Brazil at a Crossroads

Brazil is projected to increase oil and gas production by over 20% by 2030, with Petrobras driving more than half of this growth. However, analysis shows that up to 85% of Petrobrass new oil production would be economically unviable in a 1.5C world, creating significant stranded asset risks. Petrobras plans to invest USD 97 billion in oil and gas from 2025 to 2029, which is six times its spending on decarbonization and diversification. The report finds that Petrobras lags industry peers in target setting and business model diversification. To mitigate these risks, the authors recommend that the Brazilian government curb exploration licenses, redefine Petrobrass mandate toward a "harvest mode" strategy, and redirect financial flows toward clean energy, where an annual investment gap of USD 16 billion is projected by 2035.

• Brazil is projected to increase its oil and gas production by more than 20% by 2030, which would move the country from the seventh to the fourth-largest oil producer globally.
• Petrobras's financial priorities remain heavily skewed toward fossil fuels, with USD 97 billion planned for oil and gas investments between 2025 and 2029, while only 15% of its spending is dedicated to decarbonizing and diversifying its business.
• Petrobras underperforms compared to top oil and gas companies and other national oil companies (NOCs) regarding transition planning, specifically in target setting, the carbon intensity of sold products, and the development of low-carbon business models.
• The company's current assets and those under development are projected to exceed the 1.5C carbon budget by 30% between 2023 and 2050, and its emissions intensity reduction rate (0.8% annually) is significantly slower than the 4.5% required for NZE alignment.
• Brazil's updated NDC relies on ambitious carbon sequestration assumptions, such as sequestering 500 MtCO2/year by 2050 through reforestation and 400 MtCO2/year via bioenergy with carbon capture and storage (BECCS), which may justify continued oil and gas expansion.
• By 2035, Brazil will face an annual clean energy investment gap of USD 16 billion, while simultaneously spending over USD 15 billion annually on oil and gas fields incompatible with 1.5C scenarios.
• Public and private financial actors, including the Brazilian Development Bank (BNDES), have significant leverage to influence Petrobras; BNDES is the second largest investor in the company with USD 8 billion in shares.

APA

von Kursk, O. B., Roth, J., Fujii, R. J., Schiavo, C., Verazaín, L. H., & Erhan, E. (2025). Brazil at a Crossroads. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-06/brazil-petrobras-oil-gas-expansion.pdf

Chicago

von Kursk, Olivier Bois, Joachim Roth, Ricardo Junqueira Fujii, Carolyne Schiavo, Laura Hurtado Verazaín, and Emir Erhan. Brazil at a Crossroads. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-06/brazil-petrobras-oil-gas-expansion.pdf.

Wikipedia

{{cite report |last1=von Kursk |first1=Olivier Bois |last2=Roth |first2=Joachim |last3=Fujii |first3=Ricardo Junqueira |last4=Schiavo |first4=Carolyne |last5=Verazaín |first5=Laura Hurtado |last6=Erhan |first6=Emir |title=Brazil at a Crossroads |publisher=International Institute for Sustainable Development |date=June 2025 |url=https://www.iisd.org/system/files/2025-06/brazil-petrobras-oil-gas-expansion.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vonkursk2025brazil, author = {von Kursk, Olivier Bois and Roth, Joachim and Fujii, Ricardo Junqueira and Schiavo, Carolyne and Verazaín, Laura Hurtado and Erhan, Emir}, title = {{Brazil at a Crossroads}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = jun, url = {https://www.iisd.org/system/files/2025-06/brazil-petrobras-oil-gas-expansion.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }