By Gabriel Araujo and Marcela Ayres
SAO PAULO/BRASILIA, Oct 8 (Reuters) – Brazil’s tight presidential election has some investors, executives and climate-focused businesses worried that a government led by conservative Senator Flavio Bolsonaro may not maintain the policies underpinning the country’s emerging green economy.
Bolsonaro topped the first-round vote on the weekend with a stronger-than-expected performance, after a campaign in which he promised to strengthen the regulated carbon market but did not criticize the climate track record of his father, former President Jair Bolsonaro, under whom deforestation soared.
In the October 25 runoff, he will face left-leaning President Luiz Inacio Lula da Silva, who has sought to position Brazil as a hub for climate finance, launching programs to attract private capital into green projects and laying the groundwork for a regulated carbon market.
Industry has pressed Bolsonaro not to abandon that program, given the potential costs to the $2.6-trillion economy that has grown under Lula as a leading player in global climate finance.
“It would be economic stupidity to roll back this agenda,” said Tereza Campello, socio-environmental director at state development bank BNDES.
PAST REMARKS
While Bolsonaro’s campaign also promised to expand the bioeconomy by focusing on pharmaceutical and cosmetics products, concerns remain among investors and executives over his past remarks on climate change.
In an August interview with Brazil’s Globo, he described extreme weather events as cyclical and said he did not believe they were directly linked only to human influence. He recently said the best way to address climate concerns was through investments in basic sanitation.
Bolsonaro’s plan largely ignored emissions-reduction targets, said climate advocacy group Observatorio do Clima.
“Proposals such as fighting deforestation or bolstering environmental enforcement are starkly at odds with his track record in the Senate,” it said.
A spokesperson for the campaign said the senator’s environmental agenda would be further developed during a transition period between governments, declining to comment on whether a possible Bolsonaro administration would maintain Lula’s green finance initiatives.
Bolsonaro would prioritize market-based conservation incentives, like paying for environmental services, and strengthening efforts to tackle environmental crimes to eliminate illegal deforestation by 2029, a year earlier than Lula’s target, the spokesperson said.
ECONOMIC BENEFITS
During the 2019-2022 administration of Jair Bolsonaro, the government weakened environmental protections and deforestation expanded across Brazil’s Amazon.
Since then, Lula’s administration has encouraged the carbon-removal industry through loans and investments from BNDES. During his campaign, the president pledged to expand climate finance tools like Eco Invest, which has mobilized 190 billion reais ($37.83 billion) since 2024.
Industry experts say the economic benefits of this climate agenda are difficult to ignore.
“The climate agenda and the government’s view of this industry as strategic for the country do not depend on a political party,” said Gabriel Silva, chief executive of carbon-removal startup Mombak.
Regardless of who wins the election, Silva said he expects continuity in part due to Brazil’s developing regulated carbon market and credit options offered by BNDES.
Brazilian carbon credits are traded by businesses with self-imposed emissions goals. Under legislation passed in 2024, the country is preparing to launch a regulated carbon market where companies can buy credits to meet official decarbonization targets, and that will allow Brazil to trade them internationally.
HARD TO REVERSE
Support for the program from businesses could also encourage Bolsonaro to stick with it.
Before the first-round vote, the Brazilian Business Council for Sustainable Development (CEBDS), whose members include oil producer Petrobras and miner Vale, told candidates it viewed the regulated carbon market as a key issue for the country’s economy.
“In 2025, around $2.2 trillion was invested globally in clean-energy technologies; that capital is mobile,” said Daniela Mignani, CEBDS executive director for corporate management, adding that investors could move elsewhere in the face of regulatory uncertainty.
Campello of BNDES said the economic rationale behind Lula’s climate agenda could make it difficult to reverse, given the growing demand for bioeconomy products including certified timber, as well as cocoa and coffee grown in reforested areas.
The BNDES forest program has provided roughly 15 billion reais in loans and investments for projects aimed at recovering and protecting local forests.
($1 = 5.0219 reais)
(Reporting by Gabriel Araujo in Sao Paulo and Marcela Ayres in Brasilia; Additional reporting by Lisandra Paraguassu; Editing by Oliver Griffinn and Jonathan Spicer )
