Leading up to COP30 in Brazil, the Crux Alliance will be highlighting the most impactful policies for promoting a thriving, 100 percent clean energy economy that benefits all Brazilians. The below blog is an except from a report by E+ Energy Transition Institute, a Crux Alliance local partner.
Brazil’s energy transition should not be viewed as an end, but rather as a means to build a productive model aligned with social and environmental imperatives — one that can generate employment, distribute income, and promote inclusive development.
Brazil holds significant potential to leverage its renewable energy base in advancing industrial decarbonization. In several sectors, the country’s industrial processes already exhibit a lower carbon footprint compared to international counterparts. This emissions advantage creates a valuable opportunity for Brazil to attract new investments and position itself as a competitive supplier of low-carbon goods in global markets, particularly in regions where decarbonizing production is more costly or technically challenging.
From this foundation, the dynamics of industrial decarbonization can be structured into three complementary strategic pathways:
- The first step is to leverage the sustainability differential already present in certain Brazilian products to capture a real commercial advantage. Here, sustainability encompasses not only lower greenhouse gas emissions, but also best practices in water and land use, labor conditions, and other relevant factors. To achieve this, high-quality data, certifications, international recognition, and the promotion of low-carbon products are essential.
- The second pathway is to enable the transition of already established production chains that heavily rely on fossil fuels or employ highly carbon-intensive industrial processes. This requires new financing models, support for technological modernization, and policies that facilitate the substitution of carbon-intensive processes with cleaner and more efficient alternatives.
- The third front is to pave the way for the emergence of new industries driven by the global dynamics of the energy transition, such as fertilizer production, SAF (sustainable aviation fuel), and green methanol. In this context, Brazilian bio-based inputs and bioenergy will play a strategic role. It is crucial to ensure that this new industry is built with respect to environmental and social limits, preventing deforestation, promoting sustainable land and water management, and ensuring decent labor conditions. Furthermore, it is necessary to ensure certification and alignment with international standards for the responsible sourcing of these new technological pathways.
The figure above illustrates how carbon accounting, taxonomy, and certification systems play central roles in the industrial decarbonization process and in the creation of new green industries in Brazil. However, it is crucial to emphasize that these tools only generate real economic impact when there is clear demand signaling for sustainable products. It is essential to develop policies and financing instruments that address the energy transition from the demand side. That is, not only thinking about how to generate clean energy, but considering who will use it, how it will be used, and for what purpose.
Below is an initial list of mechanisms, organized into four strategic fronts:
Institutional and economic infrastructure for transition
Focus on creating systemic and institutional conditions that reduce risks, guide investments, and provide the necessary environment for decarbonization.
- Taxonomy: Defines objective criteria for what is considered sustainable, aligning investments and public policies.
- Certification and green premium recognition: Ensures traceability and acceptance of sustainable products in more demanding markets.
- Carbon market: Creates value for emission reductions and provides financial incentives for low-carbon practices.
- Reduction of country risk through clear economic and climate policies: Stability and predictability help attract investment and reduce the cost of capital.
Access to sustainable industrial and energy inputs
Ensures that the industry has reliable and competitive access to the inputs required to operate with low emissions.
- Long-term supply agreements for energy inputs (e.g., biogas, renewable electricity, green hydrogen): Reduces volatility and increases cost predictability.
- Logistical and transportation infrastructure for new inputs: Adapts modes and networks to facilitate the flow of new materials and energy sources.
- Certification and support for the development of sustainable supplier chains: With special focus on small and medium enterprises—including support for project formulation and access to financing lines for the transition.
Transformation of productive capacity
Involves tools aimed at reforming and modernizing industry, enabling its adaptation to new sustainability standards.
- Grant financing: Covers part of the costs for innovative or high-risk projects, accelerating the transition.
- Financing for industry: Transformation with Simplified Counterparties Facilitates investments in clean technologies, equipment modernization, and process reorganization.
Demand stimulation and commercial integration
Mechanisms that boost demand for sustainable products and ensure market scale, both nationally and internationally.
- Buying pools: Consortia of buyers that ensure volume and predictability for new industrial chains.
- International agreements for scale and long-term sales: Support the integration of sustainable products into external markets, particularly those that require certification and environmental proof.
- Sustainable public procurement: The state as a strategic buyer, signaling the market for low-carbon products.
Although the development of the sustainable products market is still in its early stages, the decarbonization process is complex and requires preparation now. Without the proper structuring of instruments, policies, and support mechanisms, there is a risk that Brazil could miss a strategic window of opportunity—both for its positioning in the international market and for the transformation of its national production base
Industrial decarbonization requires more than just new technologies; it involves a profound transformation of production chains, markets, and financing structures. E+ Energy Transition Institute understands that there is no one-size-fits-all solution—a coordinated set of mechanisms across industrial policy, trade, and finance is necessary to drive this change.