Report on International Climate Finance for Brazil (2021-2022) and Alignment with Sustainable Development Goals

Introduction: Mobilizing Finance for Climate Action and Sustainable Development

The Brazilian government has initiated several strategic programs to attract international capital for its climate agenda, directly contributing to the achievement of the Sustainable Development Goals (SDGs). These initiatives, including the Brazil Climate and Ecological Transformation Investment Platform (BIP) and the Eco Invest Brasil program, are designed to leverage international resources for projects that advance both national climate objectives and global sustainability targets. This report establishes a baseline for international climate finance flows to Brazil for the 2021-2022 biennium, analyzing their alignment with key SDGs and identifying trends to guide future investment towards a sustainable, low-carbon economy.

International capital is critical for complementing domestic resources and accelerating progress on multiple SDGs. It helps reduce the cost of capital for green projects, catalyzes private domestic investment, and builds local capacity, thereby creating a favorable environment for achieving SDG 13 (Climate Action), SDG 7 (Affordable and Clean Energy), and SDG 15 (Life on Land).

This analysis, conducted by the Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-RIO), quantifies international climate finance flows to Brazil from 2021-2022, comparing them with the 2019-2020 period. Despite challenging global economic conditions and domestic policy shifts, the findings indicate a positive trajectory for climate-aligned investment in Brazil, significantly outpacing global trends.

Key Findings: A Surge in SDG-Aligned Investment

International climate finance directed to Brazil demonstrated remarkable growth, signaling strong investor confidence in projects aligned with global sustainability targets.

• Overall Growth: Annual international climate finance reached US$ 5.1 billion in 2021-2022, an 84% increase from the 2019-2020 period. This substantial growth directly supports SDG 13 (Climate Action) and far exceeds the 28% global average increase in the same period.
• Partnerships for the Goals (SDG 17): Western Europe, led by France, was the primary source region, providing 50% (US$ 2.6 billion/year) of the total finance, showcasing effective international partnerships. Public institutions, particularly Multilateral Development Finance Institutions (DFIs), were the largest contributors at 58% (US$ 2.9 billion/year).
• Private Sector Engagement: Private climate finance quadrupled, reaching US$ 2.1 billion/year (42% of the total). This surge, led by Commercial Financial Institutions, is crucial for scaling up investments needed for SDG 7, SDG 9 (Industry, Innovation, and Infrastructure), and SDG 11 (Sustainable Cities and Communities).
• Focus on Climate Mitigation: 80% of the finance (US$ 4.1 billion/year) targeted climate mitigation projects, primarily in renewable energy. Finance with an adaptation component accounted for 20% (US$ 992 million/year), highlighting a need to increase focus on resilience-building activities relevant to SDG 1 (No Poverty) and SDG 2 (Zero Hunger).
• Dominance of Clean Energy (SDG 7): The energy sector attracted the majority of funds, at 53% (US$ 2.7 billion/year), with a 165% growth rate. Investments were concentrated in solar (US$ 1.5 billion/year) and wind (US$ 638 million/year) generation.
• Funding Gap for Life on Land (SDG 15): The Agriculture, Forestry, and Other Land Uses (AFOLU) sector, responsible for nearly 75% of Brazil’s greenhouse gas emissions, received only 11% (US$ 559 million/year) of international climate finance, indicating a critical misalignment between emissions sources and funding allocation.

Sectoral Analysis of SDG-Aligned Finance

The distribution of international finance across sectors reveals clear alignment with certain SDGs, while also exposing gaps where investment must be scaled up.

Energy: Advancing SDG 7 (Affordable and Clean Energy)

The energy sector was the primary recipient of international climate finance, receiving US$ 2.7 billion annually. This investment is pivotal for Brazil’s energy transition and its contribution to SDG 7.

• Investment Focus: Solar and wind power projects received 80% of the sector’s funding, reflecting a strong market-driven shift towards renewable sources.
• Funding Sources: Private sources mobilized 67% of the capital for energy projects, with commercial financial institutions and corporations leading the way. This demonstrates the commercial viability of clean energy investments.
• Financial Instruments: Commercial instruments dominated, with 61% of funds provided as debt and 35% as equity, indicating mature and bankable projects.

Agriculture, Forestry, and Other Land Uses (AFOLU): A Critical Gap for SDG 15 (Life on Land)

Despite the AFOLU sector’s outsized contribution to Brazil’s emissions, it received a disproportionately small share of international finance at US$ 559 million per year. This presents a major challenge and opportunity for advancing SDG 15 and SDG 13.

• Funding Disparity: The sector attracted only 11% of total climate finance, with forestry receiving just 2% (US$ 119 million/year).
• Public and Concessional Finance: Public actors, primarily multilateral and bilateral DFIs, provided 99% of the funding. The sector also received 47% of all tracked international grants, highlighting its reliance on concessional capital to de-risk investments in sustainable land use and forest conservation.
• Adaptation Co-benefits: 79% of finance in this sector included an adaptation component, supporting climate-resilient agriculture and contributing to SDG 2 (Zero Hunger).

Transportation: Building Sustainable Cities and Infrastructure (SDG 9 & SDG 11)

The transport sector received US$ 558 million annually, a threefold increase from the previous period. These investments are crucial for developing sustainable urban mobility and modern infrastructure.

• Key Projects: 94% of the funding was directed to the São Paulo metro system (Lines 2 and 6), a major project contributing to reduced urban congestion and emissions.
• Blended Finance Model: The funding was a mix of public and private capital, with multilateral DFIs providing debt and international corporations providing equity, showcasing an effective model for large-scale infrastructure projects under SDG 17 (Partnerships for the Goals).

Water and Sanitation: Supporting SDG 6 (Clean Water and Sanitation)

This sector received US$ 253 million annually, with a significant focus on climate adaptation. These funds support municipal and state-level programs to improve access to clean water and sanitation services.

• Adaptation Focus: 65% of the flows contributed to climate adaptation, enhancing the resilience of water systems to climate change impacts.
• Growing Private Participation: While public sources still dominate (61%), private finance from commercial institutions grew significantly, indicating new opportunities for investment following regulatory reforms.

Cross-Sectoral and Other: Strengthening Institutional Capacity (SDG 17)

This category, which includes projects spanning multiple sectors, received US$ 1.0 billion annually. The majority of this funding supports foundational activities that enable broader climate action.

• Capacity Building: 99% of funding came from public sources, primarily for policy support, capacity development, and strengthening banking and financial services for sustainable development.
• Enabling Environment: These investments are critical for creating the institutional and policy frameworks necessary to attract and effectively deploy larger volumes of climate finance across all sectors, embodying the spirit of SDG 17.

Sources and Instruments: The Role of Global Partnerships (SDG 17)

The landscape of financial sources and instruments highlights the importance of international cooperation in achieving Brazil’s climate and development goals.

1. Public Finance Leadership: Public institutions provided 58% of total finance (US$ 2.9 billion/year), with Multilateral DFIs like the Development Bank of Latin America and the Caribbean (CAF) and the Inter-American Development Bank (IADB) playing a central role. This underscores the function of public capital in mobilizing finance for sustainable development.
2. Rapid Growth in Private Finance: Private investment grew fourfold to US$ 2.1 billion/year, driven by commercial banks and corporations. This trend is essential for bridging the climate finance gap and scaling solutions for SDG 7 and SDG 9.
3. Dominance of Commercial Instruments: Debt and equity at commercial rates accounted for 89% of total flows (US$ 4.5 billion/year), concentrated in mature sectors like renewable energy.
4. Decline in Concessional Finance: In contrast, grants and concessional debt fell by 43%. While commercial finance is growing, concessional finance remains vital for de-risking innovative projects and supporting sectors with higher perceived risks, such as AFOLU (SDG 15) and adaptation (SDG 13).

Analysis of Sustainable Development Goals (SDGs) in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 6: Clean Water and Sanitation
  
  The article explicitly addresses this goal by analyzing international finance directed towards the “water and sanitation sector.” It mentions investments in “municipal and state-level sanitation and wastewater treatment programs,” which are core components of SDG 6.
• SDG 7: Affordable and Clean Energy
  
  This goal is central to the article. A significant portion of the analysis focuses on the energy sector, highlighting that it received the majority of climate finance (53%). The text specifies that these investments were primarily for “financing solar and wind energy generation projects,” directly aligning with the push for renewable energy.
• SDG 9: Industry, Innovation and Infrastructure
  
  The article connects to this SDG through its discussion of large-scale infrastructure projects. The financing for the “transport sector,” particularly the “São Paulo metro,” is a clear example of developing sustainable infrastructure. It also mentions finance for the “industry” subsector, related to minerals for the energy transition.
• SDG 11: Sustainable Cities and Communities
  
  This goal is addressed through investments in sustainable urban infrastructure. The article details funding for the expansion of the São Paulo metro, a project that improves public transportation and contributes to making cities more sustainable and inclusive. The mention of “urban development” projects further strengthens this link.
• SDG 13: Climate Action
  
  This is the primary SDG of the article. The entire report is an analysis of “international climate finance” for Brazil, tracking financial flows for “climate action,” including both “climate mitigation” and “climate adaptation” projects. It quantifies these flows to establish a baseline for measuring progress on Brazil’s climate agenda.
• SDG 15: Life on Land
  
  The article addresses this goal by examining finance for the “Agriculture, Forestry, Other Land Uses, and Fisheries (AFOLU)” sector. It specifically mentions the resumption of the “Amazon Fund,” which aims to combat deforestation, and tracks investments in the “forestry” subsector, which are crucial for protecting terrestrial ecosystems.
• SDG 17: Partnerships for the Goals
  
  This goal is woven throughout the article, which is fundamentally about mobilizing international resources. It details financial partnerships between Brazil and various international actors, including public institutions (Multilateral and Bilateral DFIs), private entities (commercial FIs, corporations), and governments from different regions (Western Europe, North America, East Asia). The analysis of public vs. private finance and different financial instruments (debt, equity, grants) directly relates to the mechanisms of global partnerships.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 6: Clean Water and Sanitation
   • Target 6.3: By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials…
     
     Explanation: The financing for “wastewater treatment programs” directly contributes to this target.
   • Target 6.a: By 2030, expand international cooperation and capacity-building support to developing countries in water- and sanitation-related activities and programmes…
     
     Explanation: The article’s focus on tracking “international climate finance” for the water and sanitation sector is a direct measurement of the progress towards this target.
2. SDG 7: Affordable and Clean Energy
   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
     
     Explanation: The article highlights a 165% growth in international finance for clean energy in Brazil, with the majority going to “solar and wind power generation projects,” which directly supports increasing the share of renewables.
   • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology.
     
     Explanation: The entire analysis of international financial flows into Brazil’s energy sector, totaling US$ 2.7 billion/year, is a direct reflection of this target in action.
3. SDG 9: Industry, Innovation and Infrastructure
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being.
     
     Explanation: The significant investment in the “São Paulo metro” is a prime example of developing sustainable transportation infrastructure as mentioned in this target.
4. SDG 11: Sustainable Cities and Communities
   • Target 11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all…
     
     Explanation: The article details over US$ 524 million/year in international finance for the São Paulo metro, a project that directly aims to create a sustainable transport system for a major city.
5. SDG 13: Climate Action
   • Target 13.a: Implement the commitment undertaken by developed-country parties… to a goal of mobilizing jointly $100 billion annually… to address the needs of developing countries in the context of meaningful mitigation actions…
     
     Explanation: The article’s core purpose is to quantify these mobilized financial flows for Brazil, stating that “International climate finance for Brazil reached an average of US$ 5.1 billion per year in 2021–2022.”
6. SDG 15: Life on Land
   • Target 15.b: Mobilize significant resources from all sources and at all levels to finance sustainable forest management…
     
     Explanation: The article tracks financial flows to the “forestry” subsector and mentions the “Amazon Fund,” both of which are mechanisms for mobilizing resources for sustainable forest management.
7. SDG 17: Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
     
     Explanation: The report is a detailed breakdown of mobilized resources, analyzing flows from public (58%) and private (42%) sources, as well as from different countries and institutions.
   • Target 17.9: Enhance international support for implementing effective and targeted capacity-building in developing countries…
     
     Explanation: The article identifies a specific category of funding for “Policy support and capacity development,” which received US$ 399 million/year to strengthen government climate policies and civil society actions.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. SDG 6: Clean Water and Sanitation
   • Indicator 6.a.1: Amount of water- and sanitation-related official development assistance that is part of a government-coordinated spending plan.
     
     Implied Measurement: The article provides a total figure for international finance to the sector, stating it received “US$ 253 million/year,” with public sources (related to official assistance) accounting for 61% of this amount.
2. SDG 7: Affordable and Clean Energy
   • Indicator 7.a.1: International financial flows to developing countries in support of clean energy research and development and renewable energy production.
     
     Direct Measurement: The article quantifies this flow precisely: “International climate investment in energy reached US$ 2.6 billion/year in 2021–2022,” with breakdowns for solar (US$ 1.5 billion/year) and wind (US$ 638 million/year).
3. SDG 9: Industry, Innovation and Infrastructure
   • Indicator 9.a.1: Total official international support (official development assistance plus other official flows) to infrastructure.
     
     Implied Measurement: The article states the transport sector received “US$ 558 million/year” in international finance, with “Public resources account[ing] for 59% of transport finance.”
4. SDG 11: Sustainable Cities and Communities
   • While no specific SDG 11 indicator is directly measured, the financial investment serves as a proxy for progress. The article states, “The São Paulo metro accounted for 94% of the flows tracked for transport in 2021–2022 (US$ 524 million/year),” indicating significant investment towards sustainable urban transport.
5. SDG 13: Climate Action
   • Indicator 13.a.1: Mobilized amount of United States dollars per year starting in 2020 accountable towards the $100 billion commitment.
     
     Direct Measurement: The article’s main finding is a direct measurement of this indicator for Brazil: “International climate finance for Brazil reached an average of US$ 5.1 billion per year in 2021–2022.”
6. SDG 15: Life on Land
   • Indicator 15.b.1: Official development assistance and public expenditure on conservation and sustainable use of biodiversity and ecosystems.
     
     Implied Measurement: The article quantifies that the “Forestry” subsector “received US$ 119 million/year in international flows,” with a significant portion coming from grants and public actors like bilateral DFIs and governments.
7. SDG 17: Partnerships for the Goals
   • Indicator 17.3.1: Foreign direct investment (FDI), official development assistance and South-South cooperation as a proportion of total domestic budget.
     
     Implied Measurement: The article provides the numerator for this indicator by tracking the total international financial flow (“US$ 5.1 billion per year”) and breaking it down by public (US$ 2.9 billion/year) and private (US$ 2.1 billion/year) sources.
   • Indicator 17.9.1: Dollar value of financial and technical assistance… committed to developing countries.
     
     Direct Measurement: The article quantifies this value for a specific subsector: “Policy support and capacity development… received US$ 399 million/year in international finance in 2021–2022.”

4. Table of SDGs, Targets, and Indicators

Source: climatepolicyinitiative.org