Brazil’s BNDES funds first commercial-scale BECCS project, paving way for industrial decarbonisation

Brazil’s state development bank has moved into engineered carbon removal with a R$384.3 million (about $71 million) commitment to the country’s first commercial-scale bioenergy with carbon capture and storage (BECCS) project, a step that could reshape financing pathways for industrial decarbonisation in Latin America.

According to the original report, BNDES approved the funding under its BNDES Mais Inovação programme to support FS Indústria de Biocombustíveis in installing a dedicated CO2 capture and injection unit at the company’s corn‑ethanol complex in Lucas do Rio Verde, Mato Grosso. The facility will compress and inject captured CO2 into deep saline formations in the Parecis Basin directly beneath the plant. Because the emissions originate from biomass, the project is designed to achieve net carbon removal when storage is permanent, distinguishing it from conventional CCS that captures fossil CO2.

FS estimates the system will sequester roughly 423,000 tonnes of CO2 annually , effectively offsetting the plant’s direct emissions at full operation , and expects the technology to underpin lower‑carbon or potentially carbon‑negative ethanol when combined with second‑crop corn supply and renewable process energy. The company says the investment will create new revenue streams through high‑integrity removal credits and help position Brazilian low‑carbon fuels in global markets. The project also sits within FS’s existing operations in Mato Grosso, where three biorefineries produce a combined 2.6 billion litres of ethanol per year alongside co‑products and bioelectricity.

BNDES framed the move as part of a broader push to build policy and financial foundations for a Brazilian carbon market. BNDES President Aloizio Mercadante highlighted that annual removals at the scale proposed would support Brazil’s Paris Agreement commitments and demonstrate how industrial BECCS could complement the country’s established biofuels sector. The bank’s backing follows a string of recent initiatives that signal a strategic pivot toward climate‑aligned financing: in November 2024 BNDES signed a near 16.7 billion reais cooperation with the Asian Infrastructure Investment Bank to back sustainable infrastructure projects, and in October 2024 the government coordinated a $10.8 billion climate and ecological investment platform, BIP, to mobilise foreign capital into energy, industry, mobility and nature‑based solutions.

The BECCS financing also complements other state‑backed climate efforts. In March 2025 Petrobras and BNDES launched ProFloresta+, a programme to stimulate reforestation and produce purchasable carbon credits backed by low‑interest BNDES loans, while in August 2025 the bank announced a separate 10 billion reais credit line to assist firms affected by U.S. tariffs , illustrating the institution’s widening mandate to blend industrial policy, trade support and climate investment.

For industrial decarbonisation practitioners and investors, the FS project is notable for three reasons. First, it couples capture infrastructure directly with an existing biorefinery and on‑site saline storage, reducing transport and logistical complexity. Second, the anticipated removal volume is material at national scale and could seed a market for removals linked to commodity supply chains. Third, BNDES’s role signals willingness from a major national development bank to underwrite early commercial BECCS risk, potentially lowering the cost of capital for follow‑on projects.

Nevertheless, key risks remain. Long‑term permanence of injected CO2 in saline formations requires robust monitoring, verification and liability frameworks; industry and regulators must establish transparent crediting rules to ensure removals are not double‑counted or offset by upstream land‑use emissions. The extent to which removal credits will command premium prices in nascent global markets is also uncertain, and buyer demand will be influenced by emerging standards and corporate net‑zero claims.

Industry data shows Brazil is already mobilising multiple instruments to attract international capital and create demand‑side anchors for both nature‑based and engineered removals. Whether BNDES’s BECCS financing becomes a template for scaling industrial removals will depend on demonstrable storage integrity, clear accounting rules for removals, and how quickly removal credits are integrated into corporate procurement strategies and public policy frameworks.

For companies involved in industrial decarbonisation, the FS project offers a practical case study of integrating BECCS into existing biofuel operations and illustrates how development bank financing can de‑risk first movers. The company claims the investment advances its sustainability agenda and aligns with UN Sustainable Development Goals, while the bank’s broader programmes indicate an appetite to combine climate objectives with industrial policy. If successful, the project could accelerate a market for low‑carbon fuels and removal credits originating from industrial bioenergy in Brazil.