Decarbonising Brazil’s industrial sector

By Green Finance Institute | December 16, 2025

All eyes were on Brazil last month at COP30, as delegates focused on implementation to drive the agenda forward. The GFI was on the ground in both São Paolo for ‘week zero’ as well as in Belem for the summit itself. The GFI is aiming to deploy our Transactions to Transitions (T2T) Global Investment Greenprint, addressing policy and regulatory barriers, demand and supply incentives, product innovation and product scaling to decarbonise Brazil’s industrial sector.

Representing 10% of the country’s emissions, Brazil’s industrial sector requires USD$9.3–21 billion in investment by 2050.[1] To enable emissions reductions, the Government of Brazil is focussed on modern industrial revival through advanced technology, innovation, sustainability, and integration into global value chains. Brazil’s New Industrialisation Strategy has the potential to add 1–1.5% to annual GDP growth and create 2–5 million jobs over the next 10–15 years.

Brazil has natural competitive advantages: a clean energy matrix, a large domestic market, vast biodiversity, and relative geopolitical stability. Together, these strengthen Brazil’s position to attract up to $55 billion
in investments in green industrialisation.[2]

Under current federal plans, public and development-bank financing via BNDES (the National Brazilian Development Bank), Finep (the Brazilian government’s Funding Authority for Studies and Projects), and others is on track to deliver $11 billion by 2026 towards research, development and innovation projects.[3]
Yet, this leaves a significant gap to be filled by private investment and international development finance to meet the targets outlined in the Brazilian New Industrialisation Strategy.

The “financing gap” is not just about the volume of capital but about how capital is structured. Brazil needs strong blended-finance mechanisms, risk-sharing instruments, as well as predictable policy signals to close this gap.

The “financing gap” is not just about the volume of capital but about how capital is structured.

The Brazilian government launched the Brazil Investment Platform (BIP) in 2024 to align investments with national climate goals and mobilise private capital for priority sectors, including green industrialisation. The platform currently covers eight subsectors and has identified 15 priority projects totalling $22.4 billion in potential investment, of which $21.7 billion are for industry, mobility, and energy.[4]

The GFI, supported by the Brazilian Ministries of Industry, Commerce and Services (MDIC) and Ministry of Mines and Energy (MME) and by the UK Government through the Department for Energy Security and Net Zero (DESNZ), is working directly with priority projects in industrial decarbonisation and low-carbon hydrogen, with a focus on reaching financial close. These projects face common execution challenges including:

• substantial funding gaps;
• insufficient market and demand analysis that weakens financial modelling;
• technology uncertainty due to first-of-a-kind deployment in Brazil;
• revenue uncertainty from the absence of binding buyer commitments; and
• limited sponsor co-financing, with equity contributions often too small relative to project scale.

Policy and Regulation

To strengthen project narratives for potential equity and debt investors, GFI and partners are advising the Brazilian government on policy and regulatory measures to create clearer sectoral transition pathways. This includes policy enablers or regulatory conditions that attract international investors and deliver a coherent offer to the market.

Incentives to create demand and supply

Two of the most critical barriers to industrial decarbonisation – feedstock risk and offtake risk – directly undermine project bankability. GFI is working with policymakers on the de-risking instruments aligned with neo-industrialisation priorities, such as green incentives, green public procurement, long-term demand guarantees, and other tools that reduce revenue volatility.

Product innovation

The adoption of risk-sharing mechanisms, including public guarantees, can mitigate losses, secure stable cash flows, and significantly enhance project bankability. Leveraging Brazil’s established financial institutions, combined with a supportive enabling environment will help position the country as a global leader in low-carbon industrial transformation.

Scale products into asset classes

Through the Brazil Hubs and the BIP, the GFI – working in partnership with initiatives like GFANZ, ITA, ICS, E+, WayCarbon – is scaling the mechanisms to help individual projects reach financial close, while simultaneously enabling sector-wide transition. By convening finance, industry, and government, GFI’s team in Brazil is building investable project pipelines and co-creating solutions that attract private capital by reducing risk and transaction costs. GFI welcomes the collaboration and support of others to achieve these aims.

The integrated approach, through a Project Preparation Facility (PPF) that combines technical assistance and finance innovation, provides the scale and speed needed for Brazil to move from one successful transaction to a full industrial transition.

This article was originally published in the December edition of Green Finance Quarterly. Read the full publication here. 

[1] Observatório do Clima (OC) – Sistema de Estimativa de Emissões e Remoções de Gases de Efeito Estufa (SEEG) (2023), United Nations Industrial Development Organisation – Brazil unveils route to industrial decarbonization by 2050 at COP28 (2023)

[2] Industrial Transition Accelerator – Brazil strengthens leadership in clean industry with three new decarbonization projects selected by the Industrial Transition Accelerator (ITA) (2025)

[3] BNDES – Finep e MCTI lançam maior programa de inovação do país com apoio de R$ 60 bi e novas taxas (2023)

[4] Projetos — Ministério da Fazenda

[5] Brazil Hubs are made of the ID Hub and the Hydrogen Hub and are a coordination and facilitation platforms to help Brazil’s industry decarbonize — mobilising finance, technology, and international collaboration — under a bilateral UK-Brazil cooperation framework.