Brazil can transform climate crisis into its biggest economic opportunity

These arguments are presented in a report by the Center for Economic Transition Expertise (CETEx), of the London School of Economics, prepared with support from the Instituto Clima e Sociedade (iCS). The study proposes a key change: stop treating the response to the climate crisis as a cost, a list of sacrifices, and start seeing it as what it really is, an economic development strategy, a chance to attract investment, create quality jobs, strengthen industry and make the country grow. And few countries in the world are as well positioned to take advantage of this opportunity as Brazil.

The moment helps to understand why. The global economy is being reshaped by two simultaneous forces. On the one hand, tensions between the great powers are reorganizing where things are produced and making what Brazil has in abundance more valuable: renewable energy, strategic minerals, fertile land, water and biodiversity. On the other hand, the transition to a low-carbon economy stopped being an environmental issue and became the biggest investment race of the century. Whoever arrives first takes the factories, technologies and jobs.

Brazil starts ahead. Around 90% of our electricity already comes from renewable sources, a feat that will take decades for the United States, China and Germany to achieve. We are a global reference in biofuels and have enormous potential in green hydrogen and critical minerals.

But the report brings a warning that Brazil knows well from its own history: having natural wealth does not guarantee becoming rich. We were once the country of Brazilwood, sugar, gold, coffee... and, in all these cycles, most of the value was captured by those who industrialized abroad what we extracted here. The risk of repeating this scenario is real: exporting cheap sun, wind and ore while others sell products made from them at a much higher price.

Green industrialization, a fundamental step

To write a different ending, the study proposes a strategy based on three movements.

The first of them is to transform what nature gave us into industry. It's not enough to have the resources. We need to use them to manufacture the products that the world will compete for here: clean steel, sustainable jet fuel, green hydrogen, fertilizers. The different technologies for producing green steel that are being adopted or developed in Brazil show the way: taking advantage of a natural advantage and transforming it into an industrial product that no one else can offer under the same conditions. And the timing could be perfect: Europe has started to tax, at the border, products produced with high levels of carbon emissions, which makes dirty steel more expensive and Brazilian green steel more competitive.

The second is to bring the world inside. Foreign investment should not just be money coming in: it should bring technology, knowledge and access to markets. This is what is happening at the Port of Pecém, in Ceará, which has become a partner with the Port of Rotterdam, the largest in Europe, to transform the sun and wind from the Northeast into green hydrogen. Companies from several countries have already announced billions of reais in investments in this area. The report points out that this logic will intensify. More and more of the world's factories will move to where clean and cheap energy is available, and Brazil could be one of the great destinations for this migration.

The third movement is for the government to do its part, with focus. It is not about subsidizing everything, but about choosing the sectors in which Brazil can win and unlock them, giving predictability to the rules, offering long-term financing and coordinating infrastructure, worker training and trade policy. It was this combination – a considerable market, the right incentives and renewable energy – that convinced BYD, the largest electric car manufacturer in the world, to set up shop in Camaçari, Bahia, in the former Ford complex. Where there was the symbol of our deindustrialization, a hub of the coming economy is beginning to emerge.

These three points show that this is not theory. It is something that has already started, but will only gain scale with strategy, coordination, political will and ambition.

The report's conclusion deserves to be reiterated: protecting the climate and economic growth are not rival agendas, but the same agenda. The climate crisis will reorganize the world economy anyway. Brazil's choice is not whether it wants to participate in this transformation, but in what position: as a supplier of cheap raw materials, once again, or as an industrial protagonist of a new era. For the first time in a long time, the ending of this story depends on us.