BRASÍLIA, May 4, 2023 – Brazil is in a strong position to give its people a better life while also successfully confronting the threat of climate change, a new World Bank Group report released today said.
According to the Country Climate and Development Report for Brazil, the country can become a global clean energy power and save the Amazon with a development plan that grows more food on less land and better protects the forests. Brazil can grow its economy and fight climate change with relatively modest investments in agriculture and deforestation, the energy sector, and cities and transport systems.
“Climate shocks could push between 800,000 and 3,000,000 Brazilians into extreme poverty as soon as 2030. It is crucial that Brazil accelerate investments towards a resilient and low carbon growth pathway,” said Johannes Zutt, World Bank Country Director for Brazil. “To take full advantage of its potential, Brazil would need net investments of 0.8 percent of its annual GDP each year between now and 2030. The World Bank is committed to work 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. Almost half of Brazil’s energy supply, including over 80 percent of its electricity, already comes from renewables, compared with world averages of between 15 and 27 percent.
Adding more clean energy would not be more expensive for Brazil than current plans to expand fossil fuel generation. An increase in investment for renewables would have higher upfront costs for power generation, transmission and storage. But the report says these would be fully recouped by savings in fuel and operations costs. Likewise, a move in transport and industry to more electrification and green hydrogen, produced with wind and solar instead of gas, would not increase costs for the economy.
The report says Brazil has a big competitive advantage in the growing global market for greener goods and services. Its private sector is already competitive in several products required for moving away from fossil fuels, including those related to wind turbines and parts for electric motors and generators. Brazil could enter markets for solar power products, expand into green hydrogen, and profit from its major deposits of climate-relevant minerals.
“The private sector can and should play a central role in the transition of the Brazilian economy towards a more resilient and decarbonized economy. The engagement from the private sector will be crucial to, among other aspects, finance the majority of capital investments needs for climate action, helping leverage climate finance and public spending,” said Carlos Leiria Pinto, IFC Brazil Country Manager. “But for that to happen, we need an enabling business environment and public support to attract private investors and accelerate innovation.”
The report says the Amazon rainforest, nearing a tipping point with potentially drastic consequences for Brazil’s people 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 preserving the forest. This plan could remove the incentives for the Amazon’s destruction 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 investments from the private sector, as well as reforms to the rural credit program and improvements in irrigation.
Spending will also be needed to facilitate the transition of workers and asset owners to greener sectors, including compensation for the early retirement of carbon emitting assets. Still, according to the Brazil CCDR, these investment needs will be largely compensated by economic savings, in the form of avoided energy spending or reduced congestion or air pollution.
Overall, total economic costs of the resilient and net-zero pathway proposed in the Brazil CCDR are about 0.5 percent of GDP, without accounting for the domestic and global benefits from avoided climate change impacts and the economic and non-economic benefits from preserving the unique biodiversity and ecosystem services offered by native forests.
Key recommendations: a combination of structural reforms, economy-wide climate policies and targeted sectoral measures
The CCDR highlights one of multiple pathways through which Brazil could take advantage of its position, therefore achieving greater climate resilience and net zero GHGs and, based on a package of actions such as:
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 most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation, while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to inform governments, citizens, the private sector and development partners and enable engagements with the development and climate agenda. CCDRs will feed into other core Bank Group diagnostics, country engagements and operations, and help attract funding and direct financing for high-impact climate action.
Download Brazil's Country Climate and Development Report here
View previously launched reports here