CARBON COMPETITIVENESS: BRAZIL AT THE NET ZERO-TRADE NEXUS

Brazil possesses a significant carbon competitiveness advantage due to its renewable-heavy electricity grid, but faces substantial risks from incoming Carbon Border Adjustment Mechanisms (CBAMs) and the EU Deforestation Regulation (EUDR). While 78% of its exports go to net zero-aligned markets, structural contradictions—such as continued fossil fuel exploration and the 'Devastation Bill'—threaten its climate credibility. The economy is heavily dependent on China, and recent unilateral tariffs from the US have introduced significant geopolitical volatility.

• A vast majority of Brazil's export economy is linked to markets with climate commitments, with 78% of exports, valued at $311 billion and supporting 4.9 million jobs, sold to countries with net zero targets.
• Brazil's trade is highly concentrated in China, which accounted for 27.1% of total exports in 2023. This dependency is particularly acute in agriculture, where China buys 73% of Brazil's soybeans.
• The EU's Deforestation Regulation (EUDR) poses a significant risk to Brazil's agri-export model, placing $15 billion in annual exports and 210,000 jobs under heightened scrutiny.
• Brazil's clean electricity grid, which was nearly 90% renewable in 2023, provides a carbon competitiveness advantage for non-agricultural exports, though industrial and transport inefficiencies partially erode this edge.
• The Basic Metals and Automotive industries are less carbon-competitive than their peers; in these sectors, Brazilian emissions are often double or more than those of alternative suppliers.
• Brazil's climate credibility is undermined by the 'Devastation Bill' (Bill 2159/2021) and continued fossil fuel expansion, with 60% of 'Energy transition and security' funds in the 'Novo PAC' programme allocated to the oil and gas industry.
• Geopolitical tensions with the US led to the imposition of steep unilateral tariffs in mid-2025, including a 10% reciprocal tariff and a subsequent 40% duty on most categories, threatening nearly a million export-linked jobs.
• Brazil's transport sector is a major emissions source, responsible for 51% of total energy-related emissions in 2022, driven largely by road transport and a technology lock-in with flex-fuel vehicles.

APA

Elliott, M., & Lang, J. (2025). CARBON COMPETITIVENESS: BRAZIL AT THE NET ZERO-TRADE NEXUS. Net Zero Tracker. https://ca1-nzt.edcdn.com/PDFs-and-Excels/Net_Zero_Trade_Nexus_Brazil_2025.pdf?v=1762091630

Chicago

Elliott, Matt, and John Lang. CARBON COMPETITIVENESS: BRAZIL AT THE NET ZERO-TRADE NEXUS. Net Zero Tracker, 2025. https://ca1-nzt.edcdn.com/PDFs-and-Excels/Net_Zero_Trade_Nexus_Brazil_2025.pdf?v=1762091630.

Wikipedia

{{cite report |last1=Elliott |first1=Matt |last2=Lang |first2=John |title=CARBON COMPETITIVENESS: BRAZIL AT THE NET ZERO-TRADE NEXUS |publisher=Net Zero Tracker |date=2025 |url=https://ca1-nzt.edcdn.com/PDFs-and-Excels/Net_Zero_Trade_Nexus_Brazil_2025.pdf?v=1762091630 |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{elliott2025carbon, author = {Elliott, Matt and Lang, John}, title = {{CARBON COMPETITIVENESS: BRAZIL AT THE NET ZERO-TRADE NEXUS}}, institution = {Net Zero Tracker}, year = {2025}, url = {https://ca1-nzt.edcdn.com/PDFs-and-Excels/Net_Zero_Trade_Nexus_Brazil_2025.pdf?v=1762091630}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }