Climate Financing in BRICS: Lessons from Brazil and South Africa

The document examines how Brazil and South Africa use carbon pricing, green bonds, green taxonomies, and central bank regulations to fund their transitions to net zero by 2050. It highlights the inadequacy of current international climate finance, noting that developing countries pay significantly more for multilateral development bank finance and that most climate funding arrives as loans rather than grants. The brief details South Africa's carbon tax and Just Energy Transition Partnership (JETP), and Brazil's voluntary carbon market and sovereign sustainable bonds. It argues that BRICS nations should use peer learning to scale these tools and collectively advocate for the restructuring of the World Bank and IMF to ensure more affordable and equitable finance for the Global South.

• Developing countries face significant financial barriers to climate action, including a need for an additional $2 trillion annually by 2030 to meet Paris Agreement goals and a disparity where they pay approximately eight times more than developed nations to access finance from multilateral development banks.
• South Africa's carbon tax, introduced in 2019, faces effectiveness challenges due to exemptions for the coal-based utility Eskom and a projected tax rate that may be insufficient to meet Nationally Determined Contributions targets by 2026.
• Brazil is developing an Emissions Trading Scheme (ETS) that will mandate emissions reporting for companies emitting over 10,000 tonnes of carbon dioxide annually and impose caps on those emitting over 25,000 tonnes, though the agriculture sector is excluded.
• Climate finance for South Africa is heavily reliant on debt; in 2023, debt financing constituted 75% of all climate finance, and 85% of the Just Energy Transition Partnership (JETP) financing consists of loans.
• Brazil has advanced its green bond market through the 2017 Brazil Green Bonds Statement and the 2023 launch of a $2 billion sovereign sustainable bond under the Sovereign Sustainable Bond Framework.
• Both countries have developed green taxonomies to prevent 'greenwashing' and attract investment; South Africa's 2022 taxonomy aligns with the EU's for interoperability, while Brazil's Sustainable Taxonomy is expected to become mandatory in January 2026.
• Central banks in both nations are integrating climate risks into regulation: the South African Reserve Bank released guidance on climate-related risk practices for banks in 2023, and Banco Central do Brasil requires climate risk stress testing and restricts loans for projects in the Amazon biome or on Indigenous land.

APA

South African Institute of International Affairs (2025). Climate Financing in BRICS: Lessons from Brazil and South Africa. https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/

Chicago

South African Institute of International Affairs. Climate Financing in BRICS: Lessons from Brazil and South Africa. 2025. https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Climate Financing in BRICS: Lessons from Brazil and South Africa |date=1 September 2025 |url=https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2025climate, author = {{South African Institute of International Affairs}}, title = {{Climate Financing in BRICS: Lessons from Brazil and South Africa}}, institution = {South African Institute of International Affairs}, year = {2025}, month = sep, url = {https://saiia.org.za/research/climate-financing-in-brics-lessons-from-brazil-and-south-africa/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }