Brazil is poised to become a pioneer in the commercial-scale production of renewable diesel from ethanol, as JetBio plans to deploy new technology at its $2 billion biofuels plant in São Paulo state.
The technology, developed by Honeywell UOP and licensed to JetBio, will allow the company to produce either renewable diesel or sustainable aviation fuel (SAF) at the same facility, potentially creating a major new source of demand for Brazil’s expanding ethanol industry.
The plant, located in Paulínia municipality, was announced in May as the world’s largest SAF production facility by capacity.
The ability to manufacture renewable diesel could help address one of the industry’s biggest concerns: ethanol supply growth outpacing demand in the coming years, putting pressure on prices.
For JetBio, the additional product also reduces commercial uncertainty surrounding the project.
“This is extremely important for JetBio, but it’s also extremely important for the Brazilian ethanol industry,” Chief Executive Officer William Moore said in an interview with The AgriBiz.
“Continued production growth without new markets will create problems for the ethanol industry and agribusiness,” he said.
Renewable diesel could absorb growing ethanol supplies while demand for SAF and other advanced fuels develops.
Funding
JetBio is currently advancing financing negotiations for the $2 billion project. Moore, who has been visiting Brazil roughly every two weeks, said half the investment would be funded through debt from Brazilian and international commercial banks and development lenders.
That includes BNDES, Brazil’s national development bank, which has indicated it could provide $500 million in financing, according to Moore.
He said BNDES has been supportive of the project and wants to make a commitment before the end of 2026.
The remaining $1 billion is expected to come from Summit Agricultural Group, JetBio’s controlling shareholder and the largest shareholder of FS, one of Brazil’s biggest ethanol producers.
Diesel or SAF?
Construction of the JetBio plant is expected to begin in 2027, with production scheduled to start in 2030.
The facility will be able to switch its entire production capacity between renewable diesel and SAF, depending on market demand and the structure of its offtake agreements.
“We can produce 100% SAF or 100% renewable diesel, depending on how we structure our offtake agreements. It’s exactly the same plant,” Moore said.
Renewable diesel offers a significant advantage over SAF: a much larger and more established market.
According to Moore, the global diesel market is five times the size of the aviation fuel market, with demand concentrated in hard-to-decarbonize industries including shipping, mining, heavy manufacturing, power generation, agriculture and heavy-duty trucking.
These industries could use renewable diesel without modifying existing engines or blending it with fossil diesel.
Moore said the fuel would cost somewhat more than conventional diesel but would allow companies to extend the useful lives of ships, vehicle fleets and mining equipment rather than replace them with expensive lower-emission alternatives.
Renewable diesel has the same molecular structure as conventional diesel, according to Moore, but can reduce greenhouse gas emissions by at least 65%.
The reduction could reach 95%, depending on the ethanol feedstock and the heat source used during production.
The fuel differs from conventional biodiesel, which is typically made from soybean oil, animal fats and other feedstocks.
Its molecular structure is similar to hydrotreated vegetable oil (HVO), commonly known as renewable or green diesel, which is produced from vegetable oils and other fats.
JetBio’s process, however, will use ethanol as its feedstock. Moore said renewable diesel had not previously been produced from ethanol.
Production Costs
Another advantage of renewable diesel over SAF is greater flexibility in ethanol sourcing.
According to Moore, renewable diesel certification systems and regulations are more accommodating of conventional ethanol as a feedstock, while SAF faces tighter restrictions.
That would allow JetBio to purchase a wider range of Brazilian ethanol without paying significant premiums for fuel made from waste materials or intermediate crops.
The broader range of eligible feedstocks should make renewable diesel cheaper to produce than SAF.
Moore said JetBio’s product would be competitive with fossil diesel at current prices, although he added that today’s diesel price levels would not last indefinitely.
Renewable diesel is generally expected to remain more expensive than conventional diesel, with costs depending on the ethanol used and the carbon-intensity target for the finished fuel.
An ideal outcome, according to Moore, would be to achieve a production cost equivalent to twice that of fossil diesel.
“I would say we can be competitive,” he said.
FS to Source 1.8B Liters of Ethanol
JetBio expects to consume 1.8 billion liters (476 million U.S. gallons) of ethanol annually, making it Brazil’s largest individual ethanol buyer. The amount represents roughly 15% of Brazil’s corn-ethanol adittional capacity seen through 2030.
FS will be responsible for sourcing the entire volume, although only part of the supply will come from its own production.
The company, which already operates an ethanol trading business, will purchase fuel from third-party producers and supply it to JetBio alongside ethanol produced at its own facilities.
Moore said obtaining competitively priced ethanol with a favorable carbon-intensity score would be critical to the project’s economics — ethanol accounts for 85% of JetBio’s total cost structure.
JetBio has already held preliminary discussions with Brazilian ethanol producers to secure supplies, but FS is expected to take over those negotiations soon.
The company is also in talks with potential buyers of renewable diesel and SAF, although Moore said it would not sign offtake agreements until it had greater visibility into production costs.
Some SAF developers begin by securing purchase commitments and only afterward seek financing to develop their projects, Moore said.
He argued that such an approach can create financial problems if developers eventually discover that agreed selling prices are insufficient to cover actual production costs.
JetBio and Summit Agricultural Group are taking a different approach, investing upfront in site selection, engineering, team development and other preparatory work.
The company expects to reach a final investment decision in March 2027.
Offtake agreements will be the last major component of that process, after JetBio determines its capital requirements, expected returns, production costs and feedstock economics.
Moore said the company is now approaching the point where it can begin serious commercial negotiations with potential buyers.
80% Exported
JetBio expects to export about 80% of the plant’s output, meeting the requirements of Brazil’s Export Processing Zone (ZPE) regime, which offers tax benefits and for which the company is seeking approval.
For Brazil’s ethanol industry, the project could provide a significant new outlet for production as domestic capacity expands.
The ability to switch between renewable diesel and SAF would also give JetBio flexibility to respond to changes in global demand for lower-carbon transportation fuels.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
