New industrial policy for a new world: Seizing Brazil’s opportunities in the energy transition

Executive Summary

The global energy transition is creating winners and losers. In the new geopolitics, the countries that matter most will possess leading solar and wind potential, critical minerals reserves, biomass resources, and hydrogen potential.  

Our Net Zero Industrial Policy lab at Johns Hopkins University has developed a methodology to rank the natural resource base and the manufacturing bases of each country.  The radar charts at the end of this summary show these analyses for Brazil.

“Our report’s primary finding is that Brazil’s size and resource endowment gives it the potential to be a leading global power. Combined with its capabilities in advanced manufacturing and mechanized agriculture, Brazil can be a first-rank power in the new energy system alongside China, United States, and Russia.”

Brazil has the critical minerals, renewables resources, biocapacity, and manufacturing base to be a major producer and exporter of energy, materials, and technology. Brazil also holds significant oil & gas reserves and expertise, which can contribute during the transition, without a need for further expansion.  

To seize these opportunities, Brazil has launched a new industrial policy, Nova Indústria Brasil (NIB). It is a promising venture that demonstrates a clear understanding of the contours of the emerging world order and Brazil’s potential place in it.

“In this report, we analyze Brazil’s position in seven industries critical to the 2050 global green economy: critical minerals, batteries, bio-hybrid EVs, sustainable aviation fuels, wind manufacturing, low-carbon steel and green fertilizers.  

For these highly promising 7 green industrial sectors, we analyze (1) Brazil’s position in the competitive global market, (2) the existing domestic production base, and (3) NIB policy initiatives together with enterprise responses.

While Brazil has the foundation to emerge as a green superpower and has made progress with recently implemented measures, the report calls for focused public policies, dynamic experimentation, and sector-specific strategies to unlock its full potential. 

The NIB strategy suffers from three weaknesses. First, industrial policy works best when it targets specific subsectors or technology areas, where problems can be precisely and dynamically formulated and where all parts of society can work together to formulate solutions. The mission orientation of NIB is too broad to provide the necessary focus.

“This means that, second, NIB's allocated funds, amounting to roughly USD 60bn, are likely to be spread too thin across too many priorities to gain Brazil a foothold in highly competitive verticals. Third, it is unclear what the mechanisms of collaboration among government, firms, labor unions, civil society and independent experts will be.”

Another key lesson of industrial policy is that dynamic experimentation and interaction is needed, but there is no clear plan to create knowledge-based clusters and design sector specific policy mixes in Nova Indústria Brasil. Structural investments in education and innovation are required for Brazil to compete with other leading economies in the new energy geopolitics. Without highly focused efforts to build knowledge in priority production chains, Brazil’s industrial policy may not realize its potential.