With a cumulative score of 1.99, Brazil ranks number 7 among emerging markets and number 31 in the global ranking.
- Emerging markets
2.25 / 5
1.39 / 5
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Net-zero goal and strategy
Brazil committed to cut greenhouse gases (GHG) emissions by 50% below 2005 levels by 2030 and is aiming for net-zero carbon emissions by 2050, having brought forward its previous target date of 2060 in April 2021. Brazil formalized this declaration at COP26 in November 2021.
Nationally Determined Contributions (NDC)
Brazil released an updated Nationally Determined Contribution (NDC) – its plan to achieve the goals set out in the Paris Agreement – in March 2022 in which it reaffirmed its commitment to reduce total net greenhouse gas emissions by 37% in 2025, based on the reference year of 2005, and increase the target reduction from 43% to 50% by 2030. The emission level in the base year, 2005, has changed over the NDC updates. It was initially at 2.1 GtCO2e in the first NDC, revised up to 2.8 GtCO2e in 2020 and later reduced to 2.56 GtCO2e in the 2022 update, because of methodological changes in the emissions inventory.
Brazil's NDC covers all sectors. The country’s power sector is relatively clean with only 21% of the generation coming from fossil fuels in 2021. Large hydro is still responsible for over half the total generation in the country.
Fossil fuel phase-out policy
There is no fossil fuel phase-out policy in Brazil.
Since 2009, Brazil has implemented reverse auctions to contract new clean energy generation capacity to supply the regulated utility market. The country is a pioneer of competitive renewable energy auctions, which have led to over 35GW of renewable energy contracted to date. In the May 2022 auction, continuing an established trend, most developers committed not to sell all the generation from their plants via auction but rather 60% of it, on average. They hope to sell the rest at higher prices in Brazil’s free market. In addition, sharp competition among project developers has typically resulted in low average wind and solar prices, including an average solar auction price of $17.5/MWh in July 2019, which remains the lowest recorded in Brazil to date.
Net metering has also been a widely utilized clean energy policy. Retail electricity customers may install up to 5MW self-generation facilities, connect to the grid, deliver surplus generation and obtain compensation in the form of a subsequent billing credit. The incentive has led to a distributed solar boom, with small-scale PV capacity jumping from around zero in 2015 to over 16GW (DC) as of August 2022. Moreover, the new Brazilian net metering and distribution charge law has guaranteed its generous net metering rules will be in place through 2045 for those who have solar systems installed by the end of 2022. New systems installed after that will face a six-year transition period to a new tariff schedule that will gradually pare back compensation.
Power prices and costs
Retail electricity prices are among the highest in Latin America. However, commercial and industrial (C&I) customers with power demand greater than 500kW are eligible to purchase electricity from Brazil’s deregulated wholesale market. Consumers with demand between 500kW and 1.5MW (special consumers) choosing this option must purchase wholesale power generated from incentivized renewable sources, including wind, small hydro, biomass and solar. The maximum threshold for special consumers fell from 2MW to 1.5MW in January 2020 and will decline by 0.5MW every January until 2023.
Brazil has the largest power market in Latin America, with total installed capacity of around 170GW in 2021. The power sector is fully unbundled. Several distinct actors participate in generation, transmission, distribution and retail. Overall, the power market is fairly evenly split between state-owned and private-sector players. Operador Nacional do Sistema Elétrico (ONS) operates the national power system and Câmara de Comercialização de Energia Elétrica (CCEE) is responsible for the country's wholesale market. Brazil’s matrix remains highly reliant on hydropower and has experienced recurring crises resulting from low rainfall in certain years, most recently in 2020-21. The last crisis has exposed the market to costly fossil-fuel generation, sending power prices soaring and temporarily raising the prospect of electricity rationing. In 2022, the Brazilian government privatized Eletrobras, the biggest electricity company in Latin America, which is responsible for around 30% of the country generation.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Despite Brazil's increasing share of intermittent renewables, most of the generation still comes from hydropower, and there have not been significant grid balancing issues. Brazil's clean energy capacity is largely contracted through auctions, which offer standardized Power Purchase Agreement (PPAs). Brazil regularly holds capacity auctions to ensure grid reliability. There are clear rules and processes defined for interconnection of projects to the grid, as well as regularly updated and published grid expansion plans. Net metering regulation is defined and the efforts to reform it have involved substantial industry and public input. However, hydrogen and storage-specific targets or regulations do not yet exist.
All PPAs are set in local currency, potentially exposing developers to substantial foreign-exchange risk. As the Brazilian real has depreciated significantly in recent years, developers have suffered from lower foreign currency-denominated revenue from long-term contracts and higher costs of imported energy equipment. Rising inflation has prompted Brazil’s central bank to hike the benchmark Selic interest rate for the 12th consecutive time in August 2022, potentially exposing developers to increased borrowing costs.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Brazil’s EV market is growing, but is still at an early stage. As Latin America’s largest auto market, Brazil leads the region in EV sales. Growth has been driven by rising sales of plug-in hybrid electric vehicles, concentrated in the luxury segment, which account for the vast majority of sales. Adoption remains very low as a percentage of new passenger vehicles sales, at well under 1%. All passenger EVs are imported in Brazil. There are currently no large-scale plans to manufacture batteries or vehicles domestically.
Policy support for EVs is somewhat limited in Brazil. In 2015, import tax rates were lowered from 35% to 0% for battery electric vehicles, and set at a range of 0-7% for plug-in hybrids and hybrids, depending on criteria such as weight and energy efficiency. However, EVs still pay higher IPI (federal excise tax) and ICMS (state sales tax) taxes. In 2018, the annual car ownership tax (IPVA) was set at 4%. EVs are exempt from this in seven states (Ceará, Maranhão, Pernambuco, Piauí, Rio Grande do Norte, Rio Grande do Sul and Sergipe) and enjoy a reduced rate in Mato Grosso do Sul, Rio de Janeiro and São Paulo. Other incentives include exemption from circulation restrictions in Sao Paulo since 2014, which prevent vehicles from entering the city during certain peak hours, depending on the final numbers on their license plates.
Fuel economy standards
Does the country have a fuel economy standard in place?
Brazil's energy efficiency plans have not been well structured overall. The country has established many policies and plans over the past decades, but these have been mainly in reaction to crises rather than the result of structured, long-term planning. In 2011, the government published the National Energy Efficiency plan (Plano Nacional de Eficiencia Energetica), establishing the main goals for the sector. However, this has yet to translate into new policies or regulations. The efficiency certification of end products is the most successful initiative in the broader energy-efficiency space.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
As of August 2022, the government had yet to implement substantive policy support in this sector. Brazil does not appear to have mandatory residential or commercial building efficiency codes. The Regulation for Energy Efficiency Labeling of Commercial, Service and Public Buildings was released in February 2009 and the Regulation for Energy Efficiency Labeling of Residential Buildings was released in November 2010. However, the labeling of residential, commercial and service buildings is voluntary, while the labeling of federal public buildings is mandatory since 2014. The low-carbon heat market remains largely irrelevant given Brazil’s tropical and subtropical climate.
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