By Joe Ryan, Executive Director, Crux Alliance
More than two decades ago, China decided to forego investments in internal combustion engine vehicles and leapfrog to what experts believed would be the technology of the future – clean, electric vehicles.
The country’s leaders adopted a comprehensive set of policies and programmes that supported the growth of a new industry, from critical minerals to the sales floor.
China today accounts for 60% of all EV sales globally, with three of its EV battery companies composing more than half the global market.
As we head into the next phase of the world’s energy transition, Brazil is staring at a similar opportunity to reap the rewards of early investments in nascent clean technologies, which means a chance to generate wealth for its people while demonstrating global climate leadership.
Brazil has a solid head start with a hydro sector that meets 72% of domestic electricity demand and is the world’s biggest sugarcane ethanol producer.
But its advantages go further.
The country’s northeast region is rich in the kind of stable winds that are perfect for wind power generation, with a wind capacity factor that is nearly double the global average. Onshore wind has already grown exponentially from humble beginnings two decades ago, but a new World Bank assessment finds that, with the right policy framework, Brazil could have as much as 96GW of installed offshore wind capacity by 2050.
If Brazil gets its wind strategy right, including by guaranteeing local communities reap real benefits, the country could be generating surplus clean power while most other countries will still be trying to build enough renewable energy to power their grids. Brazil could use its excess clean electricity to produce green hydrogen at a much lower cost than other countries.
Investing early in additional clean electricity along with green hydrogen infrastructure will give Brazil a major lead in cornering this market while speeding global climate solutions.
And then there is biofuels. Already an agricultural superpower, Brazil has an additional 40 million hectares of degraded grazing area that could be utilised.
Some argue the land should be used to grow sugarcane for even more ethanol production to fuel private vehicles. But this would be a mistake.
The world’s major auto markets and manufacturers are leaving fuel-based vehicles behind in favor of fully-electric battery powered cars and trucks because of their higher efficiency and lower emissions.
Even the heavy-duty vehicles sector is electrifying at a faster rate than previously thought, thanks to rapid advances in battery technology and falling costs.
If Brazil continues to pursue an ethanol strategy for cars it will cede electric vehicle manufacturing jobs to other countries, while its own transportation emissions fall at a slower rate than possible.
Upcoming updates to its vehicle incentive programme will be a key moment for the country to encourage faster consumer adoption of the most efficient battery vehicles.
Brazil should turn away from the hybrid technologies of the past and instead accelerate toward zero-emission battery cars and trucks.
Granted, there are sectors, such as aviation or shipping where batteries are not an easy clean energy solution but this offers advantage for countries that can provide sustainable fuel alternatives.
Instead of more ethanol, Brazil can use expanded crops and the enormous amount of plant waste that is a byproduct of their processing to create second-generation biofuels to produce sustainable shipping and aviation fuels, substantially reducing the climate impact of massive global industries offering potential for skyrocketing demand in the coming decades.
Brazil is possibly the only major exporter of biofuels in the world that has enough already available land to ensure its production is truly carbon neutral. Competitors needing to cut down more forests or transform carbon sinks to grow crops to produce biofuels are destined to be losers in a future where markets demand truly carbon neutral fuels.
And Brazil can also take a lead on creating strict and transparent mechanisms that determine the carbon intensity of crop-based fuels. If farmers and the industry can demonstrate to buyers that only their fuel truly meets what will only continue to be increasingly stringent regulatory requirements, Brazil will be able to corner the market. In a race to the top, Brazil wins.
There is no turning back from the global energy transformation, and the marketplace will reward early investors.
To capture these opportunities, Brazil’s leaders will need to devise an integrated energy strategy to optimise the best uses of its rich resources, and create the policy frameworks that can unleash this potential.
A haphazard approach that caters to powerful special interests risks leaving all of these opportunities on the table, to be seized by other countries.
In contrast, countries with a strategic vision that embrace emerging clean technologies will become the 21st century’s new economic powerhouses.
As the current president of the G20 and the host of next year’s climate negotiations, Brazil has a tremendous platform to model such vision while attracting the attention of new foreign investors. This is Brazil’s moment in the spotlight, It should not go to waste.
This article was originally published on Recharge News and is republished here with permission.
