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Establishing a Climate-Forward Clean Energy Industrial Partnership
Brazil and the United States share the goal of creating more competitive, clean, fair, and resilient economies by promoting the clean energy transition in a way that fosters economic growth and the generation of high-quality jobs, while reducing emissions and keeping our 1.5°C goals within reach, consistent with the Paris Agreement. Along with other domestic priorities, these objectives align with the following public policy agendas in both countries:
Brazil and the United States have immense potential to lead the global energy transition on some of its most promising fronts. This new partnership presents a strategic opportunity to strengthen bilateral cooperation on clean industrial development, leveraging complementarities across both our public and private sectors. The two sides announce their intent, in particular, to focus coordination across three pillars:
Through this partnership, announced by Presidents Lula and Biden, Brazil and the United States intend to mobilize all relevant government agencies in our countries to shape and accelerate just and inclusive energy transitions and provide the needed signals for public and private sector stakeholders to fully participate in this effort.
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The energy transition represents one of the main global challenges in the 21st century, especially in the context of climate change and the search for sustainable development. Brazil, with its vast natural wealth and a relevant history of investments in renewable energy, emerges as a strategic country in this process. Yet, The opportunities provided by this transition are accompanied by risks that need to be faced to ensure a balanced and resilient economy.
One of the biggest opportunities for the energy transition in Brazil is the diversification of the energy matrix. The country, which has historically depended on hydroelectricity as its main source of energy, has expanded its operations in other areas, especially in solar and wind energy generation. Brazil is already one of the world leaders in renewable energy, with emphasis on the wind sector, that in 2022 generated approximately 12% of the country''s electricity. Besides that, Solar energy has shown exponential growth in recent years. This diversification strengthens energy security and reduces dependence on sources that, although renewable, are vulnerable to climate change, like hydroelectric, which suffers from reduced rainfall during periods of prolonged drought.
Leadership in renewable energy is another opportunity that puts Brazil in an advantageous position. According to the Ministry of Mines and Energy, more of 80% of the country''s electricity already comes from clean sources, which gives Brazil an international role in discussions about sustainability and energy transition. With increasing global demand for low-carbon solutions, the country has the chance to export both technologies and know-how in renewable energy. This could strengthen Brazil''s role in multilateral agreements, like the Paris Agreement, while attracting foreign investment, creating an enabling environment for sustainable economic growth.
However, the energy transition also presents significant risks, especially related to dependence on imported technologies. Although Brazil has advanced in the production of clean energy, Most of the technologies used – such as wind turbines and solar panels – are still imported, mainly from China. This dependence could become an obstacle to the development of a robust national renewable energy industry, limiting the creation of qualified jobs and internal technological development. Besides that, Vulnerability to currency fluctuations and global supply crises can impact the cost and viability of energy projects in Brazil.
Another important risk is the economic impact on regions dependent on fossil fuel exploration.. Brazil is still one of the world''s main oil producers, and some regions, like the state of Rio de Janeiro, have an economy heavily dependent on this industry. The transition to a low-carbon economy could result in job losses and tax revenue in these areas, creating a scenario of economic uncertainty. The lack of adequate planning for professional retraining and the creation of new job opportunities in green sectors can worsen regional inequalities, exacerbating social and economic problems.
In short, The energy transition in Brazil offers enormous opportunities for sustainable development, especially through the diversification of the energy matrix and global leadership in renewable energy. Yet, risks cannot be underestimated. Dependence on imported technologies, The economic impact on regions dependent on fossil fuels and the urgent need for investment in infrastructure are challenges that need to be faced with effective public policies, technological innovation and long-term planning. If well managed, the energy transition can not only strengthen the Brazilian economy, but also consolidate the country as a global power in the fight against climate change.
In recent weeks, São Paulo has been featured as the most polluted metropolis in the world. The haze enveloping the city of 11.4 million inhabitants originates from the smoke of wildfires ravaging the country and from atmospheric pollution. In this dramatic context, amid terrifying news about the growing number of climate migrants, the need for more sustainable energy sources is impossible to ignore. Poliana Dallabrida reports.
Brazil represents a vibrant market for investment in energy transition projects. In 2023, the country was ranked sixth among the top 10 economies for such investments, following China, United States, Germany, UK and France. The country saw USD 34.8 billion injected into projects, nearly all of it in renewable energy ventures, according to data from the research firm Bloomberg NFE. Last week, the company''s global head of energy transition described Brazil as the ''golden girl'' of the global energy transition.
In the first year of his third term, President Lula da Silva announced investments of R$ 50 billion to implement the country''s largest energy transition programme, focusing on the construction of wind and solar energy parks in Brazil''s northeast. With wind and sun year-round, the region accounts for 83% of the country''s production of energy from these two renewable sources.
The northeast also holds the largest share of Brazil''s poor population and is home to the two states with the lowest Human Development Index among the 27 federal units. Given this context, wind and solar projects are viewed favourably by policymakers.
However, the social and environmental costs of this energy transition are often overlooked in governmental and business calculations. Damage to biodiversity, land disputes, threats to traditional lifestyles and impacts on water supply are among the side effects already observed in communities adjacent to such projects.
In March, an investigation carried out by the NGO Repórter Brasil identified that 46 wind energy companies – 19 of which are foreign – control 226,000 hectares of land in Rio Grande do Norte, one of the nine states in Brazil''s northeast. Control over the land is managed through lease agreements signed between the companies and residents.
One of these residents was José Bernardo Sobrinho. Illiterate, Sobrinho signed a contract ceding part of his land for 37 years, with the possibility of renewal for an additional 22 years. The farmer''s widow, Severina Rodrigues da Silva, is prohibited by the wind farm''s managing company from planting beans on her land, now marred by a wind turbine. The nearest tower is only 220 meters from Severina da Silva''s home.
A technical report by the Institute of Socioeconomic Studies (Inesc), published in October 2023, analysed 50 contracts signed by wind energy companies in Brazil''s northeast and identified clauses that are disadvantageous, irregular and abusive towards the communities. Among these are long-term contracts with automatic renewals, penalties of up to R$ 5 million for farmers wishing to break the lease, minimal compensation and variation in the monthly rent paid to residents based on the company''s earnings from the produced energy.
''In summary, the actions of companies to install wind energy generation projects in the region, with the support and participation of public authorities, reproduce the exclusion of populations directly affected by the ventures, suppressing their right to participation and distancing them from decision-making processes,'' states the report.
Another investigation by Repórter Brasil revealed that a company''s plans to build the country''s largest wind and solar energy complex disregard the potential impact on water supply, including the burial of water springs.
In Bahia, also in Brazil''s northeast, a major renewable energy project plans to install 405 wind turbines – each three times the height of the Christ the Redeemer statue in Rio de Janeiro – and 476,000 solar panels. The park will have the capacity to produce the equivalent of one-quarter of the energy generated by Brazil''s Itaipu hydroelectric plant, the largest in the country and the second largest in the world.
A study being conducted by researchers from the Federal University of Vale do São Francisco and the municipal government of Jaguarari, one of the areas affected by the megaproject, has already identified 63 springs in the region. However, the technical report that supported the project''s license only mentions three springs, a figure contradicted by the municipal environmental secretary.
Researchers interviewed by Repórter Brasil suggest that the installation of wind turbines in the region will result in the deforestation of hilltops, putting water springs at risk. Other watercourses may be buried during the construction of roads necessary for transporting the massive turbine components. The project, scheduled to begin operations in 2027, outlines the need to construct 446 kilometres of internal roads, each at least 11 metres wide.
Since 2023, the State Public Prosecutor''s Office of Bahia has been monitoring allegations of irregularities related to the project.
Dissatisfaction and protests have led to the creation of various organizations questioning the impacts of these large projects, such as the Movement of Those Affected by Renewables (MAR) in October 2023. ''We are trying to build a network not to oppose renewable energies, but to advocate for alternative models, for a just energy transition where populations are considered,'' said Francisco Adilson da Silva in an interview for Terra website. Silva is the coordinator of the Rural and Urban Assistance Service of Rio Grande do Norte, one of the organizations endorsing the MAR manifesto.
In January of this year, 30 civil society organizations, research groups and communities affected by renewable energy production in the northeast released the document ''Socioenvironmental Safeguards for Renewable Energy''. The document outlines 100 legal measures that should be taken to mitigate socio-environmental impacts in Brazil''s wind and solar sectors.
As highlighted by the news portal Nexo, the safeguards aim to address issues with existing projects and prevent the recurrence of these problems in new ventures. Besides proposing changes to Brazilian public policies, the organizations behind the document emphasize that the measures can be voluntarily adopted by companies in the wind and solar sectors, and by project financiers.
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