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PTStudy Examines Decarbonization and the Competitiveness of Brazilian Industry
Brazilian industry accounts for 25% of the national GDP and is responsible for approximately 9% of greenhouse gas emissions. The decarbonization of industry is, therefore, a central element for the country to achieve its NDCs by 2050. This effort must necessarily include hard-to-abate sectors (such as cement, steel, aluminum, chemicals, glass, paper, and pulp), which play a decisive role.
There are already at least 28 national and international financing instruments that directly or indirectly support this process. In this context, financing for industrial decarbonization appears to depend less on the creation of new instruments and more on the improvement, coordination, and stability of existing policies.
Scaling up the supply of financing for industrial decarbonization must align with a structured industrial policy and long-term signals that reduce investment risks in the sector, while preserving the industry’s competitiveness.
These were some of the insights revealed during the webinar “Public Policy and Financing Opportunities for Hard-to-Abate Sectors,” hosted by WRI Brasil and WayCarbon on March 3, which featured the participation of: Júlia Cruz (Brazilian Secretary of Green Economy, Decarbonization, and Bioindustry at the Ministry of Development, Industry, Trade, and Services – MDIC), Andres Comba (Head of UK PACT and Senior Green Finance Advisor at the British Embassy), Bruna Araújo and Nathalia Pereira (leaders of WayCarbon’s Sustainable Finance team), Marina Garcia, Luana Betti, and Karen Silverwood-Cope (Senior Analyst, Manager, and Director at WRI Brasil, respectively).
The basis for the discussion was the results of research conducted as part of the “Unlocking Finance for Industrial Decarbonisation in Brazil” project, currently being developed by WayCarbon and WRI with support from the British Embassy and the MDIC, and launched during COP30.
Climate policies
During the event’s opening ceremony, Bruna Araújo listed the various initiatives related to climate policy and industrial decarbonization identified in Brazil. “We have the Brazil Platform for Climate Investments and Ecological Transformation (BIP); the National Strategy for Industrial Decarbonization (ENDI); the Brazilian Emissions Trading System (SBCE); and the Eco Invest Program. These aim to improve this ecosystem, facilitate climate finance, and thereby enable the fulfillment of Brazil’s NDCs,” she notes.
Nathalia Pereira emphasized that the arrangement of financial instruments within the context of each industrial sector is fundamental. “Ensuring demand for green industrial products and embedding risk-reduction mechanisms for investment within these instruments — whether through excess-of-cost insurance, a guarantee fund, or something similar — is what will effectively unlock the sector’s ability to consider long-term investment, far beyond the mere provision of new financing products,” she says.
Financial instruments that support decarbonization
The 28 instruments identified in the study fall into the following categories:
- Commercial and subsidized credit lines;
- Labeled financial instruments;
- Sectoral and constitutional funds;
- Grants;
- Blended finance instruments;
- and guarantee funds.
Similarly, 104 actors were mapped across six areas: private and public sectors, funding sources, facilitators, knowledge generation, and social engagement, and four types of relationships: financing, coordination, facilitation, and representation. Examining this ecosystem made it possible to identify where there are partnerships and initiatives that are working well and where there are gaps and opportunities.
Key Points of the Brazilian Industry
In summary, the study demonstrates that Brazil’s strengths include a broad, diverse, and relatively structured ecosystem for industrial decarbonization, as well as high potential for renewable resources with complementary regional strengths, which favors the diversification of technological pathways and expands possible solutions.
Finally, another key point is the progress made on the regulatory front, which is essential for attracting international capital, such as the Eco Invest initiative, launched in 2024, and the Brazilian Sustainable Taxonomy, introduced last year.
