Carbon capture hub could serve ethanol industry

Company seeks ANP approval to test underground CO2 injection in São Paulo using emissions from sugar-and-ethanol mills

 

 

 

Renan Lopes, chief financial officer (left); Tiago Homem, technology director; and Daniel Pedroso, CEO of EnduraCarbon — Foto: Leo Pinheiro/Valor
Renan Lopes, chief financial officer (left); Tiago Homem, technology director; and Daniel Pedroso, CEO of EnduraCarbon — Photo: Leo Pinheiro/Valor

A company founded by former Petrobras and biofuel industry executives has asked the National Agency of Petroleum, Natural Gas and Biofuels (ANP) for authorization to test a project in west-central São Paulo that would capture and store underground the carbon dioxide emitted by the region’s ethanol plants. EnduraCarbon, founded a year ago, plans to capture the CO2 and inject it permanently underground, generating carbon removal credits for companies seeking to offset their greenhouse gas emissions.

The project became possible with the signing of Decree 13095 of 2026 on August 13, which regulates several types of carbon capture, transportation, and storage (CCS) activities provided for under the Fuel of the Future Law.

The decree made the ANP responsible for authorizing projects and regulating the sector. Under the rules, EnduraCarbon’s project falls under bioenergy with carbon capture and storage (BECCS), which uses carbon generated through bioenergy processing or biofuel production.

EnduraCarbon plans to develop a hub with underground carbon injection wells that would receive liquefied CO2 emitted by different mills. Ethanol plants currently release the CO2 generated during fermentation into the atmosphere. Those with biomethane facilities also emit CO2 from the biogas purification process, which separates methane from carbon dioxide.

Calculations by EnduraCarbon’s partners indicate that the hub would require an investment of R$1.5 billion if testing confirms its viability. It could store 1 million tonnes of carbon dioxide a year.

The company spent the past year developing the project and its business model while monitoring CCS technology regulation, CEO Daniel Pedroso said. One of the company’s five partners, Pedroso built his career at the ANP and Petrobras. At the oil company, he held several management positions and most recently headed its CCS operations before leaving with Tiago Homem, now an EnduraCarbon partner and director of projects and technology.

Since founding the company, the partners have studied historical geological and seismic data, including information from wells drilled in the rural areas of São Paulo state by Petrobras and Paulipetro since the 1960s. Their goal was to assess the possibility of injecting gas into saline reservoirs in the state.

“We have been studying the Paraná Basin for CCS opportunities. We saw potential in the bioenergy industry, where we could contribute our expertise,” Pedroso said. The company’s research concluded that the broader Bauru region offers the best conditions for a project of this scale because of both its geology and its proximity to several ethanol plants in São Paulo.

EnduraCarbon has already signed an agreement with Usina São Manoel, located in the municipality of São Manuel, São Paulo, under which the mill will supply the project with CO2 and electricity cogenerated by burning sugarcane biomass.

“Ethanol plants generate biogenic carbon [with a short atmospheric cycle] through ethanol fermentation. There is also a wave of investment [by ethanol plants] in biomethane, which generates additional carbon dioxide,” explained Renan Santos, a former GranBio vice president who is now an EnduraCarbon partner and chief financial officer. The company’s other partners include geologist Renato Darros de Matos, formerly of Petrobras, and Alexsander Costa, formerly of GranBio.

Only one BECCS project is currently under construction worldwide: a project operated by corn ethanol producer FS in Lucas do Rio Verde, Mato Grosso. Scheduled to begin operating in September, the FS project will store carbon emitted by the company’s own plant and account for the removed carbon in the biofuel’s emissions footprint. This will allow FS ethanol to capture more carbon than it emits over its life cycle.

EnduraCarbon’s project is not tied to a single company. Because the hub will not be physically connected to the mills, the carbon will have to be transported there. The plan is to use trucks powered by biomethane, a biofuel with a much smaller carbon footprint than diesel, which the partner mills could supply themselves.

The company also plans to install and operate carbon dioxide liquefaction units at the mills. These units could use electricity cogenerated from sugarcane bagasse to power the liquefaction process, Pedroso explained.

“The project was designed to achieve scale and economic viability. We began talking with mills, and an opportunity emerged for a commercially viable project aligned with major CCS projects worldwide,” the chief financial officer added.

Once the ANP authorizes the studies, EnduraCarbon will have three years to drill wells and conduct testing. If the research confirms that the operation is viable and safe, the company will apply to the ANP for storage authorization. Under the law, companies may operate carbon injection wells for 30 years, with the option of a 30-year extension.

According to Pedroso, the carbon credit market is expected to develop in the coming years as demand grows among technology companies and data centers, allowing credits to be sold under long-term contracts.

Market participants are concerned about how internationally transferred mitigation outcomes (ITMOs)—certificates equivalent to carbon credits that can be exported—will be regulated. The federal government is considering limits on export volumes to ensure an adequate supply of carbon credits for meeting national targets.

Santos said ITMO exports could attract foreign capital. “Because [BECCS] generates an engineered carbon credit [using technology], it is capital-intensive,” he said. According to Santos, the company is in talks with “institutional investors and large companies interested in advancing the climate agenda.”

*By Camila Souza Ramos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil’s debt climbs as state-run firms post record deficit

Gross debt reaches 82.5% of GDP, highest since 2021, while federal companies’ shortfall widens nearly 50% through July

 

 

Tiago Sbaderlotto — Foto: Wenderson Araujo/Valor
Tiago Sbaderlotto — Photo: Wenderson Araujo/Valor

Brazil’s general government gross debt, the main gauge of the country’s public debt burden, rose to 82.51% of gross domestic product in July, Central Bank data released Aug. 31 showed. It was the highest level since April 2021, when the ratio stood at 82.62%.

The debt-to-GDP ratio has risen 10.8 percentage points during President Luiz Inácio Lula da Silva’s third term. Lula is a member of the Workers’ Party (PT).

General government gross debt comprises the federal government, the National Social Security Institute (INSS) and regional governments. The ratio rose 0.6 percentage point in July, marking the seventh consecutive monthly increase. In nominal terms, gross debt reached R$10.9 trillion.

Debt drivers

The Central Bank attributed the increase mainly to nominal interest expenses, which added 0.8 percentage point to the ratio, and net debt issuance, which contributed another 0.2 point. Growth in nominal GDP partly offset the increase, reducing the ratio by 0.5 point.

The consolidated public sector — comprising the federal government, states, municipalities and state-owned companies — spent R$99 billion on debt interest in July.

Over the 12 months through July, nominal interest expenses reached R$1.15 trillion, equivalent to 8.67% of GDP. That was up from R$941.2 billion, or 7% of GDP, in the 12 months through July 2025.

Fiscal outlook

Goldman Sachs economist Alberto Ramos said in a report that debt is likely to continue rising given the Lula administration’s “expansionary fiscal stance.”

“The lack of spending control has severely undermined the credibility of the fiscal targets and contributed to an overheated and excessively indebted economy. In addition, a weak fiscal anchor has raised fiscal risk premiums, resulting in the de-anchoring of short- and medium-term inflation expectations,” Ramos said.

Rafael Rondinelli, an economist at MAG Investimentos, said the 10.8-percentage-point increase in the debt ratio under Lula reflects the “sharp increase in spending and the resulting need to keep interest rates at elevated levels.”

Brazil’s Selic base interest rate currently stands at 14%.

Banco Pine projects gross debt will rise to 83.3% of GDP by December 2026 and 87.9% by December 2027.

Gross debt has increased 3.9 percentage points so far in 2026.

State-owned companies

Brazil’s federal state-owned companies posted a record R$8.27 billion deficit from January through July, Central Bank data also released Aug. 31 showed. It was the largest nominal shortfall for the period since the series began in 2002.

The deficit widened 49.8% from R$5.52 billion in the same period of 2025. The Central Bank figures exclude oil giant Petrobras and state-controlled financial institutions such as Banco do Brasil and Caixa Econômica Federal.

Economists see the measure as an important gauge of how state-owned companies affect the public finances.

XP Investimentos economist Tiago Sbaderlotto expects state-owned companies at the federal, state and municipal levels to post a combined deficit of R$10.2 billion in 2026, equivalent to 0.1% of GDP, mainly “due to the performance of [Brazil’s postal service] Correios.” That would be the largest deficit in the Central Bank series.

Sbaderlotto estimates federal companies will account for roughly R$8.2 billion of the shortfall, with state and municipal companies contributing the remaining R$2 billion. XP therefore projects a primary deficit of R$48.2 billion, or 0.4% of GDP, for the consolidated public sector.

“The results of state-owned companies show a similar trend to previous years, with the deficit worsening as a result of a policy of higher spending. Correios is undoubtedly the state-owned company that causes the greatest concern, but we could see problems at other companies in the near future,” Sbaderlotto said.

Gabriel Uarian, chief analyst at Cultura Capital, said “the concentration of the shortfall, particularly at Correios, points to management weaknesses and increases the risk that new capital injections or government guarantees will be needed, putting pressure on the public finances and reducing fiscal room for maneuver.”

Correios losses

Correios posted a net loss of R$5.55 billion in the first half of this year as the postal service undergoes a financial and operational restructuring.

Last year, the company raised R$12 billion in loans from five financial institutions backed by federal government guarantees. The government’s 2027 annual budget proposal, submitted Monday, provides for a R$6 billion federal capital injection into the company.

As a share of GDP, the deficit at federal state-owned companies reached 0.11% in the first seven months of the year, the highest level since 2009, when it stood at 0.12%, with a R$2.13 billion shortfall.

Energy sector

Sara Paixão, a macroeconomics analyst at InvestSmart XP, also highlighted the financial condition of federally controlled energy companies, particularly Eletronuclear, which is facing difficulties related to construction of the Angra 3 nuclear power plant.

Still, Paixão said it is “important to emphasize that a significant portion of the state-owned companies reporting negative results perform strategic functions for the country.”

The Ministry of Management and Innovation in Public Services, Correios and Eletronuclear were contacted for comment but did not respond.

(Estevão Taiar contributed reporting.)

* By Hamilton Ferrari — Brasília

Source: Valor International

https://valorinternational.globo.com/

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