Long-Term Investment: The Green Transition Challenge in Brazil

The green transition, essential for mitigating the climate crisis, faces significant challenges in Brazil's economic landscape. According to BloombergNEF calculations, Brazil requires massive investments of around US$ 6 trillion to achieve net-zero greenhouse gas emissions. However, the major hurdle lies not only in identifying these resources but also in effectively mobilizing them. During COP30 in 2025, the Federation of Brazilian Banks (Febraban) acknowledged that the banking sector plays a critical role both in mobilizing capital and ensuring long-term financing for green energy projects. Nevertheless, issues such as the scarcity of long-term investments and low project bankability continue to impede significant progress in this area. BNDES' advisory board suggests that solutions may lie in combining different types of 'blended finance', involving multiple investors and sources of capital. A notable example was a R$ 500 million cofinancing by the BNDES for the installation of an aviation biofuel refinery in Bahia, using funds from the Climate Fund. This project highlighted the need for a multifaceted approach and involved a mosaic of resources from various institutions. Nonetheless, challenges persist, reflecting the complexities of transitioning to a green economy in Brazil.