Decarbonising to Compete: Towards a Low-Carbon Cement and Steel Industry in Brazil

This report by the Climate Bonds Initiative analyzes the decarbonisation pathways for the cement and steel industries in Brazil. It identifies key emission sources, evaluates emerging technologies like low-carbon hydrogen (LCH) and carbon capture and storage (CCS), and examines the financial and regulatory frameworks—including the Brazilian Emissions Trading System (SBCE)—necessary to transition these hard-to-abate sectors toward a low-carbon economy to maintain international competitiveness.

• The cement and steel industries are major contributors to greenhouse gas (GHG) emissions in Brazil, with cement accounting for approximately 2.5% and steel production contributing 4% of the country's total GHG emissions.
• In the cement sector, the calcination process—where limestone decomposes into calcium oxide and CO₂—is the primary emission source, representing about 60% of direct emissions and 70% of total sectoral emissions.
• Brazil possesses comparative advantages for industrial decarbonisation, including a predominantly renewable energy matrix and a history of using biomass (charcoal) in steelmaking, which results in lower GHG emissions per tonne of steel compared to the global average.
• Deep decarbonisation depends on emerging technologies such as low-carbon hydrogen (LCH), carbon capture and storage (CCS), and electrification, though these face barriers including high capital expenditure (CAPEX) and a lack of commercial-scale proof for CCS.
• The Brazilian Emissions Trading System (SBCE), established by Law No. 15,042/2024, creates a regulated carbon market based on a cap-and-trade model using Brazilian emission quotas (CBEs) to provide financial incentives for cleaner practices.
• Green finance in Brazil's construction sector (including cement and steel) is valued at BRL 24bn (USD 4.5bn), yet only 1% of this available credit has been utilized by the construction and real estate sector.
• The European Union's Carbon Border Adjustment Mechanism (CBAM) acts as an international regulatory pressure that encourages Brazilian industry to decarbonise to maintain export competitiveness.
• The New Industry Brazil (NIB) programme is a federal strategy to reindustrialise the country by 2033 with BRL 300bn (USD 56bn) in financing, prioritising sustainability and renewable energy.
• Short-term decarbonisation gains can be achieved through energy efficiency, replacing fossil fuels with biomass or waste (co-processing), and reducing clinker content in cement using supplementary cementitious materials (SCMs).
• Public procurement is identified as a strategic tool to create a minimum viable scale for low-carbon products, supported by Decree No. 11,890/2024 which regulates sustainable development in public purchasing.

APA

Alves, S., de Araújo, B. C., & Tanwar, S. (2025). Decarbonising to Compete: Towards a Low-Carbon Cement and Steel Industry in Brazil. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Decarbonising-to-Compete_English.pdf

Chicago

Alves, Sheila, Bruno Coloma de Araújo, and Sumedha Tanwar. Decarbonising to Compete: Towards a Low-Carbon Cement and Steel Industry in Brazil. Climate Bonds Initiative, 2025. https://www.climatebonds.net/files/documents/publications/Decarbonising-to-Compete_English.pdf.

Wikipedia

{{cite report |last1=Alves |first1=Sheila |last2=de Araújo |first2=Bruno Coloma |last3=Tanwar |first3=Sumedha |title=Decarbonising to Compete: Towards a Low-Carbon Cement and Steel Industry in Brazil |publisher=Climate Bonds Initiative |date=October 2025 |url=https://www.climatebonds.net/files/documents/publications/Decarbonising-to-Compete_English.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{alves2025decarbonising, author = {Alves, Sheila and de Araújo, Bruno Coloma and Tanwar, Sumedha}, title = {{Decarbonising to Compete: Towards a Low-Carbon Cement and Steel Industry in Brazil}}, institution = {Climate Bonds Initiative}, year = {2025}, month = oct, url = {https://www.climatebonds.net/files/documents/publications/Decarbonising-to-Compete_English.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }