Carbon Competitiveness: Brazil at the Net Zero–Trade Nexus

Brazil’s world-leading clean power mix underpins a once-in-a-generation opportunity to lead the global low-carbon export economy. Nearly 90% of its electricity comes from renewables — the cleanest grid in the G20 — giving it a natural advantage in energy-intensive sectors like aluminium, green steel and data centres. 

But rising oil dependence, persistent deforestation risks and industrial inefficiencies threaten to erode that carbon advantage just as major trading partners tighten climate rules.

Our report, Carbon Competitiveness: Brazil at the Net Zero–Trade Nexus, finds:

• Brazil’s trade is already anchored in net zero markets: 78% of its $397 billion in exports — supporting 6.6 million jobs — go to countries with net zero targets.
• The country’s $40 billion crude oil exports, supporting 71,000 jobs, are particularly exposed. Almost 90% of it goes to countries with net zero targets.
• China and EU markets dominate Brazil’s trade outlook. Together, they account for over 40% of Brazil’s exports and 2.3 million jobs. As both markets tighten climate policies, they will become more likely to reward lower-carbon suppliers.
• Carbon-intensive trade risks are rising. More than one million jobs are tied to economies with active Carbon Border Adjustment Mechanisms (CBAMs), and a further 478,000 depend on markets where similar measures are under consideration.
• Carbon-competitive sectors such as agriculture, metals and data services already benefit from Brazil’s clean electricity base.
• Biofuels sector is ripe for expansion. Brazil’s pioneering ethanol and biodiesel sectors — which produce 22% of domestic transport fuels — are in high demand from hard-to-electrify industries, particularly aviation, shipping and heavy-duty road transport.

Deforestation and trade exposure

Agricultural commodities remain Brazil’s export backbone but also its greatest liability. 

The EU Deforestation Regulation (EUDR) puts $15 billion in exports and over 200,000 jobs at risk if supply chains remain linked to forest loss. Domestic legislation such as the 2025 'Devastation Bill' could weaken oversight and strain trade ties, especially with the EU, where forest protection is an important condition for deals such as the long-delayed EU–Mercosur agreement.

Global supply chains are shifting

Across Brazil’s ten largest export markets, 266 multinational companies with a combined $9.4 trillion in revenues have full-value-chain (Scope 3) net zero targets, signalling that buyers are moving toward low-carbon suppliers. 

Brazil’s green energy advantage is already attracting investment: for example, Chinese firm Envision is partnering to build a Net Zero Industrial Park producing sustainable aviation fuel, while major tech companies including Microsoft and TikTok have announced new Brazilian data-centre projects powered by renewables.

The road ahead

Hosting COP30 in Belém gives Brazil a platform to showcase progress on renewables, industrial decarbonisation and forest protection, but also exposes its contradictions. More oil expansion and patchy enforcement of deforestation laws risk undermining its climate credibility and deterring clean energy-related investment. Success on launching and delivering the Tropical Forest Forever Facility at COP30 could help secure the finance and support to put a significant dent in deforestation.

To turn clean power into global trade power, Brazil should align its industrial, energy and forest policies, further strengthen enforcement against illegal deforestation and accelerate industrial efficiency. 

Brazil has an opportunity to transform from a commodity exporter into a clean-energy and manufacturing hub for the global economy. Failure to act risks squandering its relative carbon advantage as clean energy deployment and industrial policy accelerates decarbonisation in other countries.