Finding Pathways, Financing Innovation: Tackling the Brazilian Transition Challenge

Brazil, the fifth largest country in the world and the largest economy in Latin America, plays a critical role in the global fight against climate change. As well as being a key supplier of agricultural, mineral and oil and gas resources, it is also the largest greenhouse gas emitter in Latin America and the Caribbean and home to 60% of the Amazon basin.

As a large emerging economy, the country faces distinct challenges that distinguish its journey to become carbon neutral from those of the developed economies of Europe and North America. This white paper estimates the required investment to achieve Brazil’s climate transition by 2030 amounts to approximately BRL 1 trillion ($200 billion). To attract and facilitate this investment, Brazil must establish robust financing structures, including the development of new financial instruments such as green, social, sustainable and sustainability-linked bonds.

The paper highlights that in addition to these instruments, the country must also mobilize private funding and develop a national taxonomy. Such developments must inform sectoral decarbonization pathways that establish specific goals and guidelines for each sector, taking into account the nation’s unique features.

Tackling the Brazilian transition journey requires close collaboration among industry, public-sector and civil-society leaders, the paper argues. If successful, Brazil has the potential to become a blueprint for the transition journey of other emerging economies.