The transformation of its largest private port has lessons for the country’s aspirations

VISITORS TO THE Port of Açu may struggle to determine its industrial nature. No warehouses or piles of containers block the view of the Atlantic Ocean. Swathes of restored restinga, a local broadleaf forest, hug the shoreline, which bustles with loggerhead turtles. A different story is suggested only by the gigantic ships that dot the sea’s horizon.

The port, 320km (200 miles) north-east of Rio de Janeiro, is the world’s largest support facility for offshore oil extraction. Dreamed up a decade ago by an eccentric Brazilian billionaire as a way to meet Chinese demand for commodities, Açu is now among the world’s largest private ports. It handles more than 30% of Brazil’s crude-oil exports and 7% of its iron ore.

But Açu’s focus is shifting. In the past three years the port has signed contracts worth some $5bn to lease land for factories that will make wind turbines, as well as facilities for the production of ammonia, sustainable aviation fuel (SAF) and pure metallic iron, the main ingredient for producing low-carbon steel. Investment in green infrastructure at the port now outstrips that for fossil fuels.


Clean and getting cleaner

The port is a microcosm of Brazil’s economic aspirations. Long a major exporter of grains and raw materials, the country now wants to use its abundance of renewable energy to attract firms seeking to reduce their carbon footprint, and to manufacture and export higher-value-added goods. It is a decent plan. Reducing the carbon emissions of the most energy-intensive sectors of the economy—aviation and shipping, or the manufacturing of cement, steel and chemicals—requires huge amounts of cheap, clean energy, as well as abundant biomass.

Few countries have as much of either as Brazil does. More than 85% of its electricity is generated without burning fossil fuels, a share almost three times higher than the global average. Most of this comes from hydropower, but wind and particularly solar are catching up fast. By 2040 the costs of producing solar and wind energy are expected to fall by 46% and 27%, respectively.

This would make Brazil one of the cheapest places in the world to produce green hydrogen, which is created by using renewable energy to split water into its component molecules of hydrogen and oxygen. According to Felipe Diniz of Mirow, a consulting firm in Rio de Janeiro, it would cost about $4.50 per kilogram to make the stuff in Brazil today. He says this could fall to $1.70 within a decade, as wind and solar become cheaper. Brazil’s production costs would be in line with places like Saudi Arabia, north Africa and Chile.

Burning hydrogen is one of the few ways that the most energy-intensive sectors can decarbonise. Steel, for example, is made by burning coking coal in a blast furnace to heat and reduce iron oxide into metallic iron, which is then flushed with oxygen to purify it. But this process releases vast emissions of carbon dioxide. That can be avoided by burning hydrogen instead of coal. Brazil is the world’s second-largest producer of iron ore, which it exports to countries like China, Japan and South Korea. It wants to process more of it at home. Vale, the world’s largest iron-ore miner, is expected to open a clean ore-processing plant at the Port of Açu in 2028.




Steel exports may not be far off. McKinsey, a consultancy, estimates that producing clean metallic iron in Brazil could cost $465 per tonne by 2030, compared with $560 for a similar process in the EU. Global Efficiency Intelligence (GEI), an energy consultancy based in San Francisco, reckons it will be cheaper to make green steel in Brazil than in China, Japan, the United States, South Korea, Australia or the EU, mainly because of the lower cost of green hydrogen (see chart).

Brazil also wants to make SAF. Its forestry and agribusinesses generate 2bn tonnes of organic waste each year, which is potential feedstock. The EU and the International Civil Aviation Organisation, a standards-setting body, are both nudging airlines to use SAF. From this year, all flights originating in the EU—around a third of the global total—must contain at least 2% SAF in their fuel mix; this will rise to 20% by 2035 and 70% by 2050.

According to Thiago Sinzato of Rystad Energy, a Norwegian consultancy, global demand for SAF is expected to reach 5m barrels per day by 2050. Brazil could make up 1.3m barrels of that. “It would be easy for Brazil to become the world’s biggest SAF producer,” he says. Since 2022 Brazil’s firms have announced over $4bn in biofuel investments, including in SAF.

Money problems

Its technical foundations for a green-production boom may be sound, but Brazil’s economic travails are an obstacle. The high cost of finance is putting off bigger investments in capital-intensive projects. The real was the world’s worst-performing major currency last year, losing more than 20% of its value against the dollar.




The slump was fuelled by panic about the spending plans of Luiz Inácio Lula da Silva, the left-wing president. Markets believe he is not serious about balancing the books, even as Brazil’s budget deficit reaches 10% of GDP and gross debt nears 90% of GDP. An industrial-policy programme announced last year, involving billions of reais, supported that belief. Even as most central banks cut interest rates, on January 28th Brazil’s was raised to 13.25%, among the highest in the world.

The picture may not improve in 2025. The most cherished policies of Donald Trump, America’s president, to deport immigrants and impose tariffs, will probably strengthen the dollar. The real will slide further, and investors may look elsewhere. Brazil has great expectations for its role in decarbonising the world. But if it cannot convince investors to keep money in the country, its hopes will come to naught.