Brazil well-positioned to ‘come out ahead’ in global low carbon economy

Clare Saxon Ghauri
25 June 2013

LONDON: Brazil is uniquely placed to lead the low carbon economy, according to analysis that highlights the nation’s diverse domestic energy mix and potential for rapid renewable energy sector growth.

The fourth instalment in Carbon Tracker’s Unburnable Carbon Report series reports that if the Brazilian government carefully manages growth of both its fossil and renewable energy supplies it is well positioned to benefit from the global low carbon economy.

Carbon Tracker is a UK-based non-profit, well-known for its 2012 research indicating that up to 80% of the world’s fossil fuel energy reserves cannot be burnt in order to hit global climate change targets, causing a global ‘carbon bubble’ of what is known as ‘stranded assets’ – wasted capital from devalued energy that cannot be used.


While Brazil has a large stake in fossil fuels it also has a strong renewable energy sector with significant potential for growth. Brazil already sources more than 40% of its energy from renewable sources; it produces the second most biofuel in the world and boasts a burgeoning hydropower sector as well as a wind sector that is expected to soar.

The authors recommend that the government offsets Brazil’s competitively advantageous pre-salt oil reserves with reduced deforestation and improved agricultural practices, as well as increase investment in renewable energy in order to capitalize on the global low carbon energy transition.


Carbon Tracker’s previous research shows competing economies such as South Africa and Australia are already dependent on the coal market, so comparatively Brazil is in a better position to win capital from international investors. In a statement, Luke Sussams, Senior Researcher at Carbon Tracker, said, “Investing in a 2°C world will have winners and losers – Brazil may be well placed to come out ahead.”

Before listing recommendations for investors, the report authors state: ‘Brazil’s strong renewable resources base also provides high exposure to alternative markets which should prosper in a low carbon world, whilst also maintaining Brazil’s domestic sustainability.’

The report continues: ‘Brazil is poised at a crossroads which means it can respond to future policy and technology options if it does not overcommit to hydrocarbons. Brazil therefore is attractive to investors seeking to hedge climate risk as it has good exposure to low carbon opportunities.’

Mark Kenber, CEO, The Climate Group, commented: “Largely because Brazil has not yet developed dependence on traditional fuels, it can capitalize on the many opportunities of a clean revolution. It has already recently announced a US$2.85 billion investment in renewable energy and biofuel research, a move which will create jobs and investor confidence.

“In the report analysis lies a large incentive for Brazil to further drive the global low carbon economy forward and promote greater investment in such a transition. But despite this promising prospect, the government must address climate risks too, with long-term climate-related policy and bold emissions reduction commitments ahead of any global 2015 climate deal.”

By Clare Saxon

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