Brazil Can't Afford to Fall Behind as The World Pivots Towards Sustainable Growth | Opinion

In recent decades, Brazil has scored remarkable development successes. The country has achieved macro-economic stability, world-leading agricultural production, and improved social indicators. The world has watched as South America's largest economy, and the eighth largest in the world, lifted 30 million people out of poverty and improved the life prospects of millions of youngsters.

Although still struggling through a low-growth period, Brazil will bounce back. The real question is: how will Brazil use its assets to achieve long-term prosperity in a rapidly transforming world where, together with technological innovations, climate change looms larger every day?

The good news is that choosing a sustainable growth path offers a significant economic opportunity for Brazil. Globally, it is projected that transitioning to a low carbon growth path could deliver a direct economic gain of US$26 trillion through 2030, adding 65 million low-carbon jobs in 2030 and bringing many other benefits.

New technologies and business models are creating new opportunities and several countries are already seizing them. Take China: with the world's largest urban population, air pollution is a major health concern. Not surprisingly, the economic giant is now the world's biggest market for electric vehicles and operates 99 percent of the global fleet of electric buses. It is also experimenting with new carbon markets that may help companies clean up their activities.

Indonesia is also ramping up climate ambition. The country is currently integrating low-carbon principles into its next five-year development plan, recognizing that such an approach can help deliver an average GDP growth higher than the current business-as-usual pathway, in addition to preventing the loss of nearly 16 million hectares of forestland in 2045.

Brazil can lead in promoting transformational changes too. By employing a strategy for strong, sustainable national development, Brazil can boost economic growth, make businesses more competitive, protect natural resources, and attract greater foreign investment.

The country can build on its leadership in clean electricity and its experience with biofuels. These resources have allowed Brazil to get almost all of its electricity from renewable sources and to halve the use of gasoline. As a result, close to 45 percent of the overall national energy demand is already met by renewable sources, against a global average around 20 percent. There are many other opportunities, in at least three areas: agriculture, forest restoration, and finance.

Brazil's world class agriculture contributes to feeding the world and reducing international tensions. But climate change, combined with increased forest loss, could translate into reduced rainfall and increased local temperatures, causing crop yields to plummet. Therefore, halting illegal deforestation, scaling up low-carbon agriculture, and converting degraded pasture into productive farming is the prudent course. It would also allow for the doubling of grain production without destruction of native vegetation.

This is not a pipe dream. Most of the degraded pastureland suitable for conversion has already been identified. And technologies like satellite imagery, organic fertilizers, and new forms of measuring carbon in the soil, can help guide farmers' choices.

As part of a vision towards a net-zero carbon emission economy, Brazil has also to fully utilise its forests as carbon sinks. This can be achieved in part through commercial reforestation by leveraging the technical and commercial know-how that Brazil has developed in the last 40 years and changing patterns in house construction.

But it will also require promoting the regeneration of areas deforested in the last 400 years and unsuitable for today's mechanized agriculture. That would yield sizeable environmental services to farmers and cities, including preserving water sources in the Southeast region, where most of the country's GDP is created.

Greener finance and efficient capital allocation are instrumental to Brazil's success in attracting private capital to its infrastructure. They can also help address the still huge gaps in transportation, sanitation, and waste management. Sustainable investment in these areas alone could save over 2 percent of GDP, create hundreds of thousands of jobs and better the lives of millions in Brazil.

Finance is also the tool to help businesses respond to the risks brought by climate change, including shifts in the behaviour of domestic and global consumers. Further aligning finance and compliance with the forest code and helping companies to tap into the fast-growing market for green bonds are immediate actions that, together with the right signalling from the government, would foster a vibrant, low carbon economy.

This is a critical moment. Global carbon emissions have to decline significantly in the next decade and ways to move toward this goal without sacrificing economic growth are becoming ever more affordable. What Brazil—a member of the G20 and the 13th largest fossil fuel greenhouse gas emitter globally — does matters. The country has every incentive to take a position at the forefront of this effort.

Joaquim Levy is former Minister of Finance for Brazil.

The views expressed in this article are the author's own.