New partnership aims to strengthen regional value chains and sustainable hydrogen production.
Germany and Brazil want to join forces on climate protection and the decarbonization of industries. As announced by the German government, Chancellor Olaf Scholz and Brazil’s President Luiz Inácio Lula da Silva have signed a corresponding “Partnership for a socially just and ecological transformation” as part of the government consultations between the two countries.
The two countries have already been linked by a strategic partnership for 15 years, providing a joint commitment to greater sustainability. The deepened cooperation is now aimed, among other things, at establishing local value chains for raw materials, considering environmental, sustainability, and social issues (ESG guidelines), as stated in a joint declaration by both countries. In addition to fossil raw materials, Brazil has significant deposits of minerals for the energy transition, such as the battery materials nickel, copper, graphite, and lithium. The country also has substantial deposits of rare earths needed for electric motors and wind turbines, but only a few deposits are currently mined. Brazil could be particularly interesting as a future source of heavy rare earths such as dysprosium, considered particularly critical and whose production is now concentrated in China and Myanmar.
Great potential for Renewable Energies
Green hydrogen, produced using renewable energies, is also important in the closer cooperation between the two countries. Brazil already generates most of its electricity from renewable sources, with potential for the further expansion of wind and solar power, for example.
The two countries also stated that they are committed to the swift conclusion of the free trade agreement between the EU and the South American Mercosur Association of States. This would create the world’s largest free trade zone with over 700 million inhabitants. However, negotiations have been ongoing since 1999, and the agreement is currently on hold following a deal in 2019.
German and European government representatives have recently been increasingly seeking new partnerships with Latin American countries to broaden their supply chains in the face of geopolitical tensions and reduce one-sided dependencies, particularly on Russia and China. Latin America’s great potential for renewable energies and raw materials and the challenges facing the region were recently highlighted in the first analysis by the International Energy Agency IEA (we reported).