Climate and nature risks involve physical impacts that must be measured through risk-analysis methodologies, EY’s Grizzi points out, and these need to be revised to include forward-looking capabilities.
“Risks associated with shifting weather and nature can be dealt with either through mitigation or adaptation,” she notes. “The impacts filter down through the entire economic system, and that’s why financial institutions are also concerned about the systemic risks associated with contagion or holding assets and investments in places and companies that do not comply with transition goals.”
Leaders Of Green Growth
The good news is that Latin America has the potential to become a global leader in green solutions; according to BCG, Brazil is already the brightest star in the region, with the potential to double its yearly foreign direct investment and attract up to $3 trillion by 2050. It has the capability to generate excess green energy through renewables and increase sustainable regenerative agricultural output at scale while protecting and restoring biomes: distinct geographical regions with specific climate, vegetation, and animal life. And it could become a key player in providing cost-competitive green industrial products and services.
Brazil will host the COP30 climate summit next year, Grizzi notes; its own record has been mixed, but she remains hopeful.
“We have many good projects still in Congress,” she says, “such as the Brazilian System for Emissions Trade, which will be functional by them. But Brazil still lags behind the global north; they had more time to adapt while facing many more natural-resources restrictions. While Brazil is still catching up with the European CBAM [Carbon Border Adjustment Mechanism] or the American Inflation Reduction Act, the end results will still be positive and can place the country among the global players.”
BCG ranks Brazil as the world’s leader in profiting from regenerative agriculture at scale; first as a carbon-offset supplier through nature-based solutions, forecast to create up to $50 billion in revenue locally by 2030; and as a protagonist in wind, solar and green hydrogen generation. Brazil is expected to become a leader in biomass fuel development and a worldwide hub for low-carbon industrial products, which benefit from clean energy, ample natural resources and circularity.
“Brazil has 40% of the world’s biodiversity and one-third of the global biomes, but we don’t yet have a single global product tapping those resources directly,” says Danilo Zelinski, head of KPTL’s Forest and Climate Fund.
KPTL just concluded a round of investment in a company that taps molecules only available in the Amazon to create new products aimed at extending longevity and guaranteeing health in old age. “The opportunity to explore this biome in a sustainable way, protecting the forest, is tremendous,” Zelinski says, “and the economic incentive for this is there, too. It is much more lucrative to have such products and science coming out of the Amazon than to simply clear it for cattle pasture.”
Sustainable AI Processing
Brazil could also see increased international investment in the relocation or construction of major data centers in its northeast, according to research from Santander, much of it built on advances in generative artificial intelligence. A simple query on ChatGPT requires 10 to 15 times more electricity than a query made through regular search engines. Brazil could capture a significant share of the $440 billion market simply because it can offer what most other countries cannot: cheap, clean, renewable energy and water to cool data centers at scale. Additionally, it has geographic proximity to Chile, a global supplier of the copper needed for the critical electrical applications required for servers.
“We have all the sectorial assets in place in Latin America in general,” says Cançado, “and in Brazil specifically: mining, energy, food, agriculture. We are the only region able to sustainably develop all of these assets while transitioning to net-zero carbon emissions. And we are able to do this propelling development, spawning economic growth, creating jobs, and generating income.”
Her conclusion couldn’t be more poignant.
“At this point, we are only missing one thing: a shared vision and a regional call-to-action,” she says. “We need to decide if we want to be the global power and global hub of climate solutions for the planet. This decision needs to be shared across governments, the private sector and societies throughout our countries. But we need coordination. The risk, if we don’t do that, is we’ll once again only be the region that could have been, but never was.”
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Publish date : 2024-10-14 11:12:00
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