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Partnership between government, university, and companies aims to capture the gas released in ethanol production and evaluate its permanent storage in deep geological formations
São Paulo took the first step to develop the first Brazilian pilot unit for capturing and storing carbon from sugarcane ethanol production. The initiative seeks to prevent part of the carbon dioxide released during fermentation from being directly released into the atmosphere.
According to FAPESP Agency, the project was announced on June 10, 2026, during an Environment Week event, with the signing of the agreement that created the Center for Technologies for Biogenic Carbon Capture and Storage, called CTCCSBio. The total estimated investment is R$ 30 million over five years.
The center will be headquartered at the Polytechnic School of the University of São Paulo and will bring together the São Paulo government, researchers, and representatives of the productive sector. Participants include the Secretariat of Environment, Infrastructure and Logistics, Petrobras, Grupo São Martinho, and the law firm Rolim Goulart Cardoso Advogados.
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Despite the announcement, the plant still does not have an address, storage capacity, or exact date to start operating. The first years will be dedicated precisely to discovering where and under what conditions the project can be installed with environmental safety, economic viability, and social acceptance.
Carbon capture project will start with two years of research
The initiative was structured in two major phases. In the first two years, researchers will identify suitable regions, analyze the geology of the São Paulo subsoil, and calculate the necessary costs to capture, transport, and store the carbon.
The second phase should advance to the implementation and operation of the pilot project. This means that the announcement of R$ 30 million does not necessarily represent the cost of a future large-scale commercial plant, but the estimated budget for research, planning, technological development, and construction of the initial experience.
According to information from Semil, the work will be organized into five main axes, involving technology, infrastructure, market, regulation, and socio-environmental aspects. The proposal is also linked to the Climate Action Plan 2050 and the São Paulo State Energy Plan 2050.
How ethanol carbon can be captured
The chosen technology is known by the English acronym BECCS, which stands for Bioenergy with Carbon Capture and Storage. The system takes advantage of a specific characteristic of ethanol production to separate CO₂ before it is released into the air.
During growth, sugarcane removes carbon dioxide from the atmosphere through photosynthesis. When the plant’s sugars are fermented to produce ethanol, part of this carbon reappears in the form of a concentrated stream of CO₂.
This gas can be collected, purified, dehydrated, and compressed. Then, it is transported to a well and injected into deep geological formations, where it should remain stored for long periods, accompanied by monitoring systems.
The Energy Research Company reports that the gas produced during alcoholic fermentation can have a concentration higher than 95% CO₂, a condition that facilitates separation. The institution estimates capture costs between US$ 25 and US$ 35 per ton in this process, below the estimates for thermoelectric plants or for direct carbon removal from the air.
Ethanol could have a negative carbon footprint
The goal of BECCS is not just to avoid an industrial emission. Since the carbon was initially removed from the atmosphere by the sugarcane, its permanent storage can generate a net removal, provided that the stored amount is greater than the emissions produced in cultivation, transport, and processing.
That is why those responsible for the project claim that ethanol could become a negative carbon fuel. This classification, however, will depend on complete life cycle calculations and not just the amount of gas captured within the plant.
A dissertation developed at USP simulated the application of the technology in a large sugarcane distillery and indicated that the emission intensity could drop from 27.3 grams of CO₂ equivalent per megajoule to a negative result of 3.2 grams. The study represents an academic simulation and not a guaranteed forecast for the future unit in São Paulo.
It will also be necessary to consider the electricity consumption of the equipment, field emissions, the use of fertilizers, and the transportation of the fuel. Therefore, installing a capture system does not automatically transform all produced ethanol into a fuel without environmental impacts.
Location of the unit will depend on deep and safe reservoirs
One of the biggest challenges will be finding an ethanol plant close to a suitable geological formation. Transporting large quantities of CO₂ over long distances can increase costs and require the construction of specific pipelines.
Researchers will look for the so-called deep saline reservoirs, formed by porous rocks filled with highly saline water. This water is not suitable for human supply, and the formations evaluated should be more than a thousand meters deep.
Above the porous layer, there must be an impermeable rock formation capable of functioning as a natural barrier. Seismic studies, drilling, and pressure tests will be necessary to verify storage capacity and reduce the risk of gas movement.
The operation will also need to permanently monitor reservoir pressure, well integrity, and the location of the injected CO₂. Monitoring should continue even after the activities have ended, following rules that will still be detailed for the Brazilian sector.
In addition to geological conditions, environmental impacts, proximity to plants, existing infrastructure, and public perception will be evaluated. A technically favorable area may be discarded if it presents environmental, economic, or social difficulties.
Carbon market will be decisive to pay for the technology
Capturing and storing carbon requires equipment, energy, drilling, monitoring, and specialized labor. Since CO₂ remains underground and does not directly transform into a product sold to consumers, the project will need to find ways to generate revenue.
Possibilities include selling carbon removal credits, public incentives, and the commercial valuation of ethanol with lower emission intensity. International buyers may also be willing to pay more for fuels that have robust environmental certification.
The Ministry of Finance reported that Law No. 15,042, enacted on December 11, 2024, created the Brazilian Emissions Trading System. The implementation of the regulated market will be gradual and should establish criteria for monitoring, registering, and trading assets related to greenhouse gas emissions and removals.
For the stored carbon to generate reliable credits, it will be necessary to prove how much was actually removed, how long it will remain underground, and who will be responsible for any issues. It will also be necessary to avoid double counting, a situation where the same removal is used by more than one company or environmental program.
Future Fuel Law paved the way for storage
Brazil now has a specific legal framework for the activity following the approval of Law No. 14,993, of October 8, 2024, known as the Future Fuel Law. The text addresses the capture, pipeline transportation, and geological storage of carbon dioxide.
According to the National Agency of Petroleum, Natural Gas and Biofuels, the legislation assigned the agency the responsibility to regulate and authorize these operations. The rules should cover everything from company qualification to the transfer of responsibility for the reservoirs after the projects end.
The legal framework will be one of the areas studied by the new São Paulo center. Without clear rules on licensing, inspection, well safety, and long-term responsibility, commercial projects may find it difficult to obtain financing.
São Paulo will have the first experience dedicated to sugarcane ethanol
The designation of the country’s first unit needs to be understood specifically. The São Paulo project aims to be the first Brazilian pilot project of BECCS focused on the sugar-energy sector and sugarcane ethanol.
Brazil already has a previous initiative related to corn ethanol in Lucas do Rio Verde, in Mato Grosso. In December 2025, BNDES approved R$ 384.3 million to support an FS unit intended to compress and store approximately 423 thousand tons of CO₂ per year.
The two values should not be directly compared as if they represent identical projects. The Mato Grosso enterprise was structured on an industrial scale, while the R$ 30 million announced in São Paulo cover a research center and the development of a pilot unit whose capacity is yet to be defined.
The Mato Grosso experience could provide important information on licensing, costs, monitoring, and credit commercialization. São Paulo, in turn, could test the application of the same technology in a sugarcane-based chain, which has different productive and seasonal characteristics.
Technology could open a new market for Brazilian plants
The national potential is significant because Brazil has a large ethanol production and hundreds of industrial units. Technical estimates indicate that capturing the carbon generated in alcoholic fermentation could reach tens of millions of tons per year in the next decade if the technology were adopted on a large scale.
The expansion, however, will depend on the existence of nearby reservoirs, transportation infrastructure, financing, and buyers for the carbon credits. Not all plants will be located over suitable regions, which may necessitate the creation of shared networks of pipelines and storage sites.
The São Paulo project could show whether carbon capture is economically viable for the sugarcane sector or if it will remain restricted to large-scale facilities. The result of the five years of research will be more important than the initial announcement, as it will determine whether the solution can move beyond the experimental phase.
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