The Polycrisis
Tim Sahay and Kate Mackenzie on how geopolitics has been driving a quiet revolution in clean tech, and how the energy transition is in turn reshaping world power.
The Polycrisis
07 | Brazil: The next green industrial superpower?
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The Polycrisis is sharing some episodes from other podcasts around the world while we develop our next season.
This episode is from the Brazilian ClimaInfo podcast . It's about how Brazil has become a focal point in the global race for green industrialisation, and what that means for the future of the second largest economy in the Americas. We hear from Tulio Cariello of the Brazil-China Business Council and The Polycrisis' Tim Sahay.
Brazil's new green developmental strategy requires delicate negotiations with China. It also means contending with the US – which wants to impose carbon dominance across the entire American hemisphere, rewarding countries that support its vision and punishing those that don’t.
The Polycrisis is hosted by energy and climate finance expert Kate Mackenzie, and Tim Sahay from the Net Zero Industrial Policy Lab at Johns Hopkins University. They co-author The Polycrisis newsletter, which explores connections between energy, geopolitics, climate change, finance and industry.
- Produced by Sarah Allely
- Original music by Russell Stapleton
- Mixed by Bethany Stewart
Contact us at: polycrisispodcast@gmail.com
Hello, Kate McKenzie here. The Polycrisis team's sharing some interesting episodes from other podcasts around the world while we develop our next season. This episode is from our Brazilian friends at Clima Info podcast. It's about that country's changing role in the geopolitical landscape. We hear some Brazilian perspectives before Tim discusses his lab's research findings that Brazil is particularly well placed to be a green industrial superpower. Brazil is choosing a green developmental strategy, but that requires delicate negotiation of its relationship with China, which has traditionally just bought vast amounts of raw commodities from Brazil, but is now a big source of manufacturing expertise and investment. It also means contending with the US, which wants to impose carbon dominance across the entire American hemisphere, rewarding countries that support its vision and punishing those that don't.
SPEAKER_01Brazil is hit with tariffs. In the White House says it's about trade. Others say it's about politics. An attempt to interfere in the general election later this year. But beneath the headlines, a bigger story is unfolding. For the first time in decades, Brazil is no longer being seen only as a supplier of commodities. It has become a destination. A destination for electric cars factories, for battery production, for critical minerals, for green fuels, and for the industry that could power the 21st century. And that is changed the way the world looks at Brazil, including Washington. This is a story about a country trying to move up the value chain, about the growing role of China in that process, and about a global race to shape what the green economy looks like. And that is where our story starts. And European investors are expanding their presence in sectors like green hydrogen and sustainable fuels. And Brazil itself is trying to reposition its economy around a new idea, not simply exporting commodities, but become a platform for low carbon industrial development. At the same time, the United States is moving in a very different way. Under Trump, Washington has embraced what some analysts are calling a strategy of carbon dominance, doubling down on fossil fuels or while increasing pressure on countries pursuing alternative development paths. So today you want to understand what's really happening. Is Brazil become one of the key battlegrounds of the global competition over green industry? And what does that mean for Brazil, for China, for the United States, and for the future of the energy transition itself? According to a recent report by Brazil-China Business Council, Brazil became the largest destination for Chinese investment anywhere in the world in 2025, attracting nearly 11% of all Chinese overseas investment. The report also found that manufacturing, not mining, not oil, has become one of the main destinations for Chinese capital in the country. To help us understand what is driving this shift, we spoke with Tulio Carriello, Director of Research at the Brazil China Business Council and author of that report. Thank you, Tulli, for talking to Clima Info today.
SPEAKER_04Hi Cynthia, hi Clima Info, joining you from Sunny Rio de Janeiro.
SPEAKER_01So your report suggests that China is no longer simply buying commodities in Brazil, but actively helping building industrial chains around mining, batteries, electric mobility, and clean energy. From Benjamin's perspective, what is Brazil strategically become in this process? Are we seeing the emergence of a kind of Chinese near shoring in Brazil? Something comparable, the role Mexico has historically played for the United States.
SPEAKER_04Actually, I wouldn't say that we are seeing a near shoring here because Brazil is not becoming a low-cost manufacturing platform for China. Like in some aspects, Mexico has been for the US in some specific sectors. What we are seeing is probably closer to what people call French shoring and even power shoring, meaning countries are attracting investment because they offer political stability, strategic resources, and especially access to clean and competitive energy. And Brazil has all of that. So what we are seeing is different here, as I mentioned. So Brazil is becoming a strategic platform for Chinese companies in areas where Brazil has real advantages like minerals, specifically critical minerals, clean energy. We also have a large domestic market and the potential to build green industrial chains here. So maybe from Beijing perspective, I'd say that Brazil is not just a supplier of commodities anymore. Of course, this is an important part of the bilateral trade, but it's increasingly a place to invest, produce and process and serve both the Brazilian market and potentially other markets in the region, especially when we consider that we are in the context of Mercosul. So the key question for Brazil is how to turn this new wave of Chinese investment into more technology, more local content, and more industrial development here. So that I believe that is where the real opportunity is.
SPEAKER_01Do you think Brazil has a real strategy to use this wave of Chinese investment for green industrial development? Or is the country still reacting product by project without a broader plan?
SPEAKER_04Yeah, I think Brazil's starting to build a more consistent strategy, especially with the focus on new industrialization, energy transition, and also green industry policies. But the reality is that we are still somewhere in the middle, I'd say, because in many cases, investment decisions are still happening project by project without enough coordination between industrial policy, trade policy, and long-term planning. The opportunity here is huge because Brazil has the minerals, the clean energy, the consuming market, but attract investment is not enough by itself. I'd say the key challenge here, our partnership with China, because in some aspects the Chinese do have that long-term strategy. So we should do like them in this aspect.
SPEAKER_01If you had to identify the single most underestimate aspect of Brazil's role in the global energy transition today, something if foreign investors or policy makers still don't fully understand from abroad, what would it be?
SPEAKER_04Yeah, this is actually a very good question because I think many people still underestimate Brazil's energy advantage. Because Brazil is not only rich in natural resources, it already has uh one of the cleanest electricity matrices among major economies, and that changes the conversation completely. In the past, countries competed mainly through cheap labor or scale, for example, but in the energy transition era that we are living right now, Brazil is increasingly well positioned in sectors like green hydrogen, low carbon steel, sustainable aviation fuel, biofuels in general, data centers, batteries, and other energy-intensive industries. The real story is that Brazil could become a platform for low carbon industrial production. And this matters because many multinationals, including Chinese, are under pressure to decarbonize their supply chains.
SPEAKER_03That was great, Cynthia. But understanding China's interests in Brazil is only part of the story, right? Our historic commercial partners have been Europe and the US, and of course, they still play a role. So to figure out why Brazil is suddenly attracting attention from investors and governments around the world, we also spoke with Tim Sahai from John Hopkins University's Net Zero Industrial Policy Lab. So to get started, could you please introduce yourself and the work that you do?
SPEAKER_02Okay, I'm Tim Sahai. I'm at Johns Hopkins University at the Net Zero Industrial Policy Lab, where we study the global energy transition. We look at net zero supply chains, we study industrial policies around the world, and we work with governments and state governments and companies to help maximize green opportunities for everyone in this transition.
SPEAKER_03Okay, so Tim, in one of your reports, you said that Brazil has the potential to be one of the four superpowers of the 21st century if it focuses on its strengths regarding the field of green investor development. I think one question is if that label is really earned or if it's more hype than substance. And then what actually makes Brazil structurally attractive to these foreign players looking to invest in green development?
SPEAKER_02Yeah, so we conducted this study, not looking to find anything particular about Brazil. We were doing sort of a global assessment of look, we are all building the green economy of the future of the 2050, 2060, net zero future. Which countries have the kinds of assets that you need as a potential asset that they'll have to convert through policy, through action, through investment into real assets? And so, what do we actually need for a thriving green economy? Are resources and industrial manufacturing. And so we basically rank countries based upon the quality of their resources and the quality of their manufacturing strengths. Manufacturing strengths as expressed in their actual industrial manufacturing value added, as expressed in their patents, in their education, in their people's sort of skill levels, in the quality of their grid. Is it a net zero grid? Is it a very dirty grid? So those are the assets on the manufacturing side. And the assets on the resources sides are all of the metals and the fuels and the solar and wind resources that you would need to build a net zero economy. And those resources are wind speed, sunlight, the amount of reserves that you have in the key critical minerals, critical transitions. And when we did that study, four countries really popped out as having a very diversified set of strengths on both the resource side and the manufacturing side. And those were Brazil, the United States, China, and Russia. And so those were the countries that have the sort of the greatest ability to contribute towards this global green economy. And that really depends on what they choose to do with it.
SPEAKER_03So, Tim, tell us a little bit more about kind of like the Chinese story. I think you started with the car manufacturing, but the interests seem to be broad. And how does Brazil feature in the Chinese kind of like strategic vision of the world?
SPEAKER_02I mean, Brazil features heavily as a green superpower. So in the Chinese sort of analysis, and when we read their analysis, their company analysis, their government analysis, they really think of Brazil almost very similarly to the way our report thought of Brazil in 2024 as a place where you should be if you want to build the economy of the future. The Chinese sort of relationship with Brazil and with Latin America and with many other countries in the global south is, you know, is a complex one. For the last 40, 50 years, as China has become richer, my joke is, you know, they look to Latin America as a place to get rocks and crops. You know, what does Brazil export to China? Well, it exports largely iron ore, soya beans, and crude oil. What's common about all of those is those are extractive industries. Those are natural resource extractive industries where these raw materials are going from Brazil, being processed and finished and manufactured and turned into products or consumed inside China. So that's a relationship for the last 40 years that has in many ways not been great for Brazil. It has deepened Brazil's extractive sector and it has reduced Brazil's industrial sector. So the question then became is now that we are looking at the economy in a new way, we are looking towards the future for the next 30 years. And we all know that this energy transition is on. It is attracting a huge amount of domestic and foreign capital year after year. And so this is a trajectory where every economy is sort of greening themselves. And in that sort of question, what should Brazil's relationship with China be? Is a question that both Brazilian policymakers and companies ask as well as Chinese policymakers and countries ask. And the question is: Brazil wants a noble industrial Brazil. It wants a newly industrialized Brazil for green industrial development that is good for Brazil. And to do that, it needs a new relationship with China where it thinks much more carefully about manufacturing partnerships and industrial partnerships and less so about the raw materials. So that's the bigger story of the Brazil-sort of China relationship, is that both sides are seeking a new relationship with each other that is anchored on green industrial development and green corridors.
SPEAKER_01I think it's very interesting that our conversation is somehow naturally concentrating about how the relationship of Brazil and China is being transformed. But I want to get back to the point of what the United States stands on this.
SPEAKER_02I mean, the United States under the Trump government is actively doing a regressive policy. So over the last decade, the United States as an economy has been going greener, has been moving towards more solar, wind, EVs in its electricity sector and its transport sector, and had a very supportive green industrial policy under the previous government. All of that has been rolled back under Trump as part of what they call the energy dominance or the carbon dominance agenda, which is anchored about around promoting oil and gas and rolling back green policies. And as part of that vision, Latin America and the entire Americas is very important to them. Their new foreign policy is a hemispheric policy where both North and South America is part or and parcel of the American sort of power projection onto the world. And when they do that, they're seeking allies in Latin America that are extractive in nature. So if you want to be a part of this American sort of energy dominance agenda, you will become our friend. We'll help you with technology, we'll help you with money, we'll help you with markets, we'll help you with financing, all the things that you might want. If you choose to oppose us and promote a green development agenda, you become our enemy. And we will coerce you, we will punish you, we will try and get rid of you, we will try and find penalties on you to make you stop doing that. So that's the sort of the energy dominance or the carbon dominance agenda pursued by the Trump government, with Latin America as being its key target. And you know, we've seen this sort of play out not just in Brazil, but you know, the pressure that the Trump government has put via tariffs on so many countries. And in the last year, you know, actual sort of military conflict, you know, the Venezuelan being the biggest example right now with Cuba. And then if you are our friend and you promote these agro-industrial and more extractive sectors such as Malay in Argentina, then we might give you extra money as a bailout. So the United States Treasury gave them $20 billion for the Malay government so that they could win their midterms while Lula, you know, and the Brazilian government gets a penalty of higher tariffs, et cetera, et cetera. So this is the kind of sort of pressure campaign to promote a carbon dominance agenda promoted by the Trump government. And so the question that that, you know, you started out with how do the Americans now look at the Europeans and the Brazilians and the Chinese sort of trying to maintain a green development corridor and a green development agenda? How are they trying to sort of resist this American pressure? And can this American pressure actually succeed? And so, you know, the Brazilians are playing a very clever, sound, serious diplomatic game to preserve their policy autonomy and say, no, we do want to move in this direction. And yes, we do have friends, and we will call upon those friends and create joint technology and markets together, and maybe you should get a little bit of form-off.
SPEAKER_03Do you have kind of like concrete examples of things that are happening in Brazil that show right this China-US dynamic playing out?
SPEAKER_02One of my sort of favorite examples is, you know, I went to the plant in Bahia in Camasari where Ford, the US automaker, which, you know, for many decades was building and making SEVs from Brazil and exporting it, both for the Brazilian domestic market and for the larger Latin American market. That Ford plant was shut down, was bought out by the Chinese. And on that very same plant, the Chinese company BYD now manufactures electric vehicles, hybrid vehicles, with Brazilian engineers, Brazilian scientists, Brazilian workers. And that is a very sort of clear sort of way in which the American sort of carbon dominance agenda says we're gonna make SUVs. We're gonna make big, bulky SUVs. But the Chinese agenda says, no, we're gonna try and make electric cars and hybrids. The Brazilian-owned domestic policy, uh, the Mobert policy, you know, Brazil evaluated its options. Should we make SUVs? Should we make hybrids? Should we make pure play battery electric cars? And the Brazilian Mobile policy, industrial policy says we want to make hybrid cars. Any automaker in the world that is either already in Brazil or wants to be in Brazil, we will support you with incentives if you choose to make hybrid cars. And almost all of the European car makers inside Brazil converted their production lines from internal combustion engine towards hybrids. The three Chinese companies that have set up manufacturing plants in Brazil, you know, BYD, Great Wall Motors, Geely, etc., they have decided to make hybrids as well because they are following the Brazilian government's desire to sort of make hybrids while the Americans have just walked out. They have sold off their plant and walked out.
SPEAKER_01Tin, you explained very well the dynamic of this Trump administration, how it looks to Latin America and maybe other regions, but specifically on Latin American. It's quite clear. But my burning question is this movement of strandament of the United States in relation to Brazil, because the United States used to be the main partner of Brazil, this has begun before Trump stepped in. So my question is: what is the mentality of the private sector in the United States regarding Brazil?
SPEAKER_02I mean, and that's a very good question because this kind of gap and divide between the private sector and the government, we see in many countries, right? The government may want you to do something, the private sector can go along, or they can resist and push back. So within America, we see a lot of pushback, right? So, for example, the Californians and the Brazilians have continued their partnership on Renova Bio and the Biofuels program and creating a shared technology and market access sort of sub-nationally, right? The national government isn't doing that. It's being pursued by the Californians together with the Brazilians. The Californians, you know, the Gavin Newsom sort of came uh for COP 30 and, you know, tried to promote the Amazon fund and various sort of forestry initiatives that are being carried out by private sector firms. So these are Silicon Valley Giant, you know, the trillion dollar giants of the Facebooks and the Microsofts and the Googles. They are investing in Brazil, you know, for their various forestry initiatives, right? So that's an example of private sector cooperation continuing on the green sort of development work stream. And there are other sectors of the economy, particularly rare earth mining, where the American government actually wants they have been coerced by the Chinese who have decided to do a blockade on rare earths. So the American government is very keen to find partners that can mine rare earths and process rare earths that are not Chinese partners. And in that case, the Brazilian government and the American government have made sort of an arrangement where they see a common mutual interest in supporting Brazilian mines that can manufacture rare earths and learn how to process rare earths, which is extremely difficult, complex chemical processing, requires a lot of metallurgists, requires a lot of engineers and RD. And that's a zone of technological cooperation between Brazil and the US. And Brazil is not doing this just to be friends. With the US, they are also trying to develop their own transition minerals, critical minerals for their own sort of growth.
SPEAKER_03What about other countries, right? What about Mexico and India and the Em rates and Saudi Arabia? Like, are these countries also interested? Do they have a role to play with Brazil?
SPEAKER_02We can do sort of a round-the-world kind of a tour, right? Because Brazil has become the largest sort of recipient of FDI, of green manufacturing FDI, of green FDI in the last few years, you know, 2020, again in 2025. A lot of investors are coming into Brazil for either, as I said, for that domestic market that is now growing again in Brazil, or to act as an export base for something on the other. And there, you know, let's just start with the Europeans. So Europeans are interested in Brazil for, you know, they've been supporting the Amazon fund, for example, the Norwegians, the Germans, the Dutch have been very strongly focused upon fuels, maritime fuels, aviation fuels, green hydrogen, green ammonia. And they've made a series of deals between the European official sort of government, the European investment bank, or bilateral deals between the government. Where the example I would give is, you know, I was in Swapi in Panambuku. The Swapi is, you know, a port. Tessem is another port in Sierra in the northeast. And the northeast of Brazil has first-class resources, you know, solar and wind resources. It has first-class water, and it has brilliant sort of ports that are industrial processing ports that are closed to Europe. So they became sort of a natural place. I think the port of Rotterdam actually has a 15 or 20% stake, like an equity stake, an ownership stake of PESEM. So they've been actively investing in Brazilian ports in the Northeast to develop green hydrogen projects that can be turned into ammonia or a fuel, and that fuel can then be exported to European off-takers. The Europeans have also become the largest investor in Brazil's auto sector. So the company Stellantis, which is a conglomerate of Fiat and Peugeot, etc., these European car makers, has made the biggest single investment by an automaker in Brazil in Panambuku. And that investment happened first in 2015. And when I just went there this year, they were expanding their investments after the Muber policy in Brazil came out, building a huge hybrid, EV hybrid kind of plant that, you know, some of the best-selling sort of cars in Brazil are now coming out from that Stilantis plant. So cars, fuels, these have attracted a lot of expanded investments from the Europeans. And as I said, you know, part of this sort of world tour is another sort of country or a zone of investors that have a lot of money, are the oil kings in the Middle East. And amongst them, the Emirates, the Saudis, the Mabdala Investment Capital Fund, you know, have set up, they've thought of Brazil as what are places in which we can make money together with the Brazilians. And they too have been investing heavily in green hydrogen and green iron in particular, developing those. And they've been thinking about Brazil as a place where SAF can be made, sustainable aviation fuel can be made. And those are investments in the very first sort of SAF plants in Brazil, in Bahia, that they are investing in. They are, you know, it's like a billion or two billion dollar sort of investment in SAF.
SPEAKER_03So, Tim, what does Brazil want? Kind of like out of this whole series of deals and opportunities that are out there.
SPEAKER_02Yeah, I really hesitate to think about deals. It really has to be about what does Brazil want for its development, for its sustainable development, for its people's prosperity, for its industrial know-how, for its engineers, for its scientists. If Brazil wants to become this Nova Industrial Brazil, it's not doing it for industries, it's doing it for prosperity, it's doing it for its own value chains. And so there, you know, every time Brazil gets some foreign investment, the goal really from the Brazilian government has been to sort of, you know, put the Sinai RD ecosystem, the university ecosystem around that factory so that they can best create the skilled workers and the technologies and co-design, co-RD so that, you know, if a Chinese automaker comes or a Chinese battery maker comes, like CATL, they partner with Mora. Mora is a Brazilian battery company that knows how to make batteries, has a lot of scientists and engineers, produces a lot of patents. And now they're co-designing batteries together with CATL, and they have patents together, and they are building a new production line with Chinese engineers. You know, same thing is happening with Stillantis, the European company, as has brought in a Chinese company called Leapmotor to make a fully electric car production line in Pernambuco. And that's what Brazil really is looking for: an engine of growth, of technological localization, of value addition, and bringing in Brazilian companies that can participate in these new value chains and actively trying to find places where they can increase their local content. So you don't end up with the foreign industry as an island where it's foreign-owned, foreign managed, sent off for exports, but it is actually linked and integrated into Brazilian economy, into its people, into its know-how, and into its capabilities to allow it to move up the value chain and diversify its economy, so Cynthia and Bruno, I think this conversation has made me think about a line in the Brazilian national anthem that says giant by nature.
SPEAKER_03But if we think about the line, so far what we've done since the Europeans arrived in the 1500s has been to dig and chop our natural resources and sell them raw. From wood to gold to diamonds to sugar to coffee to now iron ore and soybeans and oil. These three being the basis of Chinese imports from Brazil in the last decades, which they explored hungrily devouring our resources to become themselves a giant. We need to shift and we have this opportunity to shift into something that's much more aligned with our own strategy, right? And the ability of Brazil becoming this giant. And if we look ahead, there's these three big things that are happening now. There's a fossil fuel crisis that's painfully revealing the weakness of depending on oil and gas from energy to agriculture. There's the climate crisis, which is getting to a level that will start to cause significant economic pain, and that not many people are really considering on their calculations about the future. And there's the artificial intelligence boom, which is creating this global hunger for energy, and that also as a tool will have this ability to accelerate development, create a lot of disruption, and probably a little bit of both. And if you think about, especially in this case, Brazil and China, right now they're looking at these three challenges and they see the opportunity to chart a different path. Because the one common element between these three things, the fossil crisis, the AI boom, and the climate crisis, is energy. And for the first time, and this comes from the International Energy Agency, this is an energy crisis that has a superior alternative, which is clean energy, energy storage, and electrification. And here's where Brazil comes in. While a lot of countries in the world are rationing energy and suffering, Brazil has the opposite problem with too much electricity in the system, which leads to the need for curtailment. A lot of groom to grow on solar, on wind, and storage. And Brazil, I think, just today announced a battery storage auction that will happen in December and kind of like open the gates for this technology to come into Brazil. And with the US and Europe and the Chinese hunting down critical minerals, we're sitting on some of the world's largest reserves. And I think there's another thing that people don't remember, which is one of our main strategic capacities, a power card, which is that we are the world's largest exporter of protein and a really stable one. And if you think that an energy shortage is causing economic pain and political turmoil, a food crisis causes revolutions. So no one wants that. And Brazil knows it. In a country that has limited investment capacity, especially at the subnational level, this Chinese capital can make a huge difference. But it's not about them owning Brazil. It's about Brazil using this position to secure much more strategic cooperation around the materials, the technologies of the energy transition that play to our strands. So electric vehicles, biofuels for airplanes and ships, minerals, batteries, green hydrogen, and fertilizers, which if we can think about it is also a form of energy just for plants, and end up with deals that include technology transfer, local content, manufacturing requirements, special trade conditions, which Brazil can then use to feed itself and fulfill the promise of our national anthem, which is to become a giant by its own nature.
SPEAKER_05That's great, Juan. What you said about energy, it gives me some food for thought because we are dealing with a game. This whole transition discussion. I think it's easier to for the people to understand as a game. In the last century, in the 20th century, the industrial competition in the global economy was based mostly on cheap workforce. So that's how China and other Asian countries have developed their own industries in the later part of that century. But now in the first quarter of the 21st century, the game has changed. It's not cheap workforce that is the key to competitiveness. It's again cheap energy is the key for competitiveness. Like we have seen in the late 19th century. But then oil and coal were the kings of the game. They were the key to development. But now the key is renewable energy. Renewable energy has the upper hand as a clean, stable, and cheap source of energy. We are seeing how this move to electrification and this and decarbonization is reorganizing global chains, especially in China and the European Union. In this context, I think it's important to highlight what you said about the Brazilian electric matrix, which is based mostly on hydropower, but also with an increasing participation of wind and solar power. Our electric matrix is a very important advantage for Brazil in a global economy focused on electrification and decarbonization, and it can play an important role in repositioning Brazil in this new economy.
SPEAKER_01And at the same time, this is the moment in history that countries like Brazil do not need to choose between development and climate action because the two things are clearly a difference thing together now.
SPEAKER_03And Bruno, to your game metaphor, by November it all changes, right? Or not. So we have both elections in Brazil that might mean two very different visions, and we also have the congressional elections in the US, which might reshape the entire context. So I think if we have this conversation in December, it might also inform new different paths, but it's impossible to predict what that will be right now.
SPEAKER_00You've been listening to an episode from the Brazilian podcast Clima Info. I'm Kate McKenzie. Kim and I will be back with more polycrisis episodes very soon.