Located in the heart of the Amazon, it has been billed as Brazil’s first sustainable aviation fuel (SAF) project, but the palm oil producer behind a planned biorefinery in Manaus is now grappling with a financial crisis triggered by concern over possible rights abuses.

Reporting in the region by Brazilian news outlet InfoAmazonia in partnership with Climate Home News, has also found that the company – São Paulo-based Brasil BioFuels (Grupo BBF) – is growing oil palm on three areas subject to sanctions by Brazil’s Ibama environmental agency over illegal deforestation.

The embargoed plots lie in São João da Baliza, a sparsely populated district strung along the highway where former grazing pasture and biodiversity-rich scrubland have steadily been replaced by neat rows of oil palms. Signs hanging on fences say the crop will be used to make SAF.

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While many locals living in the district’s towns welcome the jobs and economic boost provided by BBF’s palm plantations, Indigenous people and environmentalists see them as a threat to nature, traditional ways of life and the rainforest.

“If these areas are completely replaced by crops for biofuel production, we will lose unique species, many of which are still little known to science,” said Lucas Ferrante, a researcher from the zoology postgraduate programme at the Federal University of Amazonas (UFAM).

BBF, which announced its plans for the Manaus SAF project back in 2022, makes much of the fact that – in line with Brazil’s strict environmental laws – it only grows oil palm on land that was degraded before 2007, rather than freshly deforested land.

Stressing the company’s green credentials in an interview with Brazilian newspaper Valor Econômico last year, CEO Milton Steagall said the firm – which grows palm on about 75,000 hectares (185,000 acres) in the northern Amazon states of Pará and Roraima – “only cultivates the plant in the areas permitted by law”.

“Our sustainable palm cultivation recovers areas already degraded by deforestation and contributes to keeping the Amazon rainforest standing,” he said.

Illegally cleared land

BBF, which says it is the biggest palm oil producer in Brazil, makes palm-based biodiesel that fuels a network of power stations in the Amazon region, supplying some 140,000 customers.

The plan to produce SAF from the same feedstock would be its first foray into a new market that is set to take off in the coming years, as more countries – including Brazil – require their aviation sectors to start using greener fuel.

But InfoAmazonia’s investigation suggests that sourcing rising amounts of SAF from crops like palm that are grown in tropical forest countries – from Brazil to Malaysia – poses a threat to rainforests that are vital stores of climate-heating carbon.

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InfoAmazonia identified the illegally deforested areas being used by BBF in southern parts of Roraima by analysing data from the Earth Index platform, which draws on artificial intelligence (AI) and satellite images to determine land use.

The data was then cross-referenced with maps of embargoed areas produced by the government’s Ibama agency. In April this year, the InfoAmazonia team visited the sites and confirmed the existence of the palm crops.

Their analysis found that a total area of 164 hectares (405 acres) close to São João da Baliza had been embargoed by Ibama, meaning the land cannot be used for agriculture.

While the area – roughly equivalent to 250 soccer pitches – represents a small fraction of BBF’s total plantations, the findings highlight the deforestation risks of large-scale oil palm cultivation in the Amazon.

None of the plots are officially registered in BBF’s name – something that is relatively common in Brazil’s land registry – but when InfoAmazonia visited them, the company’s logo could be seen displayed clearly on the fences of each.

Pictures taken with a drone of one of the areas show a field that appears to have been recently planted with palms cutting into a forested area that stretches toward the horizon. A few tall trees dot the newly planted area.

Asked about InfoAmazonia’s findings, BBF said it had never been informed about the issuance of environmental penalties on any of its land in Roraima.

“(The company) has (completed) the environmental licensing processes with the State Foundation for the Environment and Water Resources (FEMARH) in all of its areas, which are necessary for the sustainable cultivation of oil palm in the state of Roraima,” a BBF spokesperson told InfoAmazonia.

Pasture and bananas make way for palm

Palm oil production in Roraima as a whole rose nearly 40 times between 2019 and 2023, according to data from the Brazilian Institute of Geography and Statistics (IBGE).

Even when palm is planted only on degraded land, the spread of plantations puts “indirect pressure” on forested areas, said Eder Carvalho, chief inspector at Ibama’s Roraima branch.

“Old pasture is replaced by palm, with forested areas in turn being cleared to make way for new pasture and banana cultivation,” he said, explaining a process often referred to in climate and environmental risk assessments as “indirect land use change”, or ILUC.

It is because of the high risk of ILUC linked to palm oil cultivation – and the related carbon dioxide emitted when forests are destroyed – that virgin palm oil is not permitted as a feedstock for SAF in Europe.

Large plantations of a single crop, a practice called monoculture, cause other environmental problems, too, opponents say, taking a heavy toll on biodiversity, depleting water supplies and often involving substantial use of pesticides and other agrochemicals.

In the Amazon, researchers say monoculture also depletes the so-called flying rivers – moist air currents – that carry rain to other parts of Brazil.

“The forest stores a lot of water in the soil, and the trees have deep roots, which lead to evaporation that cools the air, keeping the temperature low,” said climatologist Carlos Nobre, from the National Institute for Space Research (INPE), one of the first scientists to study flying rivers.

Green fuel of the future?

Environmental campaigners warn that allowing the use of non-waste vegetable oils like virgin palm oil as a feedstock for SAF would both fuel forest loss and harm the global and local climate in big commodity-producing nations with important rainforest ecosystems such as Brazil, Malaysia and Indonesia.

“We can’t go backwards and return to fuels made from plants, like palm,” said Cian Delaney, a campaign coordinator with the Belgium-based Transport & Environment organisation, adding that no agricultural crop should be used in SAF production.

“This is a fundamental point from an environmental point of view. This cannot open space for the expansion of first-generation crops,” he said.

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Due to such concerns, the EU and Britain require SAF to be made from waste products such as used cooking oil (UCO), as they began this year to mandate SAF blending into jet fuel as a way to reduce air travel’s hefty carbon emissions.

But a months-long investigation by Climate Home and its partner The Straits Times has uncovered an opaque global supply chain for UCO that exposes jet fuel providers and their aviation clients to fraud risks and raises doubts about the climate benefits of the sector’s main green hope for the years ahead.

The US takes a more lenient approach on SAF feedstocks, allowing crop-based SAF derived from corn or sugarcane.

‘Saudi Arabia of SAF’

Brazil, which is set to allow non-waste vegetable oils like palm to be used in SAF production, wants to position itself as a major global player in efforts to decarbonise transport – including flying.

Aviation currently accounts for about 2.5% of global carbon emissions.

The government of President Luiz Inácio Lula da Silva has highlighted Brazil’s potential to become a leading producer of feedstocks for SAF, which it has dubbed the “fuel of the future”.

As part of the government’s plans, airlines operating in Brazil will have to meet emissions-cutting targets by using a SAF fuel blend, starting with a 1% emissions reduction in 2027 that will rise to 10% by 2037.

Since BBF unveiled its trailblazing SAF plan, several more such projects have been announced, with tallow – a byproduct of cattle ranching – soy oil and ethanol made from sugarcane among the planned feedstocks. Brazil unveiled $1 billion in public financing last year for SAF projects, and received more than 70 proposals.

Gilberto Peralta, CEO of Airbus Brazil, told an agricultural investment conference last year that Brazil could become “the Saudi Arabia of SAF”, with its potential production far exceeding domestic needs. Like other SAF advocates, he argues that ample areas of degraded land could be used, without causing further deforestation.

But the controversy over using non-waste feedstocks could be one of the “key challenges” facing Brazil’s nascent SAF industry in competing abroad, said Pedro Guedes, biofuels analyst at Brazilian think-tank E+ Energy Transition Institute.

Human rights warning

Despite the growing hype around green aviation fuel, BBF’s financial difficulties and ongoing debt negotiations with its creditors have clouded its target to launch SAF production at the 2 billion reais ($390 million) biorefinery this year or in 2026.

Asked whether the refinery was scheduled to launch as planned, the company told InfoAmazonia it “will not be able to comment on new business operations due to the complex debt restructuring process”, adding that BBF aimed to “continue its strategic plan and resume sustainable growth of its operations”.

In its first-quarter report this year, the company told investors it faced “difficulty in obtaining new lines of financing to complete long-term projects”, without directly mentioning the refinery.

The company’s financing troubles began in August 2023, when Brazil’s National Human Rights Council (CNDH) recommended that seven banks – among them state development bank BNDES, state-run Banco do Brasil and Banco da Amazônia – should halt loan deals with the company over suspected violations against Indigenous people and others in Acará and Tomé-Açu in Pará, related to land disputes.

For years, tension between some local communities and BBF has simmered in the Amazon region over land ownership and rights – sometimes erupting into violence. The CNDH’s recommendation to banks came months after state prosecutors sought the arrest of a BBF director and its security chief for offences including torture.

The company denies wrongdoing in the case and says it has “suffered continuous invasions” of its properties in Pará since 2021.

‘No hunting, no fishing’

Back in Roraima, beside a muddy unpaved road outside São João da Baliza, signs reading “Private property” and “Hunting and fishing prohibited” stand in front of a plantation of mature oil palms.

The protected Indigenous Territory (TI) of the WaiWái people lies only about 10 km (six miles) away, but local leader Alexandre Waiwai said community members had no interest in hunting on the palm plantations, preferring to search for animals in the forest beyond.

Standing in his wooden house, the walls decorated with bows and arrows, Waiwai said many people feared that animals grazing on the plantations might ingest agrochemicals – despite BBF’s assurance it does not use them on its palm crops.

“Some animals like boar eat palm fruit. We’re afraid of contamination through the meat we hunt and also our water,” Waiwai said.

Villagers also complain about fires in areas surrounding their territory and smoke billowing out of the chimneys of BBF’s industrial plant. Community health worker Vanilda Waiwai said locals report high levels of respiratory problems.

The challenges facing BBF could hold lessons for other firms hoping to launch SAF projects in Brazil.

Guedes, from the E+ Energy Transition Institute, said Brazilian SAF producers expect human rights to be key parameters for entering international markets, adding that the country’s recently created national SAF programme is likely to take into account rights as well as biodiversity safeguards.

“We know we’ll have to present our credentials on human rights. There’s a concern in general (about human rights impacts) and Brazil is aware of that concern,” he said.

This investigation was developed with the support of Journalismfund Europe.

The post Brazilian firm behind SAF plan found growing oil palm on deforested Amazon land appeared first on Climate Home News.

Brazilian firm behind SAF plan found growing oil palm on deforested Amazon land