Brazil’s opportunity to lead the global dialogue on energy and climate

Brazil is a frontrunner in clean energy transitions: among the world’s largest economies, it boasts the lowest share of fossil fuels in its energy mix. Holding the G20 Presidency in 2024, Brazil has an opportunity to lead the global energy transition agenda, drawing on its renewables-based power system and large biofuel sector. It will also host the COP30 climate change conference next year in Belém, a gateway city to the Amazon region, which will put Brazil’s clean energy initiatives firmly under the international spotlight. 

Brazil has overcome a myriad of challenges to become a clean energy leader. Over several decades, it confronted delays in major projects, blackouts and a series of economic setbacks driven by domestic and international factors. We explore these challenges below, as they bring valuable insights for global energy transitions, and explore potential avenues to speed up progress.

Ample water resources and landmark projects like the Itaipu Dam provided Brazil with a robust foundation in hydropower generation, but also left its electricity supply vulnerable to a changing climate. In 2001, low rainfall alongside limited investment in generation and transmission led to a series of blackouts, resulting in rationing and other policy interventions to reduce electricity demand.

In the following years, Brazil worked to improve and diversify electricity sources, targeting investment in wind, solar, and biomass. There was also a focus on expanding and modernising the grid to increase reliability, reduce losses and improve the balance between supply and demand to ensure the smooth integration of variable power sources.

Regulatory interventions supported the participation of independent power producers and a suite of policy instruments – including tax incentives, bilateral agreements and renewable energy auctions – galvanised investments in clean energy. From 2000 to 2022, the share of electricity from hydro in the power mix fell by a third to just under 65%, but the share of renewables overall remained steady at around 90%. 

Brazil is a global pioneer in biofuel production, successfully combining biofuel mandates, financial incentives and sustainability requirements to expand secure and affordable biofuel supply. The country was also the main driver of global biofuel demand up to the early 2000’s, when the United States, India and other countries followed suit.

Today, the transport sector is the main source of fossil fuel demand in Brazil, which relies heavily on road transport. More than 90% of the demand for energy in the country’s transport sector comes from road transport, this compares to a global average of around 75%. Ethanol blending mandates began after the 1973 oil crisis with the Pró Álcool programme, which aimed to reduce oil imports by leveraging Brazil’s agricultural strength. Blending mandates have increased gradually over the years, reaching a 27% requirement for ethanol and 12% for biodiesel on a volume basis. And they are set to grow further, with a 15% target for biodiesel by 2026.

Decades of investment in research and innovation made this possible. Flex-fuel vehicles, which can run on gasoline or ethanol, were developed in the 1990s and now comprise almost 90% of Brazil’s light-duty vehicle fleet. The country is also a global leader in advanced biofuels (produced from waste, residues and non-food energy crops), using agricultural residues to expand supply without increasing land use.

Launched in 2024, the New Industry Brazil policy calls for a focus on sustainability and innovation. One of its targets is to increase the share of biofuels by 50% in the transport energy mix by 2033. This follows the launch of the G20’s Global Biofuel Alliance in 2023 with the aim of boosting supply and demand for biofuels. Brazil is also developing a Future Fuel Program to increase ethanol, biodiesel and sustainable aviation fuel blending, as well as to set frameworks for other low emissions fuels. 

Brazil can build on its diplomatic strengths to facilitate global cooperation and partnerships for clean energy. The country has a long history of fostering international collaboration, notably the 1992 Rio Summit, which delivered a new blueprint for international action on environmental and development issues including the United Nations Framework Convention on Climate Change. Today, Brazil’s low-emissions energy sector and large resource base provide the right conditions for developing industrial clusters alongside other countries, which will be key for transitions to net zero emissions. The country is already taking steps in this direction, working with the United States to decarbonise the steel sector, with the European Union to start low-emissions hydrogen manufacturing, and with China to produce electric vehicles and batteries.

The development of sustainable fuels is one of several areas in which the global energy and climate dialogue could benefit from Brazil’s leadership. In the IEA’s Net Zero Emissions by 2050 Scenario, demand for sustainable fuels – such as biofuels, biogases and low-emissions hydrogen – doubles by 2030 and then nearly doubles again by 2050. Sustainable fuels are important options for the transition away from fossil fuels in the transport and industrial sectors, serving as a complementary measure to electrification and energy efficiency. ​

Ramping up clean energy investment in emerging and developing economies is essential for ensuring secure, fair and affordable net zero transitions. To meet rising energy needs in ways that align with the Paris Agreement, annual investment in clean energy will need to more than triple in these economies by the early 2030s. However, limited fiscal capacity means there is little room for incentives that go beyond target-setting. Sustainable finance can help reduce the high cost of capital and usher in much needed investment. Brazil's collaboration with the World Bank and the Inter-American Development Bank on a new Sovereign Sustainable Bond allowed it to structure financing tailored to its specific needs and goals.

Yet another key task is ensuring that the transition to clean energy is people-centred and addresses the needs of the most vulnerable. Brazil has implemented programmes with this aim, like PRONATEC, which supported forest product value chains and combated illiteracy, or the Low-Carbon Agriculture Program, which includes support for smallholder farmers and bioenergy production from agricultural waste. At the COP28 climate change conference in Dubai in 2023, it unveiled an Ecological Transformation Plan with the goal of fostering economic development based on environmental sustainability, employment and productivity, and social justice.

Solutions to energy and climate needs will depend on both domestic and international action. Brazil is keenly aware of the imperative of moving faster. It has suffered in 2024 from devastating floods in the state of Rio Grande do Sul and fires in the Pantanal region. The country is working on many fronts to improve climate prospects, with important implications for its international agenda. As countries around the world seek to reach international energy and climate goals, Brazil has valuable experiences, expertise and ideas for expanding the global clean energy economy.