volumes, adding cost and complexity.

What remains undecided

Several critical questions are still open. First, ANP (Brazil’s petroleum regulator) must define the detailed methodology for lifecycle emissions accounting under the CS-SAF. Whether soy oil qualifies as a feedstock domestically is one matter; under Corsia and the EU’s ReFuelEU framework, soy-based SAF faces high indirect land-use change (ILUC) penalties that could disqualify it. The decree does not resolve this tension. Second, macauba (a native palm with potential for cultivation on degraded land) is cited as a promising feedstock, but no commercial-scale plantation exists yet. Its role depends on agronomic proof that has not arrived. Third, the interoperability between CS-SAF and Corsia-eligible emission units has no defined pathway. Without a bilateral or multilateral recognition mechanism, Brazilian certificates remain a domestic instrument.

There is also the question of timing. Corsia’s mandatory compliance phase begins in 2027 for participating states. If Brazil’s certificate system is not interoperable by then, the window to capture early-mover value in the global SAF attribute market narrows considerably.

Who gains and who loses

Ethanol producers with AtJ ambitions (Raizen and others in the sugarcane and corn ethanol chain) stand to gain if the export pathway is secured, because Brazilian sugarcane ethanol carries one of the lowest carbon intensities globally. Corn ethanol from second-crop (safrinha) production, when paired with clean energy and traceable practices, also has a competitive profile. These producers lose if the regulatory framework traps their environmental attributes inside a domestic market too small to absorb them at premium prices.

Airlines benefit in the short term from low-cost compliance via certificates, but face reputational risk if the domestic system is perceived internationally as lacking integrity. Foreign carriers flying into Brazil under Corsia rules would not necessarily accept CS-SAF as equivalent, creating a two-tier market.

Soy oil processors may see a temporary domestic opening, but their feedstock faces structural barriers to international acceptance. Developers betting on macauba or other novel feedstocks need the regulatory clarity that the decree has not yet provided.

The core tension is straightforward: Brazil built a domestic compliance tool when it needed an export-grade instrument. Fixing that requires aligning CS-SAF methodology with Corsia criteria before mandatory global demand absorbs available supply from competitors in the US, EU, and Southeast Asia.

via Reset