According to a new World Bank Group report released today, Brazil is in a strong position to offer its people a better life while successfully addressing the threat of climate change.
According to the Brazil Climate and Development Report, Brazil can become a global clean energy powerhouse and save the Amazon with a development plan that grows more food on less land and better protects forests.
Brazil can grow its economy and fight climate change with relatively modest investments in agriculture, deforestation, energy, and transportation systems.
“Climate shocks could push between 800,000 and 3,000,000 Brazilians into extreme poverty as soon as 2030.”
“Brazil must accelerate investments towards a resilient, low-carbon growth path,” said Johannes Zutt, World Bank Country Director for Brazil.
“To fully realize its potential, Brazil would need net investments of 0.5% of its annual GDP annually between now and 2050.”
“The World Bank is committed to working together with the Government of Brazil to achieve its development goals while delivering on climate action.”
The report highlights that Brazil is already in a strong position to source more renewable energy.
Nearly half of Brazil’s energy supply, including more than 80% of its electricity, already comes from renewables, compared to global averages of between 15% and 27%.
Adding clean energy would be no more expensive for Brazil than current plans to expand fossil fuel generation.
Increased investment in renewables would have higher upfront costs for generation, transmission, and energy storage.
But, according to the report, they would be fully recovered through fuel and operating cost savings.
Similarly, a shift in transportation and industry toward greater electrification and green hydrogen, produced with wind and solar power instead of gas, would not increase economic costs.
The report shows Brazil has a strong competitive advantage in the growing global greener goods and services market.
Its private sector is already competitive in several products needed to move away from fossil fuels, such as those related to wind turbines and parts for electric motors and generators.
Brazil could enter markets for solar energy products, expand into green hydrogen and benefit from its significant deposits of minerals relevant to the energy transition.
“The private sector can and must play a central role in the transition of the Brazilian economy to a more resilient and decarbonized economy.”
“Private sector engagement will be crucial for, among other things, financing the majority of capital investment needs for climate action, helping to leverage climate finance and public spending,” said Carlos Leiria Pinto, Country Manager, IFC Brazil.
“But for that to happen, we need an enabling business environment and public support to attract private investors and accelerate innovation.”
The report argues that the Amazon rainforest, which is approaching a tipping point with potentially drastic consequences for the Brazilian population in areas such as agriculture, urban water supply, flood mitigation, and hydropower, can be saved with a development plan that better coordinates the needs of agriculture with the preservation of the rainforest.
Such a plan could remove incentives for destroying the Amazon while protecting jobs and ensuring food security.
Investments to boost agricultural productivity could make it more resilient and sustainable.
These investments could provide technical assistance and extension services, including private sector investments, rural credit program reforms, and irrigation improvements.
Spending will also be needed to facilitate the transition of workers and asset owners to greener sectors, including compensation for early retirement of carbon-emitting assets.
Yet, according to Brazil’s CCDR, these investment needs will be largely offset by economic savings in the form of avoided energy expenditure or reduced congestion or air pollution.
Overall, the total economic costs of the resilient and carbon-neutral pathway proposed in Brazil’s CCDR are around 0.5% of GDP, without taking into account the national and global benefits from avoided climate change impacts or the economic and non-economic benefits from preserving the unique biodiversity and ecosystem services provided by native forests.
KEY RECOMMENDATIONS: A COMBINATION OF STRUCTURAL REFORMS, ECONOMY-WIDE CLIMATE POLICIES, AND SECTOR-SPECIFIC MEASURES
CCDR highlights one of the multiple pathways through which Brazil could leverage its position, thereby achieving greater climate resilience and zero net GHG emissions and, based on a package of actions such as:
- Meeting the commitment to zero illegal deforestation by 2028 (under the current Forest Code): around 90% of deforestation is illegal.
- Enable sustainable and productive land stewardship and land uses (e.g., protected areas, the establishment of indigenous territories, and restoration of degraded pastures) and sustainable natural resource-based economic activities (e.g., ecotourism and forest plantations) to boost carbon storage, removing about 600 million tons of carbon dioxide equivalent (MtCO2e) per year (“negative emissions”).
- Strengthening climate-smart agriculture (agriculture that can tolerate weather changes while polluting less and emitting less carbon).
- Priorities such as intensifying livestock production, increasing crop productivity, and reducing farmers’ exposure to climate risks can, at the same time, halve the sector’s emissions from 500 MtCO2e per year in 2020 to 250 MtCO2e per year in 2050.
- Leverage competitive advantages in renewables to become a leading producer of green hydrogen, which can help accelerate the transition to renewables, especially in the transportation and heavy industries, while diversifying exports and attracting investment.
- Improve energy efficiency, transition to low-carbon fuels (especially in transport and industry), increase rail and waterways instead of road freight transport and promote greater use of public transport instead of private vehicles.
- Use urban planning, urban management, finance and invest in nature-based solutions (such as creating green spaces, protecting wetlands, and improving natural protection from coastal flooding) to create an enabling environment for green and resilient cities.
- Accelerate productivity-enhancing reforms, including trade policy reform, to help Brazil integrate into global value chains beyond commodities.
- Implement economy-wide interventions, including changing incentives for private investors and consumers with tax and subsidy reforms (including carbon pricing mechanisms) to benefit them and society.
This should be accompanied by measures to help people adapt to climate change and support the transition to a low-carbon economy, such as job placement and training in new skills.
Promoting resilience and a just transition includes investments in health and education and relevant employment and social protection support.
ABOUT COUNTRY CLIMATE AND DEVELOPMENT REPORTS (CCDRS)
The World Bank Group’s Country Climate and Development Reports (CCDRs) are new core diagnostic reports that integrate climate change and development considerations.
They will help countries prioritize the highest-impact actions to reduce greenhouse gas (GHG) emissions and drive adaptation while meeting broader development objectives.
CCDRs are based on rigorous data and research and identify key pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges, as well as the benefits and opportunities of doing so.
The reports suggest concrete, prioritized actions to support a low-carbon and resilient transition.
As public documents, the CCDRs are intended to inform governments, citizens, the private sector, and development partners and enable engagement with the climate and development agenda.
The CCDRs will feed into other core Bank Group diagnostics, country engagements, and operations and help attract funding and direct financing for high-impact climate actions.
Download Brazil’s Climate and Development Report here.