Energy Transition

Regulatory and Tax Issues

The Ultra Group believes in Brazil’s potential to be a leading player in the transition to a low-carbon economy. It further believes that this can be achieved in an orderly and efficient manner, without affecting the supply of energy or negatively impacting the population, value chains and the country’s economic development. In the Group’s view, however, to achieve this it is necessary to change the regulatory and tax models of the fuel sector, which, in their current formats, inhibit investments in new technologies and infrastructure and restrict competitiveness in the sector.

The changes seen as necessary include a tax reform that provides incentives for the production and competitiveness of the various types of bio-fuel (second-generation ethanol, corn ethanol, bio-diesel and aviation bio-kerosene, among others) and the removal of market restrictions on the import of bio-fuels. Today, only fuel producers are allowed to import bio-fuels. An important advance already achieved concerns the new bio-diesel sales model, which came into force in January 2022. The model allows direct negotiation between distributors and producers, and replaces the previous public auctions arranged by the National Agency for Petroleum, Natural Gas and Bio-fuels (ANP).

The Carbon Disclosure Project (CDP)

Since 2008, the Ultra Group has responded to the Carbon Disclosure Project (CDP) Questionnaire, under its Disclosure.Insight.Action. Program. The questionnaire is designed to assess a company’s performance in the management of the topic of climate change. Furthermore, the questionnaire is aligned to the guidelines of the Task Force on Climate-related Financial Disclosure (TCFD).

In the 2021 questionnaire, the Group received a C score (awareness level). Changes in the CDP’s evaluation criteria and the Group’s stricter responses to the questionnaire resulted in an assessment that was lower the previous year, when it received a B score (management level), which is still within the average for South American companies. For more information see the CDP web site.

GHG Emission Performance

The Group’s total GHG emissions for the year reduced by 2% compared to 2020. For the first time the Group’s businesses acquired renewable energy certificates (I-RECS) enabling Ultragaz, Ultracargo and Ipiranga to completely offset their emissions from the consumption of purchased electricity. The Holding, which itself has a low carbon footprint, acquired the I-RECs in 2022, which will allow it to offset all GHG emissions linked to the consumption of purchased energy in 2021.

Ultragaz’s, direct GHG emissions (Scope 1) were 7% higher compared to 2020. The variation was due mainly to an increase in fuel consumption as a result of the expansion of the company-owned fleet of vehicles. Towards the end of the year, the company started to implement a route optimizing project to increase the efficiency of its deliveries to customers in the bulk liquids segment. The project was aimed at reducing the total mileage driven and, consequently, the Scope 1 GHG emissions.

Ultracargo’s direct GHG emissions were 45.7% lower compared to 2020. The volatile organic compounds (VOCs) burners at the Santos (SP) terminal are fed by LPG and are the company’s largest source of direct GHG emissions. They cannot be replaced due to the legal conditions imposed by the environmental license to operate. The volume of fuels handled at the terminal decreased by around 60% in 2021, which reduced the need to use its VOC burners during the year. Furthermore, in the last quarter, one of the burners was shut down due to a technical fault, also reducing LPG consumption. The company informed the environmental authorities and redirected the flows to another burner.

Oxiteno’s direct emissions direct emissions were practically the same as for the previous year (increase of 1.6%). Oxiteno´s continues to use waste gases from partners for the generation of steam in its boilers. Currently, these waste gases represent 8% of the company’s energy mix. It also sells the gases produced in the manufacture of ethylene oxide, which can be used as raw materials in other production processes. In 2021, 40,792 tons of CO₂ were sold to White Martins in Camaçari and 7,291 tons of CO₂ to Air Liquide in Mauá (SP).

Ipiranga’s total carbon footprint decreased by 3% compared to 2020. Scope 1 emissions increased by 1% and Scope 3 emissions reduced by 4% compared to the previous year. The significant growth in its Scope 2 emissions was due to variations in the GHG emission factor for the National Interconnected System of electricity (SIN).

Extrafarma reduced its direct emissions by 56.9% due to a lower consumption of fossil fuels in its generators, and in its company-owned fleet of vehicles, as a result of implementing a route optimization project in 2021. The company’s Scope 2 emissions were stable and its reported Scope 3 emissions reduced by 26%, mainly due to the lower number of corporate trips. Extrafarma outsourced part of its distribution of products, but the associated emissions were not considered in the calculation of Scope 3 emissions since they are not monitored.

Total GHG Emissions 2021 – By Business (tCO₂e)