(Bloomberg) — Brazil’s ambitious emissions-reduction targets announced at COP29 in Azerbaijan “petrified” the South American nation’s steel companies, which refuse to adopt unachievable goals, according to the head of industry group Aco Brasil.
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“Baku has left us petrified,” Aco Brasil Executive President Marco Polo de Mello Lopes told journalists Monday. “We had tough meetings with the government. The sector won’t take on targets that aren’t feasible.”
Latin America’s largest economy will host next year’s climate conference, set to take place in the city of Belem. The country has been trying to position itself as a leader on climate by announcing a new goal of reducing emissions 67% from 2005 levels by 2035. President Luiz Inácio Lula da Silva signed a bill last week that creates the Brazilian carbon credit market, which will establish sanctions on carbon-intensive emitters.
Aco Brasil calculates the steel sector would need 180 billion reais ($29.3 billion) in capital spending to achieve net zero emissions by 2050. The industry is concerned that consumers aren’t willing to pay more for steel with a lower carbon footprint. The consequence could be disastrous for a sector that has been facing increasing “predatory imports,” especially from China, said Maria Cristina Yuan, Aco Brasil’s head of institutional relations.
Steelmakers are asking the Brazilian government to adopt a carbon border adjustment mechanism similar to the European Union’s to protect local industry amid the introduction of the carbon market, otherwise the risk is “destroying national production,” Yuan said. Aco Brasil estimates imports will increase 24% this year, to 6.2 million tons, despite the adoption of protection measures in June.
“Let’s at least prevent the entry of steel products with a higher carbon footprint, because otherwise it’s a very unequal fight,” she said.
The iron and steel sector accounts for around 4% of Brazil’s greenhouse gas emissions — below the global average of 7%. The steel institute highlighted that in Brazil, sectors such as agribusiness are responsible for a third of the country’s carbon footprint, well above the industrial sector. Yuan says that while the industry isn’t shying away from reducing its emissions, it won’t be enough to meet the country’s commitments.
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