The work underway in the National Congress of Brazil highlights the prioritization of CCUS as part of the country’s efforts to decarbonize the economy. The development and implementation of multiple programs, including subsidies, stipulated by the current draft legislation will be critical to enabling CCUS and BECCS projects. Once in place, the legislative framework is expected to pave the way for cutting emissions from the industrial sector, which accounts for 6% of total GHG emissions in Brazil. In addition, the framework is expected to create new opportunities for biofuel producers to improve the carbon intensity of their products by capturing and sequestering associated CO2 emissions.  

Draft legislation: Everything, everywhere, all at once 

The proposed legislative package will likely lay the foundation for the application of carbon capture and storage technologies across multiple sectors and enable further regulatory developments in different directions at the same time. In addition to the flagship Bill 1425/2022 that would establish the CCUS framework in Brazil, the national legislature is considering other bills that would create opportunities for investment in CCS in biofuel and hydrogen sectors. 

• Bill 528/2020 - Low-Carbon Mobility. The proposal would establish the National Sustainable Aviation Fuel Program (ProBioQAV), the National Green Diesel Program (PNDV) and the National Decarbonization Program for Natural Gas Producers and Importers and Biomethane Incentives. Coupled with the CCUS bill, the legislation could facilitate emission reductions in the country’s biofuel industry through the deployment of BECCS that could further bolster its international competitiveness.  In April, Brazilian player Raízen SA made its first shipment of sugarcane ethanol (estimated to have life-cycle emissions almost three times lower than those of corn ethanol from the U.S.) to LanzaJet Inc.’s plant in Georgia (United States) that would be converted into sustainable aviation fuel (SAF). Separately, FS Agrisolutions recently confirmed the technical viability of a CO2 capture project at its corn ethanol plant in Mato Grosso. When required regulations are approved, the project would be able to capture 423 thousand metric tons of CO2 per year over a 30-year period, allowing the company to produce carbon-negative ethanol. 

• Bill 5816/2023 - Hydrogen Production. The draft would establish the Low-Carbon Hydrogen Development Program and provide for the introduction of subsidies that would be available for a period of 10 years (from the date of enactment) to promote the production of low-carbon hydrogen. In addition, the proposed legislation would allow the production of renewable hydrogen from biomass. This hydrogen production route – biomass gasification with CCS – has carbon-dioxide removal (CDR) potential, with emissions estimated between –17.50 and –11.66 kgCO2/kgH2. 

• Bill 182/2024 - Carbon market. The proposal would create the Brazilian GHG Emissions Trading System (Sistema Brasileiro de Comércio de Emissões de Gases de Efeito Estufa – SBCE), requiring companies to buy carbon credits to cover emissions. The threshold would be set at 25,000 metric tons of CO2e per year, while the operators of all facilities emitting over 10,000 metric tons of CO2e per year would be required to report emissions. Domestic players would be allowed to sell carbon credits in the international market under the Article 6.4 mechanism, subject to approval by the Brazilian market regulator. 

The potential passage of the proposed legislation is expected to create long-term certainty for the developers of CCUS and BECCS projects. Meanwhile, the government and regulators will need to ensure timely adoption of implementing regulations and the launch of relevant programs to facilitate project development. 

Standardization: industry best practices 

In March 2024, the Brazilian Technical Standards Association (Associação Brasileira de Normas Técnicas - ABNT) launched, as recommended practices, standards ABNT ISO 27914 for CO2 geologic storage and ABNT ISO 27916 for Enhanced Oil Recovery (EOR) using CO2 geologic storage. In addition to the technical aspects of CCUS projects, the standards include requirements and recommendation for the the development of management systems, engagement with the community and other stakeholders, risk assessment process, risk management and communication of risks. 

The approval of the recommended practices is expected to guide regulatory developments at the national and local levels and bolster the sector’s investment attractiveness by providing more clarity and certainty. 

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Decarbonization: a policy priority 

In early 2024, the Brazilian government approved the 2024-26 Action Plan “New Industry Brazil (Nova Indústria Brasil – NIB), which also outlines the development of CCS and BECCS among key priorities (along with low-carbon hydrogen). A total of R$700 million (USD130 million) is allocated for innovations to promote industrial decarbonization and bioenergy production. In May, the Ministry of Development, Industry Trade and Services (Ministério do Desenvolvimento, Indústria, Comércio e Serviços - MDIC) established the Working Group on the Sectoral Plan to Mitigate GHG Emissions (Industry). The group is expected to present its findings to the Ministry of Environment and Climate Change (Ministério de Meio Ambiente e Mudança do Clima – MMA) before November, which would inform the country’s updated climate action plan scheduled for 2025. The potential inclusion of CCUS/BECCS in the plan will likely ensure policy continuity and highlight the government’s long-term commitment to advancing the technology in Brazil. 

Sector’s estimated potential 

Although the Brazilian government has not issued any official forecasts about the development of engineered carbon removals or their role in achieving climate commitments, there are several important projections that demonstrate the potential scale of the industry’s capabilities in Brazil.  

According to CCS Brazil, a non-profit organization focused on promoting CCS, the country can capture over 190 million metric tons of CO2 per year, requiring significant storage capacity. Separately, the Brazilian Center for International Relations (Centro Brasileiro de Relações Internacionais – CEBRI), in its Neutralidade de cabono até 2050 report, launched in 2023, outlined two scenarios considering BECCS capabilities of 274 Mt CO2 and 369 Mt CO2 in 2050.More recently, Shell presented its own scenario with an annual estimate of Brazil’s carbon storage potential. The Brazil:Leading the world to net-zero emissions report projects that by the 2040s, Brazil could store 100 Mt CO2 per year from DACCS, BECCS and industrial sources, which would allow the country to achieve negative emissions before 2050. 

Still, there is a lack of data about Brazil’s geological carbon sequestration capacity, and the government could be required to allocate budget funds for research programs to improve the understanding of the country’s storage potential and compare it with the projected capture capabilities.

Despite continued policy and regulatory advancements, additional efforts will be likely required to remove existing obstacles to large-scale CCUS deployment in Brazil. Most importantly, the government will likely need to create incentives and/or offer state funding to facilitate the buildout of CO2 transport infrastructure, especially for connecting emission sources with potential offshore carbon sequestration sites. At the end of 2023, Petrobras, Brazil’s national oil company (NOC), indicated its interest in transporting and storing emissions from the bioenergy industry. Given the NOC’s experience in CO2 injection for EOR operations, it could become a driving force behind the advancement of carbon dioxide pipeline and storage infrastructure. 

This article is also published on the authour's blog.