Transport may delay energy transition in Brazil

Brazil has pledged to reach net-zero greenhouse gas emissions by 2050. Yet one of the biggest roadblocks on the way to that goal is the freight and logistics sector.

According to data from the National Confederation of Transport (CNT), more than 60% of all cargo in the country moves along highways, primarily by trucks that run on fossil fuels. Without targeted action, closing this gap will be nearly impossible.

“Freight transport, when analyzing the most significant sources of emissions, stands out as a priority for innovation in the energy sector,” explains David Tsai, project coordinator at the Department of Energy and Environment.

“After that comes passenger transport, then industry, then fuel production, and finally housing and the electric sector,” he adds.

Projections from Brazil’s 2029 Ten-Year Energy Expansion Plan, developed by the Energy Research Company (EPE), estimate that freight transport demand will grow 3.4% per year until 2029.

The report warns that “cargo transport demand remains heavily tied to the use of B diesel. Within this study, there are no perspectives for large-scale development of alternative fuel projects for vehicles.”

The country’s heavy reliance on road freight has already proven problematic. In 2018, a nationwide truckers’ strike, sparked by rising diesel prices, lasted ten days.

The ripple effect was immediate: shortages of basic goods in supermarkets, fuel at gas stations, and other essential supplies.

The combined losses across several sectors exceeded 70 billion reais.

Investment Gap

For medium-term change, Brazil must diversify its transportation mix, which requires major investment.

A World Economic Forum study based on 2019 data ranked Brazil 71st out of 141 countries in transportation infrastructure quality.

This ranking reflects not only poor road conditions but also chronic underinvestment, limiting the modernization of fleets and expansion into other transport modes.

The World Bank’s report Infrastructure Assessment in Brazil highlights an investment gap of roughly 4 trillion reais in the transport sector.

Marcus Quintella, director of FGV Transportes, emphasizes: “The federal government needs to step up its budget to reduce road dependence and expand infrastructure.

We should be investing 4% of GDP, but we’re not even reaching 0.7% annually. We’re miles away from what’s needed.”

The Brazilian Development Bank (BNDES), the country’s main source of logistics investment, has also been criticized for allocating insufficient funds.

Still, there are signs of change. “In recent years, investments in mobility and logistics dropped significantly, but today they’re a priority for BNDES and other major players. Electric buses, for instance, have higher upfront costs but lower maintenance expenses.

That’s one of our key focuses,” says Luciana Costa, BNDES director of Infrastructure, Energy Transition, and Climate Change.

Railroads and Electrification

One proposed solution to reduce freight-related emissions is expanding electrification of the road fleet.

The Ministry of the Environment has already signaled that electrification is part of Brazil’s climate strategy. “The MMA is leading the development of the new National Climate Change Plan, which includes sectoral mitigation programs for cities, transport, and energy.

Electrifying the fleet is an essential piece of Brazil’s ecological transition,” the ministry stated.

Funding has also been announced: the Climate Fund was relaunched in 2023 with 630 million reais earmarked for mitigation and adaptation projects.

Additionally, the federal government raised at least 10.4 billion reais this year through the issuance of green bonds.

However, electrification faces significant short-term hurdles. “The first challenge in Brazil is energy infrastructure.

Within cities, we’re fine. But long-distance transport depends on highway infrastructure, and that’s not just about having charging stations.

When you start drawing large amounts of power at specific points, you put stress on the entire energy transmission system.

Who will finance that?” asks Eberaldo Almeida, former president of the Brazilian Institute of Petroleum and Gas.

Tsai is also cautious: “It’s hard to picture a fully electric future right now.

These vehicles need massive batteries, long ranges, and fast charging — and building the necessary infrastructure is extremely costly. With what we have today, it’s difficult to imagine this being easy to implement.”

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