Fernando Haddad’s Vision: Revolutionizing Brazil’s Green Economy

Receive free Brazil updates

We’ll send you a myFT Daily Digest email rounding up the latest Brazil news every morning.

The writer is finance minister of Brazil

When we assumed office less than a year ago, Brazil was in a state of disarray. Economic growth was slowing down, mounting debt concerns were evident, and real interest rates were globally high. In addition, the social fabric of our society had been severely damaged following a violent attack on our democratic institutions during President Luiz Inácio Lula da Silva’s tenure.

However, those challenging initial months are behind us. We have begun implementing a series of reforms aimed at fostering growth and productivity while rebuilding trust in democratic solutions to our economic and social challenges. Yet, our work has only just begun. Looking ahead, we are now embarking on an ambitious and comprehensive plan for ecological transformation.

Brazil has already positioned itself as a global leader in the green economy. With 92% of our electricity sourced from renewable sources and significant stretches of native vegetation remaining intact, we have made notable accomplishments. However, meeting our commitment to achieve a net-zero economy as per the Paris Agreement poses its own set of challenges. Our nationally determined contributions (NDCs) include targets to reduce carbon emissions by 37% by 2025 and 50% by 2030, with the ultimate goal of achieving net-zero emissions by 2050. We view decarbonization and diversification away from fossil fuels as not only a necessary step but also an opportunity to create jobs, boost income, and improve the lives of millions of Brazilians.

Under the leadership of President Lula and in collaboration with Minister of the Environment Marina Silva, we are proposing a holistic transformation of our economy and society through investments in greener infrastructure, sustainable agriculture, reforestation, circular economy practices, increased technology adoption in production processes, and climate adaptation measures. We are committed to sharing our ongoing experiences and supporting other countries in their own green transitions.

Our plan is distinct from America’s Inflation Reduction Act, which allocated significant budget resources across various sectors. Instead, our approach consists of a mosaic of gradual yet intensive regulatory and tax policies that will be approved by Congress. One of the key pillars of our plan is the establishment of a carbon market, mirroring the EU Emissions Trading System. This market will apply to all production units emitting more than 25,000 tonnes of carbon annually and will allocate a majority of its revenues to research and development. Additionally, it will prioritize the protection of indigenous and traditional communities, with clear rules for profit redistribution. To safeguard our forests, we will strengthen control and monitoring systems while promoting forest concessions to private partners and linking agricultural financing to improved environmental standards.

We welcome foreign investors interested in decarbonizing their production chains and investing in clean innovation to contribute to Brazil’s accelerated development. Beyond traditional exports, we see productivity and innovation as crucial components for reducing emissions and creating investment opportunities and high-quality jobs.

Importantly, our plan is grounded in a solid fiscal and regulatory foundation. In the past eight months, we have implemented a modern fiscal rule to address deficits, which has reassured domestic and international economic actors of our commitment to fiscal discipline. Furthermore, we are nearing the completion of a long-awaited tax reform aligned with international best practices. The improving macroeconomic conditions reflect the progress of our reform agenda, which will endure. Our environmental achievements are also notable, with a 48% reduction in deforestation in the first eight months of this year compared to the same period last year.

Our objective is to reconcile robust economic growth and social progress with environmental protection. We aim to bring about a fundamental change in our development model and enhance our position in the global economy. With our upcoming G20 presidency, Brazil is ready to embrace the future and reaffirm its role as a leader in the sustainable and inclusive development agenda.