Brazil's civil aviation agency Anac will launch a public consultation next week on how to calculate sustainable aviation fuel (SAF) greenhouse gas (GHG) reductions and monitor compliance under the ProBioQAV program requiring airlines to reduce domestic emissions starting in 2027. Anac will define the methodology and monitor compliance with the rules, while hydrocarbons regulator ANP will be responsible for monitoring issuance, registration and record-keeping of sustainability certificates for SAF — known as CS-SAF. Anac is suggesting that the certification carry different prices according to each production pathway's GHG reductions. Anac's governance and environment superintendent Marcelo Bernardes and technical manager for mitigation measures and energy transition Ricardo Dupont spoke to Argus about the next steps for the regulation and the outlook for Brazil's SAF market. Edited highlights follow:
How should CS-SAF trading be standardized, given the different carbon footprints of the fuel?
Dupont: CS-SAF is like a birth certificate. It is different from a carbon credit, which represents the reduction or removal of a metric tonne of CO2 from the atmosphere.
The SAF blender agent will have the right to issue the CS-SAF. Each CS-SAF corresponds to a volume of SAF with specific characteristics, emissions and life cycle. There is no common unit. There is an abatement cost.
The abatement cost per fuel will vary. If I have the same production cost for two types of SAF and one cuts emissions by 50pc and the other by 30pc, the abatement cost is different.
Operators will always seek the one with the lowest abatement cost in R/tonne of CO2 so that their compliance cost is as low as possible.
The decree assigns Anac to define the calculation methodology to verify emission reductions achieved by using SAF and other low carbon fuels or technologies. What parameters will be used and what will be the base year for measuring these reductions?
Bernardes: The CO2 reduction targets will apply to the current year. Companies will look at all their 2027 emissions and calculate to reach 1pc by using SAF or another alternative fuel. Companies will have until 31 March of the following year to submit an emissions report to Anac.
What will be the main challenges in monitoring the use of SAF, lower carbon aviation fuels (LCAF) and other alternatives, particularly regarding traceability and proof of environmental benefits?
Bernardes: In terms of safety, aviation fuel is under tight control, so that is not a concern. CS-SAF will make monitoring much easier, ensuring traceability and avoiding double counting.
It also helps that Anac has maintained an emissions inventory for 10 years. We receive air traffic control information for all flights in Brazil and know origin, destination, airline and aircraft model. That greatly facilitates inspections and allows highly reliable checks.
Anac's regulation will go to public consultation next week. The material will include fines and penalties for non compliance.
The decree splits responsibility between ANP and Anac for implementing ProBioQAV program. How will the two agencies coordinate?
Bernardes: ANP and Anac have been coordinating for quite some time. We have weekly meetings with ANP on the law, so there should be no overlap. We have spoken extensively about the certificate and how trading will work.
Is there any estimate of the regulatory and financial impact of the new requirements on airlines? Does the agency see a risk of ticket price increases?
Bernardes: SAF can cost two-to-three times more than jet kerosine. The decree was cautious in setting a gradual increase in blending, precisely to allow Brazil to develop an SAF production chain. In addition, the decree introduces other mechanisms. CS-SAFs can only be traded among airlines. There will initially be no secondary market share. The focus will be on those needing to meet the mandate.
