Incentivizing Sustainable Aviation Fuel: Supply Chain and Policy Insights from Brazil

Abstract Sustainable aviation fuel (SAF) plays a central role in decarbonizing the aviation sector. Brazil is positioned to become a leader in SAF production and consumption from sugarcane-based ethanol. However, integrating SAF into the Brazilian sugarcane industry is challenging due to high production costs, an undeveloped SAF supply chain, and ethanol competition between ground and aviation transportation. The present study uses mixed-integer linear optimization to design SAF supply chains in Brazil under various blend requirements and design scenarios. Three sugarcane mills in São Paulo are identified for strategic SAF investments, with a recommended premium of 2.6 R$ L–1 (0.5 US$ L–1). Furthermore, SAF production increases net CO2 emissions by up to 2.7 Mt year–1 (relative to a 0% baseline) due to ethanol displacement. Sensitivity analysis reveals SAF conversion and emission targets for net-zero system emissions. These results provide several key insights to guide SAF supply chain growth, technology development, and policy design in Brazil. Finally, the general optimization framework provides a template for SAF capacity expansion worldwide.