1 00:00:00,320 --> 00:00:03,320 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,640 --> 00:00:07,360 Speaker 1: the BNAF podcast. Brazil is in the spotlight as host 3 00:00:07,440 --> 00:00:10,200 Speaker 1: of this year's G twenty meetings and next year's COP 4 00:00:10,240 --> 00:00:13,960 Speaker 1: thirty climate conference. It's setting the tone for global negotiations. 5 00:00:14,160 --> 00:00:17,960 Speaker 1: Their influence doesn't end there. Though endowed with an array 6 00:00:18,000 --> 00:00:22,360 Speaker 1: of natural resources, Brazil is also an increasingly important country 7 00:00:22,400 --> 00:00:26,120 Speaker 1: for the energy transition. Everything from transition metals to biofuels 8 00:00:26,160 --> 00:00:28,520 Speaker 1: can be found in Brazil when it comes to clean energy. 9 00:00:28,680 --> 00:00:32,159 Speaker 1: In twenty twenty three, it ranked sixth globally in energy 10 00:00:32,159 --> 00:00:36,400 Speaker 1: transition investment by attracting over thirty five billion dollars. They're 11 00:00:36,440 --> 00:00:39,960 Speaker 1: also ranked third for wind and solar installations alone. Their 12 00:00:39,960 --> 00:00:42,879 Speaker 1: dominance and clean power could lead to future opportunities for 13 00:00:42,920 --> 00:00:46,640 Speaker 1: everything from green hydrogen to a cleaner manufacturing sector. On 14 00:00:46,640 --> 00:00:50,040 Speaker 1: today's show, we're joined by Bloomberg nef's head of Latam Research, 15 00:00:50,159 --> 00:00:54,560 Speaker 1: James Ellis, and BNF analyst based in Seal Paulo, Vensius, Newness, 16 00:00:54,680 --> 00:00:56,880 Speaker 1: and they take us on a whistlestop tour of the 17 00:00:56,920 --> 00:01:00,520 Speaker 1: various climate and transition priorities for Brazil. B and EF 18 00:01:00,560 --> 00:01:04,200 Speaker 1: subscribers can find James and Vinicius's recent market outlook for 19 00:01:04,240 --> 00:01:06,600 Speaker 1: Brazil at BNF dot com or at BNOF on the 20 00:01:06,600 --> 00:01:09,480 Speaker 1: Bloomberg terminal. Make sure to subscribe to the show and 21 00:01:09,600 --> 00:01:12,200 Speaker 1: if you give us a review on Apple Podcasts or Spotify, 22 00:01:12,280 --> 00:01:14,720 Speaker 1: that will help make us more discoverable by others who 23 00:01:14,760 --> 00:01:17,440 Speaker 1: are interested in the energy transition. But right now, let's 24 00:01:17,440 --> 00:01:20,000 Speaker 1: speak with James and Vinnie about the outlook for Brazil. 25 00:01:29,640 --> 00:01:31,759 Speaker 1: VINNI great to have you on the show today. 26 00:01:32,000 --> 00:01:34,080 Speaker 2: Thank you, Dana. It's a pleasure to talk to you. 27 00:01:34,360 --> 00:01:36,080 Speaker 1: And James, thank you for coming back. 28 00:01:36,560 --> 00:01:37,959 Speaker 3: Thank you, Dana, pleasure to be here. 29 00:01:38,400 --> 00:01:41,200 Speaker 1: We are here to talk about Brazil today, which is 30 00:01:41,560 --> 00:01:43,560 Speaker 1: a country that it seems like all eyes are on 31 00:01:43,640 --> 00:01:45,880 Speaker 1: at the moment. They are the host of this year's 32 00:01:45,880 --> 00:01:48,440 Speaker 1: G twenty, they are the host of next year's COP 33 00:01:48,520 --> 00:01:51,440 Speaker 1: thirty meetings, and that just brings a lot of attention 34 00:01:51,560 --> 00:01:54,280 Speaker 1: and interest to the country of Brazil when it comes 35 00:01:54,320 --> 00:01:56,960 Speaker 1: to the energy transition, but also when we think about 36 00:01:56,960 --> 00:01:59,160 Speaker 1: it as just the wider economy. I mean, as we've 37 00:01:59,160 --> 00:02:01,560 Speaker 1: been preparing for this show, we've been thinking about just 38 00:02:01,640 --> 00:02:05,360 Speaker 1: how incredibly diverse the energy assets are, but then also 39 00:02:05,760 --> 00:02:08,400 Speaker 1: all of the opportunity. So let's just rewind, let's set 40 00:02:08,440 --> 00:02:11,120 Speaker 1: ourselves a little bit of background. When we talk about 41 00:02:11,120 --> 00:02:15,280 Speaker 1: renewable energy goals, how ambitious would you say Brazil's goals 42 00:02:15,280 --> 00:02:19,400 Speaker 1: are compared to let's say other G twenty member nations. 43 00:02:19,919 --> 00:02:22,839 Speaker 2: In terms of renewable energy, Brazil is already really will 44 00:02:22,880 --> 00:02:25,239 Speaker 2: WELP position compared to it spears in g trenny. And 45 00:02:25,280 --> 00:02:28,880 Speaker 2: that's basically because Brazil electricity makers. It's already ninety percent 46 00:02:28,919 --> 00:02:32,200 Speaker 2: clean with a large presence of large hydro assets. But 47 00:02:32,240 --> 00:02:35,080 Speaker 2: also if a grow in presence of wind and solar generation, 48 00:02:35,280 --> 00:02:37,760 Speaker 2: and Brazil has a big ambitions to continue to grow 49 00:02:37,840 --> 00:02:41,120 Speaker 2: the share of renewable energy and to explore this cheap 50 00:02:41,160 --> 00:02:45,600 Speaker 2: electricity to industrialize and produce carbon carbon neutral goods. 51 00:02:46,000 --> 00:02:48,760 Speaker 1: So, with all eyes on Brazil from a policy standpoint, 52 00:02:48,760 --> 00:02:51,120 Speaker 1: from an energy standpoint, is it an area of interest 53 00:02:51,160 --> 00:02:54,160 Speaker 1: from a foreign direct investment standpoint? And I'm thinking specifically 54 00:02:54,240 --> 00:02:56,160 Speaker 1: about the fact that a lot of the Southern European 55 00:02:56,160 --> 00:03:00,959 Speaker 1: countries do invest in energy infrastructure in countries FROSUS South America. 56 00:03:01,080 --> 00:03:03,639 Speaker 1: Is Brazil one of those countries. It's really the recipient 57 00:03:03,880 --> 00:03:07,320 Speaker 1: of this attention from countries around the world from an investment. 58 00:03:06,960 --> 00:03:11,239 Speaker 2: Standpoint, Yeah, definitely. Like you said, you have already a 59 00:03:11,240 --> 00:03:13,760 Speaker 2: lot of European utilities that are present in Brazil, mainly 60 00:03:13,760 --> 00:03:17,400 Speaker 2: on the distribution, transmission and generation sector, and those twoties 61 00:03:17,480 --> 00:03:20,040 Speaker 2: are invested in a lot on renewable generation as well. 62 00:03:20,160 --> 00:03:22,880 Speaker 2: So if you look at the top asset owners in 63 00:03:22,919 --> 00:03:26,000 Speaker 2: Brazil for renewable projects, you see a lot of European 64 00:03:26,040 --> 00:03:30,280 Speaker 2: companies and growing presence for foreign direct investment in Brazil 65 00:03:30,320 --> 00:03:30,720 Speaker 2: for sure. 66 00:03:31,000 --> 00:03:33,040 Speaker 1: Can we talk about what that energy mix looks like 67 00:03:33,120 --> 00:03:35,760 Speaker 1: a little bit more because you had just mentioned, you know, 68 00:03:35,760 --> 00:03:37,920 Speaker 1: it has hydro, but there's also wind and there's also 69 00:03:38,000 --> 00:03:40,600 Speaker 1: solar in which of these spaces has grown the most 70 00:03:40,760 --> 00:03:43,560 Speaker 1: recently and potentially has the most room for growth. 71 00:03:43,840 --> 00:03:48,360 Speaker 2: Brazil historically has had a clean and electricity matrix basically 72 00:03:48,360 --> 00:03:50,880 Speaker 2: because of large hydro projects that were built a few 73 00:03:50,880 --> 00:03:54,240 Speaker 2: decades ago. But ten years ago, around twenty ten, Brazil 74 00:03:54,280 --> 00:03:57,560 Speaker 2: started doing renewable energy auctions for wind and solar generation 75 00:03:57,720 --> 00:04:01,000 Speaker 2: and those auctions really kicked off this revolution in Brazil 76 00:04:01,000 --> 00:04:04,720 Speaker 2: in terms of renewable generation. So nowadays the biggest sources 77 00:04:04,760 --> 00:04:07,880 Speaker 2: of all electricity that are increasing its capacity are wind 78 00:04:07,920 --> 00:04:11,400 Speaker 2: and solar, specifically solar on the last few years because 79 00:04:11,480 --> 00:04:15,560 Speaker 2: of the distributed generation sector, which are small scale solar 80 00:04:16,040 --> 00:04:18,920 Speaker 2: solar plants less than five megawatts in Brazil that are 81 00:04:18,960 --> 00:04:22,359 Speaker 2: capable of participating on the net media and legislation in 82 00:04:22,400 --> 00:04:26,120 Speaker 2: the country, and that has driven a lot of investments, 83 00:04:26,400 --> 00:04:29,080 Speaker 2: especially in the last couple of years. So small scale 84 00:04:29,120 --> 00:04:32,120 Speaker 2: solar is definitely the sector that it's booming in Brazil 85 00:04:32,160 --> 00:04:34,480 Speaker 2: right now and is responsible for most of the investments 86 00:04:34,520 --> 00:04:36,960 Speaker 2: not only in Brazil, but in Latin America as well. 87 00:04:37,080 --> 00:04:39,840 Speaker 1: And as you had mentioned, there was a Brazilian policy 88 00:04:39,880 --> 00:04:42,200 Speaker 1: that actually helps spur that along. Would you say that 89 00:04:42,200 --> 00:04:44,880 Speaker 1: that is the primary driver of why small scale solar 90 00:04:44,920 --> 00:04:45,560 Speaker 1: has taken off. 91 00:04:45,800 --> 00:04:49,200 Speaker 2: Yeah, definitely, the policy, the net media in legislation was 92 00:04:49,279 --> 00:04:52,640 Speaker 2: responsible for the growing of the solar industry, basically because 93 00:04:52,680 --> 00:04:55,600 Speaker 2: the legislation allowed for full net metering, which means that 94 00:04:55,720 --> 00:04:59,600 Speaker 2: residential and commercial consumers can produce energy and trade that 95 00:05:00,040 --> 00:05:02,920 Speaker 2: or power credits, and because of the high electricity prices 96 00:05:02,960 --> 00:05:05,640 Speaker 2: for those consumers in the country, this made a really 97 00:05:05,680 --> 00:05:08,920 Speaker 2: good business case for smast scale in Brazil, which led 98 00:05:08,960 --> 00:05:11,640 Speaker 2: for all of this investments in the past few years. 99 00:05:11,680 --> 00:05:14,159 Speaker 2: Because of the small scale solar. Brazil was the third 100 00:05:14,160 --> 00:05:16,600 Speaker 2: country that installed most capacity in the world in twenty 101 00:05:16,640 --> 00:05:19,960 Speaker 2: tiny three, and basically because this policy then net metering 102 00:05:20,000 --> 00:05:22,080 Speaker 2: policy was one of the main responsibles for that. 103 00:05:22,400 --> 00:05:24,640 Speaker 1: Now let's focus on wind for a second, which has 104 00:05:24,680 --> 00:05:27,080 Speaker 1: been an area that's actually done quite well in Brazil. 105 00:05:27,160 --> 00:05:30,720 Speaker 1: It has extraordinarily high capacity factors. But in other parts 106 00:05:30,760 --> 00:05:33,080 Speaker 1: of the world we've seen some real issues over the 107 00:05:33,120 --> 00:05:36,480 Speaker 1: last year when it comes to win generation in terms 108 00:05:36,480 --> 00:05:39,239 Speaker 1: of costs, in terms of supply chains, as Brazil suffered 109 00:05:39,240 --> 00:05:41,760 Speaker 1: the same consequences, or if things been better there, I. 110 00:05:41,760 --> 00:05:44,679 Speaker 2: Would say generally that Brazil was better in training Cheny 111 00:05:44,680 --> 00:05:47,559 Speaker 2: Tree than spears globally. Actually in change Chinny Tree Bazoo 112 00:05:47,560 --> 00:05:50,920 Speaker 2: installed roughly five gigawatts of wind, which was a record 113 00:05:50,920 --> 00:05:53,279 Speaker 2: for the country, and the same as solar was a 114 00:05:53,320 --> 00:05:56,839 Speaker 2: third country in terms of capacity installed in training Chenny Tree, 115 00:05:56,880 --> 00:05:59,440 Speaker 2: and that's mainly because Brazil has developed over the year 116 00:05:59,520 --> 00:06:03,240 Speaker 2: a pretty good supply chain infrastructure for wind development. That 117 00:06:03,440 --> 00:06:06,960 Speaker 2: was due to a lot of local content policies related 118 00:06:07,040 --> 00:06:09,919 Speaker 2: to finance in all those projects here in the country, 119 00:06:10,040 --> 00:06:13,479 Speaker 2: and because of that, the country has not suffered that 120 00:06:13,640 --> 00:06:16,520 Speaker 2: much in terms of wind development, although if you look 121 00:06:16,640 --> 00:06:18,960 Speaker 2: to our forecast for the next few years, we do 122 00:06:19,080 --> 00:06:22,320 Speaker 2: expect that wind installations will probably drop on the next 123 00:06:22,320 --> 00:06:25,040 Speaker 2: couple of years, mainly because in the country right now 124 00:06:25,080 --> 00:06:28,280 Speaker 2: there is a short term oversupply of renewable energy and 125 00:06:28,360 --> 00:06:33,159 Speaker 2: that's reducing the procurement for PPAs for wind energy. 126 00:06:33,440 --> 00:06:37,119 Speaker 1: So let's talk about another really hot area, an area 127 00:06:37,200 --> 00:06:40,240 Speaker 1: that all eyes are on as well, and that is hydrogen. 128 00:06:40,520 --> 00:06:42,680 Speaker 1: It's an area that a lot of investment has gone 129 00:06:42,680 --> 00:06:45,320 Speaker 1: into in the US with the Inflation Reduction Act, certainly 130 00:06:45,320 --> 00:06:48,120 Speaker 1: also in Europe. But I actually think that the energy 131 00:06:48,200 --> 00:06:50,800 Speaker 1: companies around the world are really looking at hydrogen as 132 00:06:50,800 --> 00:06:53,880 Speaker 1: a way to reduce emissions in hard to debate sectors. 133 00:06:53,960 --> 00:06:56,240 Speaker 1: And as we know and have gone into detail on 134 00:06:56,360 --> 00:06:58,719 Speaker 1: in the show, there's a lot of different ways to 135 00:06:59,120 --> 00:07:03,080 Speaker 1: make hydrogen. With the renewables that Brazil has and kind 136 00:07:03,120 --> 00:07:05,360 Speaker 1: of the way that their greate is currently structured, how 137 00:07:05,360 --> 00:07:09,960 Speaker 1: well presitioned is Brazil to be a producer of green hydrogen. 138 00:07:10,480 --> 00:07:12,640 Speaker 3: I mean something that needs to be said, just touching 139 00:07:12,680 --> 00:07:15,680 Speaker 3: on the topic we were just talking about about wind, 140 00:07:15,720 --> 00:07:18,920 Speaker 3: is that Brazil has this fantastic wind resource and as 141 00:07:19,000 --> 00:07:22,320 Speaker 3: Vinnie pointed, out that's a homegrown success story. Like the 142 00:07:22,360 --> 00:07:24,840 Speaker 3: first auctions were held well over a decade ago. It's 143 00:07:24,880 --> 00:07:28,360 Speaker 3: currently the second largest source of power generation by capacity, 144 00:07:28,640 --> 00:07:30,840 Speaker 3: and a conscious decision was made to sort of support 145 00:07:30,840 --> 00:07:33,840 Speaker 3: that industry, not just in terms of developing the power capacity, 146 00:07:33,880 --> 00:07:36,640 Speaker 3: but also developing the local supply chains to support it, 147 00:07:36,680 --> 00:07:40,840 Speaker 3: to create jobs and create industry locally. The interesting tie 148 00:07:40,880 --> 00:07:44,600 Speaker 3: in with green hydrogen is that Brazil's onshore wind resource 149 00:07:44,760 --> 00:07:46,720 Speaker 3: is so competitive. If you look at the sort of 150 00:07:46,800 --> 00:07:49,679 Speaker 3: national average of its wind plans compared to any other market, 151 00:07:49,720 --> 00:07:52,360 Speaker 3: it has the highest average capacity factors in the world, 152 00:07:52,440 --> 00:07:55,679 Speaker 3: which produce the lowest levelized costs of electricity in the world. 153 00:07:55,840 --> 00:08:00,240 Speaker 3: And since renewable energy is the largest single cost in 154 00:08:00,280 --> 00:08:03,320 Speaker 3: producing green hydrogen, that results, according to our modeling, in 155 00:08:03,360 --> 00:08:06,840 Speaker 3: the lowest level aised cost of hydrogen production in the world. 156 00:08:07,120 --> 00:08:10,320 Speaker 3: So that's what makes the hydrogen story really interesting in Brazil. 157 00:08:10,440 --> 00:08:12,880 Speaker 3: There are obviously many things that need to happen to 158 00:08:12,960 --> 00:08:16,520 Speaker 3: develop that sort of capacity and a domestic hydrogen ecosystem, 159 00:08:16,600 --> 00:08:19,040 Speaker 3: but clearly what's not in question is that the potential 160 00:08:19,120 --> 00:08:19,800 Speaker 3: is there and. 161 00:08:19,880 --> 00:08:22,160 Speaker 2: Just so added few words tough throughout, James said, the 162 00:08:22,240 --> 00:08:25,800 Speaker 2: interested in Brazil and producing hydrogen. It's mainly because the 163 00:08:25,840 --> 00:08:28,840 Speaker 2: country now is seeking ways to increase its demand for energy. 164 00:08:29,000 --> 00:08:31,520 Speaker 2: For many years, Brazil has developed a lot of solar 165 00:08:31,560 --> 00:08:34,200 Speaker 2: and wind projects, and now the country has come to 166 00:08:34,240 --> 00:08:36,720 Speaker 2: a point where it needs to increase demand for discline 167 00:08:36,760 --> 00:08:41,000 Speaker 2: electricity in order to continue to increase its renewable capacity, 168 00:08:41,080 --> 00:08:43,040 Speaker 2: and hydrogen is one of the topics that the country 169 00:08:43,040 --> 00:08:45,000 Speaker 2: most one should develop it because that's a really good 170 00:08:45,000 --> 00:08:47,880 Speaker 2: opportunity for renewables to continue to grow in Brazil. 171 00:08:48,160 --> 00:08:50,240 Speaker 1: So the production of hydrogen is something that you can 172 00:08:50,280 --> 00:08:53,400 Speaker 1: do with a energy system that is getting bigger and 173 00:08:53,480 --> 00:08:56,600 Speaker 1: has really great economics. As you've outlined. Are they also 174 00:08:56,720 --> 00:09:01,120 Speaker 1: selling electricity on to other nearby countries, and it is 175 00:09:01,200 --> 00:09:04,120 Speaker 1: essentially an engine for the eight entire continent. 176 00:09:04,520 --> 00:09:08,880 Speaker 2: Brazil does export electricity and also import from Argentina, Uruguay 177 00:09:09,040 --> 00:09:12,599 Speaker 2: and Paraguay, but that's not where most of the opportunities 178 00:09:12,640 --> 00:09:17,600 Speaker 2: are for Brazil in terms of exporting electricity or exported 179 00:09:17,800 --> 00:09:21,640 Speaker 2: clean molecules. That's where hydrogen can play an important role 180 00:09:21,720 --> 00:09:24,200 Speaker 2: for the country. But also hydrogen is a really good 181 00:09:24,240 --> 00:09:27,280 Speaker 2: opportunity if you think about a domestic market. So what 182 00:09:27,520 --> 00:09:30,400 Speaker 2: Brazil is trying to do. It's built a domestic demand 183 00:09:30,520 --> 00:09:34,600 Speaker 2: for hydrogen and hydrogen itself, but also another product that 184 00:09:34,640 --> 00:09:38,280 Speaker 2: can be decarbonized by hydrogen, such as green fertilizers or 185 00:09:38,360 --> 00:09:43,079 Speaker 2: production of green steels, and overall the carbonization of heartshobaya industries. 186 00:09:43,559 --> 00:09:46,040 Speaker 3: I just want to complement that. I mean, Brazil is 187 00:09:46,080 --> 00:09:49,800 Speaker 3: a country that is incredibly blessed in terms of natural resources. 188 00:09:49,840 --> 00:09:52,800 Speaker 3: We've been focusing on renewable energy so far, so like 189 00:09:53,040 --> 00:09:56,280 Speaker 3: step one Harness the largest freshwater resources in the world 190 00:09:56,480 --> 00:09:59,240 Speaker 3: with large hydro capacity, Step two Harness the best wind 191 00:09:59,240 --> 00:10:02,239 Speaker 3: resource in the world. Now we see solar absolutely skyrocketing. 192 00:10:02,280 --> 00:10:04,600 Speaker 3: There are other sort of like pieces to this equation 193 00:10:04,760 --> 00:10:07,320 Speaker 3: that we haven't touched on yet. Brazil has enormous iron 194 00:10:07,360 --> 00:10:10,920 Speaker 3: ore reserves and resources and accounts for about twenty percent 195 00:10:11,120 --> 00:10:13,400 Speaker 3: of the global iron ore market, so there are potentially 196 00:10:13,480 --> 00:10:17,400 Speaker 3: interesting niches for green hydrogen application in production of green steel, 197 00:10:17,400 --> 00:10:20,240 Speaker 3: which Vini just mentioned. Brazil is also, as I think 198 00:10:20,440 --> 00:10:24,199 Speaker 3: most people know, it is an absolute agricultural superpower. It's 199 00:10:24,200 --> 00:10:27,959 Speaker 3: the top producer of so many important agricultural commodities, yet 200 00:10:28,040 --> 00:10:31,000 Speaker 3: a huge proportion of its nitrogen fertilizers are actually important, 201 00:10:31,040 --> 00:10:34,679 Speaker 3: and those are produced in other countries using nitrogen fertilizer, 202 00:10:34,840 --> 00:10:38,280 Speaker 3: using gray hydrogen, or derived from fossil fuels. So there's 203 00:10:38,280 --> 00:10:41,200 Speaker 3: also an opportunity, as Vini mentioned fertilizers for Brazil to 204 00:10:41,280 --> 00:10:44,320 Speaker 3: not only, for example, produce clean ammonia and export that, 205 00:10:44,360 --> 00:10:47,960 Speaker 3: but perhaps use that ammonia to produce its own lower 206 00:10:47,960 --> 00:10:51,880 Speaker 3: carbon fertilizer for which there is a massive domestic market 207 00:10:52,040 --> 00:10:52,560 Speaker 3: right there. 208 00:10:52,840 --> 00:10:56,400 Speaker 1: Countries like Brazil that are endowed with incredible natural resources 209 00:10:56,520 --> 00:10:59,360 Speaker 1: are sometimes do fall victim to this resource curse. And 210 00:10:59,480 --> 00:11:02,840 Speaker 1: what we's is Brazil really in some respects pivoting and 211 00:11:02,880 --> 00:11:06,479 Speaker 1: looking at how they can use these resources to essentially 212 00:11:06,679 --> 00:11:09,000 Speaker 1: be a bigger player in the global economy and the 213 00:11:09,040 --> 00:11:11,560 Speaker 1: sort of things that they can actually use domestically, because 214 00:11:11,600 --> 00:11:15,200 Speaker 1: as you just highlighted, exporting electricity isn't necessarily the end game. 215 00:11:15,320 --> 00:11:17,600 Speaker 1: It's actually what they can do with the electricity within 216 00:11:17,720 --> 00:11:19,920 Speaker 1: their own borders and then what they can make out 217 00:11:19,960 --> 00:11:22,280 Speaker 1: of it, it's going to have a bigger impact. So 218 00:11:22,360 --> 00:11:24,040 Speaker 1: can you talk a little bit about kind of some 219 00:11:24,080 --> 00:11:26,440 Speaker 1: of the areas where you see a lot of potential 220 00:11:26,559 --> 00:11:30,240 Speaker 1: for Brazil in their strategy in breaking the resource curse. 221 00:11:30,679 --> 00:11:34,680 Speaker 2: Brazil has historically been in commodity exporter country, exporting during 222 00:11:34,720 --> 00:11:37,280 Speaker 2: his old history and with hydrogen. What I think the 223 00:11:37,360 --> 00:11:40,439 Speaker 2: country is trying to do is to break this tradition 224 00:11:40,640 --> 00:11:44,080 Speaker 2: and starting not to export only hydrogen itself, but products 225 00:11:44,120 --> 00:11:48,440 Speaker 2: with higher value aggregraated with the carbonized industry, products made 226 00:11:48,480 --> 00:11:51,800 Speaker 2: with this clean hydrogen. So the opportunity is not only 227 00:11:51,960 --> 00:11:55,480 Speaker 2: the domestic market for this green hydrogen and the subproducts, 228 00:11:55,520 --> 00:11:58,520 Speaker 2: but also to export not only hydrogen are ammonia itself, 229 00:11:58,559 --> 00:12:01,920 Speaker 2: but also products that can use this hydrogen inside the country, 230 00:12:02,040 --> 00:12:04,760 Speaker 2: produce goods and then export them. And that's where the 231 00:12:04,840 --> 00:12:07,520 Speaker 2: biggest opportunity is for the country. And for that, the 232 00:12:07,640 --> 00:12:11,560 Speaker 2: renewable energy industry and the industrialization the industry needs to 233 00:12:11,559 --> 00:12:14,600 Speaker 2: be tied together, and Brazil needs to boosts in its 234 00:12:14,640 --> 00:12:19,440 Speaker 2: industrial capacity with this clean electricity or clean molecule with hydrogen. 235 00:12:19,960 --> 00:12:23,280 Speaker 1: Let's talk about an area that I have really already 236 00:12:23,280 --> 00:12:25,640 Speaker 1: brought up when we talked about Brazil on a previous show, 237 00:12:25,679 --> 00:12:29,400 Speaker 1: but it was biofuels, because I really strongly associate biofuels 238 00:12:29,400 --> 00:12:31,720 Speaker 1: with Brazil, and I know they're not the number one 239 00:12:31,840 --> 00:12:34,720 Speaker 1: producer of this, but for some reason. In my head, 240 00:12:34,760 --> 00:12:37,920 Speaker 1: it's completely intrinsically linked, and right now there's so much 241 00:12:37,960 --> 00:12:40,040 Speaker 1: going on when it comes to some of the hard 242 00:12:40,080 --> 00:12:43,040 Speaker 1: to debate sectors. So I'm thinking of sustainable aviation fuel 243 00:12:43,080 --> 00:12:45,720 Speaker 1: and how this is one of the primary strategies for 244 00:12:45,920 --> 00:12:48,520 Speaker 1: greening that space at the moment. So can you talk 245 00:12:48,559 --> 00:12:51,960 Speaker 1: a little bit about biofuels and where Brazil is now 246 00:12:52,000 --> 00:12:55,559 Speaker 1: and whether or not, you know, my biases to associate 247 00:12:55,600 --> 00:12:57,520 Speaker 1: Brazil with biofuels is founded. 248 00:12:57,840 --> 00:12:59,719 Speaker 3: I think it's absolutely founded, because it's not the top 249 00:12:59,720 --> 00:13:02,920 Speaker 3: p it's number two, and it's number two after the US, 250 00:13:03,000 --> 00:13:06,520 Speaker 3: which is an even larger country in terms of population, 251 00:13:06,600 --> 00:13:09,640 Speaker 3: footprint in some senses resources. But there are key differences 252 00:13:09,640 --> 00:13:12,720 Speaker 3: between these markets. The US is producing corn based ethanol. 253 00:13:12,760 --> 00:13:17,280 Speaker 3: Brazil is producing largely cane based ethanol, and that has 254 00:13:17,280 --> 00:13:20,760 Speaker 3: a different carbon footprint and different cost structure, and I 255 00:13:20,760 --> 00:13:23,760 Speaker 3: think different opportunities as far as producing other products like 256 00:13:23,880 --> 00:13:27,080 Speaker 3: sustainable aviation fuel the other sort of key difference. I 257 00:13:27,120 --> 00:13:29,800 Speaker 3: think that just high level observation about the role of 258 00:13:29,840 --> 00:13:32,319 Speaker 3: biofuels in Brazil, is there much more integrated into the 259 00:13:32,360 --> 00:13:35,160 Speaker 3: transport sector than they are in the US in the 260 00:13:35,240 --> 00:13:38,040 Speaker 3: sense that almost any passenger vehicle car in Brazil is 261 00:13:38,080 --> 00:13:40,520 Speaker 3: fully flex fuel can run on any combination of one 262 00:13:40,559 --> 00:13:43,960 Speaker 3: hundred percent gasoline to one hundred percent ethanol, and this, 263 00:13:44,360 --> 00:13:46,800 Speaker 3: as with wind, comes from policies that were sort of 264 00:13:46,840 --> 00:13:49,800 Speaker 3: put in place at least a decade or decades ago 265 00:13:49,960 --> 00:13:52,760 Speaker 3: that made this conscious choice to develop biofuels and integrate 266 00:13:52,800 --> 00:13:55,520 Speaker 3: them into transport. So another important high level point to 267 00:13:55,520 --> 00:13:57,959 Speaker 3: make about Brazil is not only is the power sector 268 00:13:58,040 --> 00:14:00,480 Speaker 3: ninety percent clean energy, including larg hydroe so, but also 269 00:14:00,520 --> 00:14:03,280 Speaker 3: transport is significantly more decarbonized than it is in most 270 00:14:03,280 --> 00:14:04,240 Speaker 3: other major economies. 271 00:14:04,320 --> 00:14:06,680 Speaker 1: Are these completely different cars that are being sold there 272 00:14:06,720 --> 00:14:08,760 Speaker 1: than another parts of the world, and they're not capable 273 00:14:08,800 --> 00:14:10,640 Speaker 1: to handle the biofuels well. 274 00:14:10,640 --> 00:14:12,840 Speaker 3: They're produced for the domestic market. Brazil is a very 275 00:14:12,920 --> 00:14:16,120 Speaker 3: large car manufacturer, has a population of two hundred million 276 00:14:16,280 --> 00:14:19,760 Speaker 3: people and has a car industry, so all of the 277 00:14:19,800 --> 00:14:23,880 Speaker 3: major auto manufacturers pretty much produce cars there for the 278 00:14:23,920 --> 00:14:26,280 Speaker 3: domestic market. One thing that I think needs to be 279 00:14:26,320 --> 00:14:29,080 Speaker 3: said is that evs are only starting to make inroads recently, 280 00:14:29,160 --> 00:14:31,680 Speaker 3: so there's an important sort of tie in between biofuels, 281 00:14:32,240 --> 00:14:35,680 Speaker 3: electric vehicles, and some interesting ways we think that market's evolving. 282 00:14:35,840 --> 00:14:37,760 Speaker 1: Well, let's go ahead and talk about that now, because 283 00:14:37,760 --> 00:14:40,040 Speaker 1: the reason that I'm asking about kind of the domestic 284 00:14:40,120 --> 00:14:42,840 Speaker 1: versus international market for vehicles is that you think of 285 00:14:43,000 --> 00:14:45,680 Speaker 1: other parts of the world, in places like California that 286 00:14:45,720 --> 00:14:48,080 Speaker 1: have tighter emission standards, and so other parts of the 287 00:14:48,080 --> 00:14:51,200 Speaker 1: States actually end up having these cars with tighter emission standards. 288 00:14:51,240 --> 00:14:53,400 Speaker 1: You think about the fact that if the innovation has 289 00:14:53,440 --> 00:14:55,840 Speaker 1: taken place in Brazil, it would be great to see 290 00:14:55,960 --> 00:15:00,080 Speaker 1: the innovation expanded elsewhere in adoption actually happening there. Well, 291 00:15:00,280 --> 00:15:05,120 Speaker 1: that conversation around whether biofuels or electric vehicles are the 292 00:15:05,280 --> 00:15:07,800 Speaker 1: endgame when it comes to decarbonizing, and I think that 293 00:15:08,000 --> 00:15:10,360 Speaker 1: you know our stance very much within BNF is that 294 00:15:10,440 --> 00:15:14,640 Speaker 1: electric vehicles take us much closer to a paras aligned 295 00:15:14,760 --> 00:15:18,640 Speaker 1: net zero by twenty fifty future that it would be 296 00:15:18,680 --> 00:15:21,720 Speaker 1: a conversation more around electric vehicles now. Is the reason 297 00:15:21,760 --> 00:15:25,680 Speaker 1: there's been relatively slow uptake in Brazil have something to 298 00:15:25,760 --> 00:15:28,240 Speaker 1: do with the fact that there was early adoption of 299 00:15:28,360 --> 00:15:31,560 Speaker 1: biofuels or is there another reason that would lead to 300 00:15:31,680 --> 00:15:34,600 Speaker 1: why they're only now really starting to get traction? 301 00:15:35,120 --> 00:15:37,360 Speaker 2: I would say definitely the fact that Brazil has a 302 00:15:37,400 --> 00:15:40,800 Speaker 2: really good adoption of biofuels and is road transport is 303 00:15:40,840 --> 00:15:43,480 Speaker 2: one of the factors that are taking these longer than 304 00:15:43,560 --> 00:15:46,560 Speaker 2: usual than to kick off in the country and just 305 00:15:46,560 --> 00:15:49,520 Speaker 2: a compliment to jam was saying earlier. Early in the seventies, 306 00:15:49,520 --> 00:15:52,240 Speaker 2: Brazil started the problem which is called Provacol, which was 307 00:15:52,240 --> 00:15:55,360 Speaker 2: the project that really developed the the biofuels industry in 308 00:15:55,360 --> 00:15:58,560 Speaker 2: the country, the production of the massic flex fuel vehicles 309 00:15:58,760 --> 00:16:02,080 Speaker 2: and because of all of the the biofus policies in Brazil, 310 00:16:02,200 --> 00:16:06,120 Speaker 2: road transport in Brazil nowadays have a significant share of 311 00:16:06,200 --> 00:16:09,480 Speaker 2: renewables fuels. So if you think about passenger vehicles, roughly 312 00:16:09,520 --> 00:16:13,520 Speaker 2: forty percent of the energy consumption of this category is 313 00:16:13,600 --> 00:16:16,560 Speaker 2: due to biofuls and because of that, Brazil already has 314 00:16:16,600 --> 00:16:19,720 Speaker 2: a cleaner transport segment than other countries. But that's not 315 00:16:19,920 --> 00:16:22,360 Speaker 2: just say that EVIS will not be important in Brazil. 316 00:16:22,440 --> 00:16:25,160 Speaker 2: There's no silver bullet if you think about decarbonized and 317 00:16:25,280 --> 00:16:29,600 Speaker 2: transport and EVIS and also biofuels will play it important role. 318 00:16:29,720 --> 00:16:32,280 Speaker 2: The thing about Brazil is that since Brazil already has 319 00:16:32,360 --> 00:16:37,080 Speaker 2: a big adoption of biofules, probably hybrid vehicles and plugging 320 00:16:37,160 --> 00:16:40,240 Speaker 2: hybrid vehicles will play an important role on this transition 321 00:16:40,600 --> 00:16:44,840 Speaker 2: to a battery electricity fleet. It's not necessarily a competition 322 00:16:45,080 --> 00:16:49,960 Speaker 2: between biofuels and electric vehicles, and if Brazil actually adopts 323 00:16:49,960 --> 00:16:53,480 Speaker 2: electric vehicles, that doesn't mean necessarily that biofuels will lose 324 00:16:53,600 --> 00:16:55,640 Speaker 2: its space, because you have a lot of products that 325 00:16:55,680 --> 00:16:58,360 Speaker 2: can be made with those biofuels. You can make sustainable 326 00:16:58,400 --> 00:17:00,600 Speaker 2: aviation fuels, you can use then in odthers areas, and 327 00:17:00,640 --> 00:17:03,040 Speaker 2: you can also use it on transport because you also 328 00:17:03,080 --> 00:17:06,000 Speaker 2: have plugging hybrid vehicles for a long time on the country. 329 00:17:06,200 --> 00:17:08,840 Speaker 2: So it's just to highlight that in the transport sector 330 00:17:08,880 --> 00:17:11,520 Speaker 2: and in all sectors, there's no like silver bullet, and 331 00:17:11,960 --> 00:17:14,400 Speaker 2: both technologies can play an important role. 332 00:17:14,720 --> 00:17:16,760 Speaker 3: Dan I think it was correct and accurate of view 333 00:17:16,880 --> 00:17:19,520 Speaker 3: to sort of frame the question as biofuels and electric 334 00:17:19,560 --> 00:17:22,679 Speaker 3: vehicles as being in opposition, because that is in fact 335 00:17:23,000 --> 00:17:26,440 Speaker 3: how it's seen in some quarters in Brazil. It's seen 336 00:17:26,440 --> 00:17:29,120 Speaker 3: as a bit of a competition. It's possible, as Vinnie said, 337 00:17:29,160 --> 00:17:31,800 Speaker 3: that you know, or actually quite likely that the sort 338 00:17:31,800 --> 00:17:35,400 Speaker 3: of prevalence of biofuels in Brazil hasn't necessarily let's say 339 00:17:35,600 --> 00:17:38,080 Speaker 3: hastened the arrival of evs if anything had put a 340 00:17:38,080 --> 00:17:41,480 Speaker 3: stop on it. But there's no world in which anybody 341 00:17:41,520 --> 00:17:44,720 Speaker 3: thinks that the entire transport sector can be run on 342 00:17:44,840 --> 00:17:47,359 Speaker 3: ethanol y, because it would simply demand too much land, 343 00:17:47,440 --> 00:17:49,240 Speaker 3: right and it'd be like then you're talking, you get 344 00:17:49,240 --> 00:17:51,760 Speaker 3: into food crops and food security issues. So there's no 345 00:17:51,840 --> 00:17:54,720 Speaker 3: way that biofuels could meet the transport needs of the future. 346 00:17:54,760 --> 00:17:57,080 Speaker 3: So you need something else that's low carbon, and as 347 00:17:57,160 --> 00:18:00,000 Speaker 3: Vinnie said, in a country that doesn't have charging infrastructure, yeah, 348 00:18:00,080 --> 00:18:03,200 Speaker 3: that's on the cusp of producing chibvs. These two solutions 349 00:18:03,240 --> 00:18:05,560 Speaker 3: are going to co exist on the road and even 350 00:18:05,680 --> 00:18:07,679 Speaker 3: in the engine for a long time to come. So 351 00:18:07,800 --> 00:18:10,040 Speaker 3: definitely not a zero sum game on transport. 352 00:18:10,600 --> 00:18:13,640 Speaker 1: Historically, Brazil has not been a manufacturer of electric vehicles, 353 00:18:13,640 --> 00:18:16,120 Speaker 1: but that's all about to change. So can you talk 354 00:18:16,160 --> 00:18:17,959 Speaker 1: a little bit about some of the companies that are 355 00:18:17,960 --> 00:18:21,480 Speaker 1: going into Brazil and really starting to produce electric vehicles 356 00:18:21,600 --> 00:18:22,440 Speaker 1: within the country. 357 00:18:22,760 --> 00:18:25,359 Speaker 3: Yeah, I would put this as one of the more 358 00:18:25,359 --> 00:18:29,480 Speaker 3: exciting announcements in Brazil and energy transition. In the last 359 00:18:29,480 --> 00:18:32,840 Speaker 3: twelve to eighteen months period, we saw Ford exit the 360 00:18:32,840 --> 00:18:35,879 Speaker 3: country after one hundred years of producing cars and vehicles, 361 00:18:35,880 --> 00:18:38,080 Speaker 3: and at the same time we saw bid come in 362 00:18:38,119 --> 00:18:40,600 Speaker 3: and purchase a major facility of THEIRS in Bahia to 363 00:18:40,800 --> 00:18:44,160 Speaker 3: produce battery electric vehicles and hybrid vehicles, as Vinnie said, 364 00:18:44,200 --> 00:18:46,120 Speaker 3: which is going to be a big part of the strategy. 365 00:18:46,160 --> 00:18:48,360 Speaker 3: Then we also saw great Wall Motors enter the country 366 00:18:48,480 --> 00:18:53,720 Speaker 3: also last year, and both Chinese automakers pledged to have 367 00:18:53,800 --> 00:18:56,160 Speaker 3: the first vehicles roll off the line this year and 368 00:18:56,359 --> 00:18:59,200 Speaker 3: for them to be competitively priced with local flex fuel options. 369 00:18:59,320 --> 00:19:02,879 Speaker 3: Since we've also in Stallantis announced plans to produce cars 370 00:19:02,920 --> 00:19:05,960 Speaker 3: with batteries of some kind in the country, so the 371 00:19:06,000 --> 00:19:09,720 Speaker 3: scene is definitely changing. One thing that needs to be said, though, 372 00:19:09,960 --> 00:19:13,480 Speaker 3: is like to your question about why have evs not 373 00:19:13,520 --> 00:19:15,199 Speaker 3: sort of taken off to date, I think like the 374 00:19:15,280 --> 00:19:18,800 Speaker 3: most obvious answer. I think Vinny kind of covered it 375 00:19:18,800 --> 00:19:21,520 Speaker 3: in the sense that like it's partly because biofuels are 376 00:19:21,640 --> 00:19:23,879 Speaker 3: already well entrenched and have done a good job of 377 00:19:23,880 --> 00:19:26,480 Speaker 3: cutting the admissions of vehicles. I think it's just also 378 00:19:26,520 --> 00:19:29,480 Speaker 3: down to the fact that outside of specific areas in 379 00:19:29,480 --> 00:19:32,000 Speaker 3: the world, evs are pretty early everywhere, they haven't necessarily 380 00:19:32,040 --> 00:19:35,440 Speaker 3: been available widely and to a sort of mass audience 381 00:19:35,520 --> 00:19:38,200 Speaker 3: in Brazil, so consumer preferences haven't really had a chance 382 00:19:38,280 --> 00:19:40,600 Speaker 3: yet to like necessarily evolve. But what we have seen 383 00:19:40,640 --> 00:19:44,359 Speaker 3: in Brazil is as electric vehicles have become available at 384 00:19:44,400 --> 00:19:47,480 Speaker 3: different price points, there's been very strong uptake. So my 385 00:19:47,920 --> 00:19:49,919 Speaker 3: guess would be that as soon as you get very 386 00:19:49,920 --> 00:19:53,200 Speaker 3: competitively priced battery electric vehicles and plug in hybrid electric vehicles, 387 00:19:53,240 --> 00:19:55,400 Speaker 3: people are going to want them, as they do typically 388 00:19:55,440 --> 00:19:56,359 Speaker 3: anywhere else in the world. 389 00:19:56,640 --> 00:19:58,840 Speaker 1: I mean, that gap between the price of an internal 390 00:19:58,840 --> 00:20:02,879 Speaker 1: combustion engine electric vehicles still exists, it's just narrowing, and 391 00:20:02,920 --> 00:20:05,359 Speaker 1: maybe that does make the right conditions for this to 392 00:20:05,400 --> 00:20:09,399 Speaker 1: be the time for companies like BYD, who are huge 393 00:20:09,440 --> 00:20:12,440 Speaker 1: manufacturers in China of electric vehicles and have been able 394 00:20:12,480 --> 00:20:14,760 Speaker 1: to drive down price in such a dramatic way, to 395 00:20:14,840 --> 00:20:17,920 Speaker 1: bring it to other parts of the world like Brazil. 396 00:20:18,080 --> 00:20:20,280 Speaker 1: So how about the metals end of things. You know, 397 00:20:20,320 --> 00:20:23,160 Speaker 1: you had mentioned a little bit earlier that they're very 398 00:20:23,160 --> 00:20:26,000 Speaker 1: well endowed with natural resources and metals are certainly part 399 00:20:26,040 --> 00:20:28,320 Speaker 1: of it. Is Brazil a country that also has a 400 00:20:28,359 --> 00:20:31,800 Speaker 1: lot of the metals required for electric vehicles or actually 401 00:20:31,880 --> 00:20:35,080 Speaker 1: just you know, lithium, ion, batteries for stationary storage and 402 00:20:35,160 --> 00:20:36,639 Speaker 1: all the different things that it's applied to. 403 00:20:37,400 --> 00:20:40,119 Speaker 2: Yeah, Brazil is actually a crucial source of transition metals 404 00:20:40,119 --> 00:20:43,160 Speaker 2: and actually ranks third globally in BENEFS assessment of transition 405 00:20:43,240 --> 00:20:46,800 Speaker 2: metals reserves. Brazil has a lot of important metals and 406 00:20:47,200 --> 00:20:50,440 Speaker 2: for strategic minerals that exceed fifteen percent of global reserves. 407 00:20:50,520 --> 00:20:54,159 Speaker 2: They are graphied where herbs nico and manganese and Brazil 408 00:20:54,280 --> 00:20:58,439 Speaker 2: historically was a big mining country, with Valley being one 409 00:20:58,480 --> 00:21:01,280 Speaker 2: of the most important companies in the country, and the 410 00:21:01,320 --> 00:21:05,080 Speaker 2: transition likewise with the hydrogen story that you can also 411 00:21:05,480 --> 00:21:09,280 Speaker 2: export the mineral or export the clean molecule, and that's 412 00:21:09,280 --> 00:21:12,159 Speaker 2: a good commodity exporting opportunities. What you're seeing today is 413 00:21:12,160 --> 00:21:15,720 Speaker 2: that Brazil has also this capacity of mining, of exploring 414 00:21:15,760 --> 00:21:19,480 Speaker 2: this but also to producing goods domestically with that mining capacity. 415 00:21:19,520 --> 00:21:22,320 Speaker 2: So for example, Brazil has one of the biggest iron 416 00:21:22,400 --> 00:21:24,959 Speaker 2: R reserves on Earth, but doesn't produce a lot of steel. 417 00:21:25,040 --> 00:21:28,320 Speaker 2: So a big opportunity there is using this capacity, this 418 00:21:28,480 --> 00:21:31,360 Speaker 2: resource that it has on iron R and then produce 419 00:21:31,840 --> 00:21:34,960 Speaker 2: steel for example. So Brazil has a really good mining 420 00:21:34,960 --> 00:21:38,000 Speaker 2: infrastructure for a lidium for iron ore, and the country 421 00:21:38,040 --> 00:21:41,680 Speaker 2: has has opportunities both to export those products but also 422 00:21:41,760 --> 00:21:44,960 Speaker 2: to produce goods such as batteries. Are stel with this 423 00:21:45,240 --> 00:21:47,120 Speaker 2: mining resources that the country has. 424 00:21:47,359 --> 00:21:49,000 Speaker 1: I mean, you bring up a really good point when 425 00:21:49,040 --> 00:21:51,800 Speaker 1: you talk about steel, because there's mining, but then there's 426 00:21:51,880 --> 00:21:54,760 Speaker 1: refining and then there's the assembly of items on the 427 00:21:54,800 --> 00:21:57,000 Speaker 1: other end. So if we're thinking about all of the 428 00:21:57,040 --> 00:22:00,880 Speaker 1: mining resources and thinking about manufacturing of electric vehicles, does 429 00:22:00,960 --> 00:22:03,480 Speaker 1: make sense at least when we're thinking about global supply chains, 430 00:22:03,520 --> 00:22:07,639 Speaker 1: perhaps to onshore more of that refining capacity. Is Brazil 431 00:22:07,760 --> 00:22:11,720 Speaker 1: one of the countries that is on shoring more manufacturing 432 00:22:11,760 --> 00:22:14,760 Speaker 1: and is really becoming an area of interest for the 433 00:22:14,760 --> 00:22:17,439 Speaker 1: whole region or even for just their domestic market. 434 00:22:17,840 --> 00:22:20,159 Speaker 3: I think it's early days, Dana, like we as we 435 00:22:20,320 --> 00:22:23,520 Speaker 3: just talked about, we're starting to see or we're going 436 00:22:23,560 --> 00:22:26,600 Speaker 3: to see EV production very soon for the first time 437 00:22:26,760 --> 00:22:30,600 Speaker 3: in Brazil and in Latin America production for the domestic market. 438 00:22:30,640 --> 00:22:33,800 Speaker 3: Mexico currently produces evs, but they're largely exported models like 439 00:22:33,880 --> 00:22:36,960 Speaker 3: the Ford Machi. But when bid and Stillantis and great 440 00:22:37,000 --> 00:22:39,560 Speaker 3: Wall begin producing EV's in Brazil, those are going to 441 00:22:39,560 --> 00:22:42,760 Speaker 3: be produced for the local market. And that's a first one. 442 00:22:43,280 --> 00:22:46,119 Speaker 3: I think theme that's kind of emerged from this conversation 443 00:22:46,520 --> 00:22:50,560 Speaker 3: is the fact that the country has natural resources, and 444 00:22:50,600 --> 00:22:53,080 Speaker 3: that's already an opportunity, and it's an obvious one. What 445 00:22:53,640 --> 00:22:55,840 Speaker 3: I think is sort of interesting about this current moment 446 00:22:55,880 --> 00:22:59,280 Speaker 3: in time with the Lula administration and then it's international 447 00:22:59,359 --> 00:23:01,840 Speaker 3: leadership in the G twenty this year and then cop 448 00:23:01,880 --> 00:23:04,800 Speaker 3: next year, is that it creates this interesting opportunity for 449 00:23:04,880 --> 00:23:08,720 Speaker 3: the country to take concrete steps to sort of overlay 450 00:23:08,800 --> 00:23:13,040 Speaker 3: global energy transition priorities with its natural resource wealth to 451 00:23:13,080 --> 00:23:15,360 Speaker 3: move to different places in the value chain, whether we're 452 00:23:15,359 --> 00:23:18,800 Speaker 3: talking about like ethanol to staffs, or we're talking about 453 00:23:18,840 --> 00:23:21,840 Speaker 3: critical minerals and metals and development for example of a 454 00:23:22,080 --> 00:23:25,280 Speaker 3: domestic battery supply chain for example, that last topic, it's 455 00:23:25,440 --> 00:23:28,399 Speaker 3: very less clear to us that Brazil will develop a 456 00:23:28,400 --> 00:23:31,200 Speaker 3: domestic battery supply chain in the near future, simply because 457 00:23:31,240 --> 00:23:34,320 Speaker 3: its conscious decision of industrial policy. Like we've seen with 458 00:23:34,400 --> 00:23:36,439 Speaker 3: the Biden administration in the States, if you want to 459 00:23:36,440 --> 00:23:38,960 Speaker 3: do this, you really need everybody aligned and the decision 460 00:23:38,960 --> 00:23:40,640 Speaker 3: needs to be made at the very top, and that's 461 00:23:40,640 --> 00:23:42,600 Speaker 3: something that we sort of have yet to see in Brazil, 462 00:23:42,640 --> 00:23:44,760 Speaker 3: but I think it's early days and it's potentially coming. 463 00:23:45,200 --> 00:23:47,480 Speaker 1: So talk to me a little bit about the policy 464 00:23:47,520 --> 00:23:52,640 Speaker 1: situation there. How supportive is the government currently of renewables 465 00:23:52,680 --> 00:23:55,159 Speaker 1: and what sort of policies are in place to really 466 00:23:55,240 --> 00:23:59,320 Speaker 1: spur some of these exciting potential industries really into a 467 00:23:59,320 --> 00:24:01,640 Speaker 1: lot of growth action over the next few years. 468 00:24:01,920 --> 00:24:04,680 Speaker 3: Well, support for renewable energy, as we've said, goes back 469 00:24:04,720 --> 00:24:07,320 Speaker 3: a long way. Brazil installed had its first gigo out 470 00:24:07,320 --> 00:24:10,000 Speaker 3: of wind capacity Cumulating installed in twenty ten, and auctions 471 00:24:10,040 --> 00:24:12,760 Speaker 3: predate that. So first gig go out of cumultive installed 472 00:24:12,800 --> 00:24:15,600 Speaker 3: solar capacity in twenty seventeen, and then the hydro goes 473 00:24:15,600 --> 00:24:18,600 Speaker 3: back many decades. So support for renewable energy has a 474 00:24:18,600 --> 00:24:21,640 Speaker 3: long track record and has been consistent across different administrations. 475 00:24:21,800 --> 00:24:26,040 Speaker 3: That much is not in doubt. Decisions around leveraging that 476 00:24:26,280 --> 00:24:30,119 Speaker 3: clean energy resource and success into other areas of the 477 00:24:30,119 --> 00:24:33,560 Speaker 3: economy are where we're at today. So some of Brazil's 478 00:24:33,880 --> 00:24:36,480 Speaker 3: neighbors in the region, like Chile and Colombia and many 479 00:24:36,520 --> 00:24:40,240 Speaker 3: other countries have released concrete green hydrogen strategies with concrete 480 00:24:40,240 --> 00:24:42,800 Speaker 3: goals and targets. We haven't yet seen that in Brazil, 481 00:24:42,840 --> 00:24:45,600 Speaker 3: there's still regulatory steps that need to be taken around that, 482 00:24:45,720 --> 00:24:47,919 Speaker 3: and there are a couple other areas that kind of 483 00:24:47,960 --> 00:24:50,919 Speaker 3: fit into that category. Offshore wind is another one where 484 00:24:51,040 --> 00:24:55,000 Speaker 3: there's currently regulatory movement and discussion around it, but there's 485 00:24:55,040 --> 00:24:56,840 Speaker 3: yet to be announced a formal route to market for 486 00:24:56,840 --> 00:25:00,040 Speaker 3: offshore wind. Brazil's carbon market legislation is yet another one 487 00:25:00,080 --> 00:25:04,120 Speaker 3: where there's an expectation that Brazil will introduce a compliance 488 00:25:04,160 --> 00:25:07,240 Speaker 3: market patterned after the EUS in the coming months three years, 489 00:25:07,359 --> 00:25:10,280 Speaker 3: but sort of still in the sort of regulatory policy 490 00:25:10,320 --> 00:25:14,119 Speaker 3: development phase. So that's hence our characterization of Brazil at 491 00:25:14,119 --> 00:25:16,000 Speaker 3: this moment as it being sort of at a decisive 492 00:25:16,040 --> 00:25:18,840 Speaker 3: moment where it's success in renewable energy has been very clear. 493 00:25:18,960 --> 00:25:22,360 Speaker 3: That's amazing because as we know from our global modeling, 494 00:25:22,520 --> 00:25:24,679 Speaker 3: we think the power sector can account for about fifty 495 00:25:24,680 --> 00:25:27,560 Speaker 3: percent of emissions reductions from net between net zero and 496 00:25:27,600 --> 00:25:30,840 Speaker 3: business as usual. So Brazil sort of nailed it on 497 00:25:30,880 --> 00:25:32,679 Speaker 3: the power sector, and it's done a great job with 498 00:25:32,680 --> 00:25:36,200 Speaker 3: ethanol historically in the transport sector, but leveraging it into 499 00:25:36,200 --> 00:25:39,159 Speaker 3: other areas of industry is still, i would say a 500 00:25:39,160 --> 00:25:40,040 Speaker 3: bit of an open question. 501 00:25:40,480 --> 00:25:43,600 Speaker 2: There's something particularly of Brazil in terms of policies through 502 00:25:43,600 --> 00:25:46,160 Speaker 2: renewables and energy transitions general. That I think is really 503 00:25:46,200 --> 00:25:49,520 Speaker 2: interesting is that in terms of renewal energy development, regardless 504 00:25:49,560 --> 00:25:53,000 Speaker 2: of the government, we won't see a lot of bushbacks 505 00:25:53,160 --> 00:25:56,119 Speaker 2: for renewable development. And that's basically because the economic of 506 00:25:56,160 --> 00:25:59,480 Speaker 2: renewables are so good in Brazil that despite the government, 507 00:25:59,640 --> 00:26:03,280 Speaker 2: the port foreign ubles itself will continue. Of course, that's 508 00:26:03,320 --> 00:26:06,280 Speaker 2: not true for a lot of ESG related topics, like 509 00:26:06,400 --> 00:26:11,040 Speaker 2: James was saying about carbon markets and rainforest deforestation, all 510 00:26:11,080 --> 00:26:13,920 Speaker 2: of those topics they are really related in terms of 511 00:26:14,000 --> 00:26:17,680 Speaker 2: the government policies, But renewables developments in general are kind 512 00:26:17,720 --> 00:26:20,240 Speaker 2: of constant in the country despite of the government. 513 00:26:20,640 --> 00:26:23,160 Speaker 1: Well, let's keep talking about policy, but let's talk about 514 00:26:23,160 --> 00:26:25,879 Speaker 1: it in relation to biodiversity, because it's hard to have 515 00:26:25,880 --> 00:26:28,760 Speaker 1: a conversation about Brazil that doesn't in some way touch 516 00:26:28,920 --> 00:26:31,600 Speaker 1: upon the Amazon rainforest. And one of the things that 517 00:26:31,640 --> 00:26:34,840 Speaker 1: the Lula government has publicly stated is a commitment to 518 00:26:34,960 --> 00:26:38,280 Speaker 1: preserving the Amazon. So how has that been going and 519 00:26:38,880 --> 00:26:40,320 Speaker 1: what sort of policies are in. 520 00:26:40,240 --> 00:26:44,080 Speaker 2: Place during Lula's first and second term as presidents from 521 00:26:44,160 --> 00:26:46,960 Speaker 2: two thousand and three to twenty eleven, we have seen 522 00:26:47,000 --> 00:26:50,000 Speaker 2: a big drop in terms of deforestation of the Amazon. 523 00:26:50,160 --> 00:26:52,520 Speaker 2: That was one of the main policies at the time, 524 00:26:52,680 --> 00:26:56,400 Speaker 2: and he really managed to reduce legal deforestation in the area. 525 00:26:56,480 --> 00:26:59,880 Speaker 2: After that, we've seen an increase on deforestation in other governments, 526 00:27:00,080 --> 00:27:02,840 Speaker 2: which was concerning for the country because of Brazil's commitment 527 00:27:02,880 --> 00:27:06,520 Speaker 2: to reduce deforestation and overall emissions. But what we're seeing 528 00:27:06,560 --> 00:27:09,960 Speaker 2: since last year of flulus third term as presence is 529 00:27:10,080 --> 00:27:13,159 Speaker 2: that deforestation is actually decreasing again in the country. And 530 00:27:13,200 --> 00:27:15,760 Speaker 2: that's basically because there has been a lot of efforts 531 00:27:15,800 --> 00:27:19,639 Speaker 2: from the government in terms of reducing and actually trying 532 00:27:19,680 --> 00:27:23,280 Speaker 2: to achieve zero legal deforestation, which was what Lulas committed 533 00:27:23,359 --> 00:27:25,720 Speaker 2: a few years ago. And this is really important for 534 00:27:25,760 --> 00:27:30,359 Speaker 2: Brazil because deforestation is the single largest emissions source of 535 00:27:30,400 --> 00:27:33,359 Speaker 2: the country. So if Brazil really wants to become anat 536 00:27:33,480 --> 00:27:37,000 Speaker 2: zero country by twenty fifty, deforestation not only from the 537 00:27:37,040 --> 00:27:39,919 Speaker 2: Amazon region but from the country as how is the 538 00:27:39,960 --> 00:27:41,440 Speaker 2: most important topic for sure. 539 00:27:41,800 --> 00:27:45,240 Speaker 1: I mean, it really makes COP thirty extraordinarily iconic when 540 00:27:45,240 --> 00:27:48,520 Speaker 1: you think about it in conjunction with the location of 541 00:27:48,560 --> 00:27:52,640 Speaker 1: the Amazon and how important that is to global biodiversity 542 00:27:52,680 --> 00:27:53,879 Speaker 1: and global emissions. 543 00:27:54,160 --> 00:27:54,320 Speaker 2: Dan. 544 00:27:54,440 --> 00:27:56,640 Speaker 3: I think it's important just to contextualize when we're talking 545 00:27:56,640 --> 00:27:59,240 Speaker 3: about deforestation and we're talking about the Amazon, of which 546 00:27:59,280 --> 00:28:01,760 Speaker 3: a huge share falls within Brazil's borders. I mean it 547 00:28:01,920 --> 00:28:04,440 Speaker 3: it sort of recalls to me the discussion in US 548 00:28:04,480 --> 00:28:08,600 Speaker 3: domestic politics around border policies, because we're talking about geographically 549 00:28:08,680 --> 00:28:11,720 Speaker 3: a vast area. We're talking about thousands and thousands of 550 00:28:11,840 --> 00:28:15,760 Speaker 3: kilometer long border, right that is very very intense and 551 00:28:15,840 --> 00:28:19,520 Speaker 3: challenging terrain, with a lot of different economic interests going on, 552 00:28:19,720 --> 00:28:22,960 Speaker 3: some legal and some illegal, both in terms of mining, 553 00:28:23,040 --> 00:28:25,200 Speaker 3: in terms of organized crime, in terms of narcotics, in 554 00:28:25,280 --> 00:28:27,960 Speaker 3: terms of agriculture, and it's a border that's shared with 555 00:28:28,000 --> 00:28:30,439 Speaker 3: many different countries. So it's one thing to sort of 556 00:28:30,480 --> 00:28:32,080 Speaker 3: like we you know, we look at a chart and 557 00:28:32,119 --> 00:28:33,840 Speaker 3: we say, okay, you know, it's gone a little bit up, 558 00:28:33,840 --> 00:28:35,040 Speaker 3: it's gone a little bit down. But if you're the 559 00:28:35,080 --> 00:28:38,280 Speaker 3: Alula administration and all of the people in that chain 560 00:28:38,320 --> 00:28:41,960 Speaker 3: of command whose responsibility is for like monitoring and verifying 561 00:28:42,160 --> 00:28:45,240 Speaker 3: whether land is legally or illegally deforced it or even 562 00:28:45,280 --> 00:28:48,200 Speaker 3: who owns it, we're talking about like a massive challenge 563 00:28:48,200 --> 00:28:50,520 Speaker 3: and a very complex set of issues and that's where 564 00:28:50,560 --> 00:28:54,920 Speaker 3: the questions around international funding come in and whether, indeed 565 00:28:55,000 --> 00:28:57,200 Speaker 3: and to what extent there should be international and global 566 00:28:57,200 --> 00:29:00,600 Speaker 3: funding for supporting Brazil in this effort to combat illegal forestation, 567 00:29:00,640 --> 00:29:02,600 Speaker 3: because it's so important for the world. But it's such 568 00:29:02,640 --> 00:29:05,920 Speaker 3: a massive and extraordinary complex problem to tackle, I think, 569 00:29:06,160 --> 00:29:06,640 Speaker 3: and one. 570 00:29:06,480 --> 00:29:08,800 Speaker 1: Way that's been addressed is through kind of the voluntary 571 00:29:08,800 --> 00:29:11,480 Speaker 1: carbon space, but in the compliance carbon space, you mentioned 572 00:29:11,480 --> 00:29:14,000 Speaker 1: that the government was already looking at something to do there. 573 00:29:14,120 --> 00:29:16,000 Speaker 1: How close do you think that really is? Is a 574 00:29:16,040 --> 00:29:19,520 Speaker 1: way to kind of look at this really complex bace 575 00:29:19,560 --> 00:29:21,560 Speaker 1: and put some financial boundaries around it. 576 00:29:21,880 --> 00:29:25,560 Speaker 2: Brazil is developing a legislation for its regulated carbon markets. 577 00:29:25,680 --> 00:29:28,920 Speaker 2: The legislation should be voted this year and hopefully this 578 00:29:29,000 --> 00:29:32,320 Speaker 2: will also help in terms of avoiding the florestation on 579 00:29:32,400 --> 00:29:35,280 Speaker 2: the Amazon, but it's definitely not the only policy that 580 00:29:35,360 --> 00:29:38,360 Speaker 2: can reduce the forestation in the region. What Brazil needs 581 00:29:38,400 --> 00:29:40,200 Speaker 2: to do, and what has been struggled to do over 582 00:29:40,200 --> 00:29:43,840 Speaker 2: the last years, is find business models for the communities 583 00:29:43,840 --> 00:29:46,840 Speaker 2: in the Amazon in order for them to continue to 584 00:29:47,240 --> 00:29:49,880 Speaker 2: produce her to have a source of revenue without the 585 00:29:49,920 --> 00:29:53,520 Speaker 2: foresting the forest. And like James mentioned, the difficult there 586 00:29:53,640 --> 00:29:56,040 Speaker 2: is that's such a vast territory in the country, with 587 00:29:56,200 --> 00:29:58,760 Speaker 2: a lot of different covers, a lot of different Brazilian states, 588 00:29:58,760 --> 00:30:01,000 Speaker 2: with a lot of different borders, and with some regions 589 00:30:01,000 --> 00:30:03,560 Speaker 2: that's really hard success. And this cut in Brazil is 590 00:30:03,560 --> 00:30:07,040 Speaker 2: not only how those communities can guarantee a source of revenue, 591 00:30:07,120 --> 00:30:10,800 Speaker 2: but also how they can protect the force while having 592 00:30:10,800 --> 00:30:12,320 Speaker 2: a revenue of business there. 593 00:30:12,760 --> 00:30:15,600 Speaker 1: So we've talked about a lot of different things on 594 00:30:15,640 --> 00:30:18,320 Speaker 1: this show. Is this kind of whistle stop primer on 595 00:30:18,400 --> 00:30:20,640 Speaker 1: where is Brazil now when it comes to the energy 596 00:30:20,640 --> 00:30:22,960 Speaker 1: transition into missions. So as we go through and just 597 00:30:23,040 --> 00:30:26,840 Speaker 1: kind of recount, we're thinking about everything from biodiversity to 598 00:30:27,480 --> 00:30:31,720 Speaker 1: biofuels and what's happening on the agricultural and we're also 599 00:30:31,800 --> 00:30:35,000 Speaker 1: talking about natural resources, some coming from metals and mining. 600 00:30:35,160 --> 00:30:39,320 Speaker 1: We're talking about electric vehicles and the onshoring of manufacturing 601 00:30:39,360 --> 00:30:42,560 Speaker 1: on that end. We're talking about a renewable energy space 602 00:30:42,640 --> 00:30:46,360 Speaker 1: that has a long history and is growing with favorable 603 00:30:46,360 --> 00:30:50,160 Speaker 1: economics that could create increasingly favorable space for other parts 604 00:30:50,160 --> 00:30:52,560 Speaker 1: of that value chain, such as hydrogen. So if we're 605 00:30:52,600 --> 00:30:54,960 Speaker 1: talking about all of these different areas that are all 606 00:30:55,000 --> 00:30:59,360 Speaker 1: potentially growth opportunities for Brazil. What one are you most 607 00:30:59,360 --> 00:31:01,600 Speaker 1: excited about. I'm going to make both of you pick. 608 00:31:01,920 --> 00:31:04,800 Speaker 2: You know before saying what I'm most excited about. What 609 00:31:04,840 --> 00:31:07,160 Speaker 2: I think is interesting is that that's both a good 610 00:31:07,200 --> 00:31:09,440 Speaker 2: and a bad thing that Brazil is on the spotlight 611 00:31:09,480 --> 00:31:11,280 Speaker 2: in the next two years. The good thing is that 612 00:31:11,440 --> 00:31:13,360 Speaker 2: now the focus is on the country, there's a lot 613 00:31:13,360 --> 00:31:16,600 Speaker 2: of opportunities it can in fact start new business, but 614 00:31:16,640 --> 00:31:19,840 Speaker 2: also there's a responsibility of that Brazil needs in those 615 00:31:19,840 --> 00:31:22,800 Speaker 2: two years to do its homework and really do the 616 00:31:22,920 --> 00:31:26,680 Speaker 2: right policies and really take advantage of those opportunities. And 617 00:31:26,800 --> 00:31:29,520 Speaker 2: for me, what I'm most excited about, it's not a 618 00:31:29,560 --> 00:31:33,480 Speaker 2: topic specifically, but it's about Brazil stop only being a 619 00:31:33,520 --> 00:31:37,120 Speaker 2: commodity exporter and also becoming an industrialized country where it 620 00:31:37,120 --> 00:31:40,720 Speaker 2: can produce low carbon goods and actually have a big 621 00:31:40,760 --> 00:31:44,600 Speaker 2: impact globally with this cheap electricity matrix and all of 622 00:31:44,640 --> 00:31:46,400 Speaker 2: the good resources that the country have. 623 00:31:47,040 --> 00:31:49,680 Speaker 3: Yeah, I agree with Vinnie. If I were to identify 624 00:31:49,720 --> 00:31:52,600 Speaker 3: a theme that I'm most excited about, it's the fact 625 00:31:52,760 --> 00:31:55,680 Speaker 3: that the global priorities of energy transition aligned well with 626 00:31:55,720 --> 00:31:58,920 Speaker 3: Brazil's strengths. Brazil has very cheap and abundant renewal of 627 00:31:59,040 --> 00:32:02,760 Speaker 3: energy and already mostly decarbonized power sector, and that creates 628 00:32:02,760 --> 00:32:06,120 Speaker 3: this potential to produce almost anything with a lower carbon 629 00:32:06,120 --> 00:32:08,800 Speaker 3: footprint than almost anywhere else. If you produce an ev 630 00:32:09,320 --> 00:32:11,320 Speaker 3: a lithium ion battery in Brazil, it has a lower 631 00:32:11,320 --> 00:32:13,360 Speaker 3: carbon footprint than if you produce it in the US, 632 00:32:13,440 --> 00:32:16,400 Speaker 3: let alone China. So there's a sort of carbon competitiveness 633 00:32:16,480 --> 00:32:18,680 Speaker 3: to Brazil that I think is just only going to 634 00:32:18,680 --> 00:32:21,560 Speaker 3: grow in global importance across every single thing we produce 635 00:32:21,600 --> 00:32:24,160 Speaker 3: in the global economy almost in the decades to come. 636 00:32:24,280 --> 00:32:28,520 Speaker 3: And then because its renewable energy resources are generally so 637 00:32:28,640 --> 00:32:31,160 Speaker 3: strong that things that have to be made with clean energy, 638 00:32:31,400 --> 00:32:34,360 Speaker 3: like green hydrogen, for example, it can potentially produce it 639 00:32:34,400 --> 00:32:37,360 Speaker 3: more cheaply than in other places. So I guess, to 640 00:32:37,400 --> 00:32:39,640 Speaker 3: echo a bit what Vinnie said, what I think is 641 00:32:39,680 --> 00:32:43,960 Speaker 3: most interesting is how to leverage energy transition into industrialization, 642 00:32:44,520 --> 00:32:48,080 Speaker 3: job growth and sort of creation of new industries in Brazil. 643 00:32:48,320 --> 00:32:50,800 Speaker 3: So that would be my answer, moving from being a 644 00:32:50,800 --> 00:32:54,320 Speaker 3: clean energy powerhouse to economic growth and job creation and industry. 645 00:32:54,560 --> 00:32:58,360 Speaker 1: You are both excellent politicians giving not quite the debt 646 00:32:58,400 --> 00:33:01,280 Speaker 1: on answer, but honestly a much that are more comprehensive 647 00:33:01,320 --> 00:33:05,240 Speaker 1: and nuanced view of this incredibly complex country. Vinnie James, 648 00:33:05,240 --> 00:33:06,720 Speaker 1: thank you so much for joining today. 649 00:33:06,920 --> 00:33:14,880 Speaker 2: Thank you, Dana, Thanks so much, Dana. 650 00:33:17,400 --> 00:33:20,520 Speaker 1: Today's episode of Switched On was produced by Cam Gray 651 00:33:20,720 --> 00:33:24,360 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a 652 00:33:24,440 --> 00:33:27,560 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 653 00:33:27,640 --> 00:33:30,320 Speaker 1: recording does not constitute, nor should it be construed, as 654 00:33:30,360 --> 00:33:34,120 Speaker 1: investment in vice, investment recommendations, or a recommendation as to 655 00:33:34,160 --> 00:33:37,040 Speaker 1: an investment or other strategy. Bloomberg ANIFF should not be 656 00:33:37,080 --> 00:33:40,800 Speaker 1: considered as information sufficient upon which to base an investment decision. 657 00:33:40,960 --> 00:33:43,920 Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes 658 00:33:43,960 --> 00:33:47,680 Speaker 1: any representation or warranty as to the accuracy or completeness 659 00:33:47,680 --> 00:33:50,680 Speaker 1: of the information contained in this recording, and any liability 660 00:33:50,720 --> 00:33:53,400 Speaker 1: as a result of this recording is expressly disclaimed.