The independent panel of judges chose the Ethos Ergon Biofuels Future Flow project in Brazil to win the IJGlobal ESG Awards 2024 trophy for Power-to-X in Latin America with one judge celebrating the importance of “supporting a major area of required investment and growth”.

Ethos Ergon closed a 10-year, $617 million green 4(a)(2), reopening a 10-year private placement Brazilian issuers hiatus to fund the acquisition of future Physical Ethanol CPR – Cédula do Produtor Rural – issued by Raízen.

The proceeds were raised in connection with the construction of 5 second generation ethanol (E2G) facilities in Brazil to be owned by Raízen.

The notes monetise future Physical Ethanol deliveries via the CPR, underpinned by a 13-year floor-price take-or-pay offtake agreement with Shell.

This unprecedented structure combines future flow and project finance best-features, in addition of being the first non-recourse construction financing to cellulosic ethanol plants.

Citibank acted as sole ratings adviser and lead placement agent alongside Morgan Stanley. The bank devised and delivered a unique transaction structure capable of self-funding Raízen’s groundbreaking E2G business line.

The offering marks the reopening of the USPP market for Brazilian issuers after 10-year hiatus with an unprecedented group of world-class investors, in addition of being the first non-recourse construction financing to cellulosic ethanol plants.

Citi also achieved green tagging with a strong connection with energy transition as – according to Sustainalytics second-party opinion – the Ethos Framework is credible, impactful and aligned with the 4 components of the Green Bond Principles.

According to the submission: “Advances in sustainability, technology and job creation are the major highlights of all investment in cellulosic ethanol.

“In general, the cellulosic ethanol has a carbon footprint 80% lower than Brazilian regular gasoline, and 30% lower than regular ethanol. The production of this biofuel is also a perfect example of circular economy: since the production of biofuels is increase by 50% without having to plant an extra hectare of sugarcane, it drastically reduces waste and negative environmental impacts.

“And different from regular ethanol, the Cellulosic Ethanol is even more social friendly since it does not compromise food production since it is produced from sugarcane bagasse residue.”

Raízen recently inaugurated the Bonfim E2G Facility, and all the 5 plants related to Ethos transaction will have the same capacity of 82,000 of cubic meter per year.

For the operation in Bonfim, Raízen’s offered more than 20,000 hours of training to employees in partnership with education institutions, thus providing local community development.

The E2G plants add social and economic benefits, increasing the representation in the state fund for the participation of the municipalities in which they are inserted, in addition to generating shared growth, development of national suppliers, production of equipment of national origin, technical training of local labour and generation of jobs.

According to Raízen, the construction of the 20 E2G plants will impact more than 500 suppliers, generating more than 17,000 direct and indirect jobs.