At 3.3 million square miles, Brazil is a big country with 200 million inhabitants and one of the world's largest tropical forests. Over the last decade, its social policies lifted 40 million people out of stark poverty. It has beautiful beaches, soccer, Samba and Carnival, but it also has deforestation, urban violence and social inequity.
When it comes to green business and sustainability, the country lacks leadership in areas other than biofuels, a sector it has built up since the 1970s. Yet it has many promising characteristics and worrisome problems that could be seen as opportunities. One is a growing trend that an increasing number of Brazilians would pay a little more for green goods if given information that justifies the higher prices (PDF, Portuguese).
But this is a complex country with an even more complex economy. Despite slower economic growth recently, inflation has accelerated and unemployment has hovered at a record low 5 percent. At the same time, the country found itself in the global spotlight in June when millions of people hit the streets to demand better-quality public services, such as education and public transportation.
These are mixed signals for investors. For green business investors specifically, the view is even cloudier. Below are five reasons that could make you take a second look at green business opportunities in Brazil.
1. Untapped renewable energy resources
Since 2009, Brazil has attracted more than $10 bilion in wind power investment. The sector grew from 323 megawatts (MW) in 2008 to more than 3 gigawatts (GW) installed, with forecasts pegging 2016 capacity at 9 GW. This is way below Brazil's wind power potential of 340 GW (Portuguese).
This is not a market for solely big players because Brazil's industrial policy forces producers to tap local suppliers in exchange for below-market rates on loans from official banks. The same should happen in solar energy, which should be tested in auctions for the first time next month. Aside from this, Brazil has 8 kilometers of coastline for wave energy, which it's already testing, plus potential energy production from biomass that is driven by its burgeoning agribusiness industry.
2. Waste, wastewater and sanitation
Brazil's substandard sanitation, wastewater treatment and waste collection practices were among the reasons behind the country's June protests. But since 2010, the government has put in place several landmark bills that force the country to deal with these notoriously shameful conditions.
In the wastewater sector, Brazil must increase treated sewage from 38 percent to more than 60 percent by 2030. By 2014, all solid waste must go to properly managed landfills, while local governments must invest in policies to recycle and reduce the amount of waste sent to landfills. This means investments in several types of programs, ranging from waste-to-energy to recycling, for several classes of products because 60 percent of all Brazilian municipalities lack landfills (PDF, Portuguese).
3. Energy efficiency
Brazil is revising its energy consumption standards to impose efficiency standards for several types of electronic equipment, which will require investment in new technologies. About 70 percent of Brazil's electricity comes from renewable sources, such as large-scale hydropower, biomass and wind power, which removes the possibility of financing energy efficiency measures through carbon credits. Still, Brazilians are interested in efficiency and reducing energy consumption in homes, shops, factories and government buildings.
4. Green buildings
Brazil is a proponent of green building standards and certifications, including LEED and Aqua. So far, 115 buildings have some kind of certification, with 783 seeking certification. Many towns have implemented legislation to stimulate the use of green building technologies, such as giving land charge discounts for projects that recycle water, reduce waste generation or use renewable energy. As a result, many green building product suppliers have opened in the country in the past five years.
5. Funds, financing and universities
Since the mid-1990s, Brazil has implemented new national programs to boost research, development and innovation, adding to an already strong research foundation that produces 2.7 percent of the world's total scientific output, according to Thomson Reuters. Brazil has put in place several programs, ranging from cheap loans to government grants for small and large businesses, to boost innovation and foster partnerships between the private sector and academia. As much as a quarter of research efforts are focused on green tech.
Image of Brazilian flag by Baloncici via Shutterstock