Green dependency

Blessed by nature and with an enviably sustainable energy park, Brazil is facing an old historical dilemma in the race to decarbonize its economy. With few registered patents and without the necessary investments in research and development, the country runs the risk of continuing to be what it has always been, a mere importer of equipment and knowledge. “Countries that do not develop certain technologies cannot produce and meet production needs. They have to import, and this creates yet another trap,” says Guilherme Magacho, a senior economist at the French Development Agency, dedicated to research on the negative effects on developing nations with limited access to green technologies.

Data on the high concentration of international patent applications associated with wind and solar energy in high-income countries and China highlight the deep technological dependence of other nations in the Global South in the energy transition, highlights researcher João Telésforo, from the Center for Research in Macroeconomics of Inequalities at FEA-USP, in two studies on the subject. Although Brazil is the sixth country in the world with the largest installed capacity for onshore wind generation, it is not among the 20 countries that filed the most international patent applications in this area, from 2000 to 2024. The ten leaders in the ranking were responsible for 81.3% of international wind energy patent applications in this period, while Brazil holds only 0.4% of the applications. In solar generation, the concentration is even greater, with five countries responsible for 77.3% of international patent applications from 2000 to 2024. Brazil made only 0.19% of applications in the same period, leading Latin America and equaling South Africa, a country ahead of the others on the African continent, adds the USP researcher.

The country lags behind in both the wind and solar sectors

The challenges facing developing countries during the transition to a low-carbon economy include the risk of a substantial deepening of external constraints, warns Luca Tausch, also from the Agence Française de Développement. For every dollar invested exclusively in maintaining current productive capacity, on average, more than 45% “leaks” directly and indirectly to foreign producers. Some socioeconomic benefits of green investment, such as job creation, are consumed by the rest of the world, rather than fostering domestic job creation. “Essentially, with a growing demand for capital goods produced abroad, generated by the transition to a low-carbon economy, developing countries face a growing external constraint and substantial socioeconomic imbalances,” warns Tausch. “In a study of 189 countries, we identified carbon-intensive industries and then estimated each country’s direct and indirect dependence on these sectors, considering restrictions on raising foreign currency to analyze external exposure, public revenue to assess fiscal exposure, and investor and employment participation to analyze socioeconomic exposure,” Magacho highlighted.

Most of the economies with the highest external exposure depend on mining and extraction to raise foreign exchange. Of the list, only Russia, Kazakhstan, Bahrain, Ukraine, Croatia, South Africa and Brazil do not depend exclusively on this sector. In the case of Russia, Bahrain, Croatia, South Africa and Brazil, the oil, chemicals and non-mineral metals sectors are also crucial to ensuring external sustainability. “These countries can therefore be seen as less vulnerable compared to other more exposed countries, if we consider that their sources of foreign exchange are more diversified and come from processing activities, not just extraction,” Magacho points out.

Contribution. During the Lula administration, Petrobras was instructed to resume investments in the energy transition and formed partnerships for technology development – ​​Image: Archive/Petrobras Agency

Over the past 20 years, there has been very limited progress in the expansion of renewable energy in the country, especially wind energy, Telésforo points out. The BNDES, a major driver of industrial policy in Brazil, was successful in stimulating the production of wind turbines, an essential part of wind turbines that contain most of the high-tech components. All wind farms received significant financing from the state-owned bank. The counterpart was a portion of local content, as is the case in other sectors, such as oil. “The vast majority of products were foreign, which, in order to qualify for subsidized credit from the BNDES, needed to have a certain level of local content. However, they continued to produce the technology abroad. This generates a low effect of productive chain and control of technologies. Value continues to be transferred abroad and does not generate a more robust development hub in Brazil”, highlights the USP researcher.

The most successful case is that of WEG, a Brazilian company from Santa Catarina that managed to produce wind turbines with domestic technology. The progress, although significant, is limited, since WEG has a small share of the local market. More than 90% is controlled by foreign companies that have very little research and development activity in Brazil, Telésforo emphasizes. “When China arrived in this market, technology was already dominated by Denmark and Germany, pioneering countries. The Chinese government entered with state-owned companies investing and producing to boost the sector. The government proposed local content of up to 90% to foreign participants, but saw that this requirement was insufficient, because assembling the product in the country does not guarantee technology transfer,” says the researcher. That was when the government, in China and India, began to invest in technology transfer. “In Brazil, there has never been a targeted policy.”

China and developed countries hold most patents

Since 2014, there has been a continuous reduction in investments in research and development in the renewable energy sector, year after year, which has been in line with the dismantling of science policy in Brazil under the governments of Michel Temer and Jair Bolsonaro. The National Fund for Scientific and Technological Development was scrapped and most of the funds were earmarked to pay interest on the debt. There was a budgetary dismantling of science and technology policy in favor of financial rentierism, Telésforo points out. “And then, in 2023, we had two pieces of good news in Brazil, with Lula, a resumption of investments in research and development and Petrobras”, continues the researcher. Facing much criticism from the market, the government decided that the oil company would be central to the exploration and technological development of wind generation, especially in view of the prospect of forming a market for offshore wind generation exploration, in the ocean. In addition to BNDES, with financing, Petrobras established, among other alternatives, a partnership with WEG, for the production of wind generators with greater capacity.

The fact that Brazil has the technical capacity to develop green technologies puts the country on a different level of possibilities, believes Magacho. “In most countries, if you are totally dependent, technologically and financially, you don’t have the productive or financial capital to fund this type of investment, which is costly and long-term.” It is very interesting, he continues, to look at the outlook in Brazil. The fact that the BNDES exists to finance is an advantage, because it has its own capital and the capacity to generate domestic financing. Local content policies become more well-founded. The case of Petrobras is an example, because it uses local technology and develops technology domestically, in partnership with foreign companies from industrialized countries, which puts Brazil in the position of not a borrower, but rather a developer of technology. •

Published in issue no. 1369 of CartaCapital , on July 9, 2025.

This text appears in the printed edition of CartaCapital under the title 'Green dependency'