BP announced on 22 July that the British energy giant has agreed to form a 50:50 joint venture with US-based agriculture, food and ingredients company Bunge that will create a leading bioenergy company in one of the world’s largest fast-growing markets for biofuels.

“This is another large-scale example of BP’s commitment to play a leading role in a rapid transition to a low carbon future,” BP CEO Bob Dudley said. “Biofuels will be an essential part of delivering the energy transition and Brazil is leading the way in showing how they can be used at scale, reducing emissions from transport. This combination will unlock new possibilities for improved efficiency and future growth in this key market,” he added.

According to BP, the UK company will combine its Brazilian biofuels and biopower businesses with that of Bunge to create a world-scale, highly-efficient producer of sugarcane ethanol in Brazil, BP Bunge Bioenergia. BP’s interest in the new venture will grow its existing biofuels business by more than 50%.

Brazil is the world’s second largest and most integrated market for ethanol as a transportation fuel with demand forecast to grow rapidly. The majority of vehicles in the country – around 70% – are already able to run on ethanol and the country’s demand for ethanol is estimated to increase by around 70% by 2030.

Bunge CEO Gregory A. Heckman said this joint venture with BP represents a major portfolio optimisation milestone for Bunge. “We are proud of what our team has done to evolve our sugar and bioenergy business as an industry leader. I am confident that this team, and the strong commitment from a global leader such as BP, will create even greater shareholder value,” he said.

BP Bunge Bioenergia will have 11 biofuels sites in Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. It will also generate renewable electricity – fuelled by waste biomass from the sugar cane – through its cogeneration facilities to power all its sites and sell surplus electricity to the Brazilian power grid, BP said.

In 2018 the Brazilian production of ethanol was some 26 billion litres, produced almost entirely from sugarcane grown in-country. The Brazilian government is introducing a new low carbon transport policy, known as RenovaBio, to establish the first regulated carbon credits market in the country.