Summary: As the seventh largest emitter of greenhouse gas emissions—primarily from agriculture (32%), land-use change and deforestation (28%) and fossil fuel consumption (27.7%)—Brazil plays a key role in global climate negotiations. In its Nationally Determined Contribution (NDC) to the Paris Agreement on climate change, the country has pledged to reduce its emissions by 37% in 2025 and 43% in 2030 (relative to 2005 levels). To meet these targets, the Brazilian NDC highlighted its intentions to decrease deforestation, reforest degraded land areas, expand the use of renewable energy sources, increase energy efficiency and expand the area of integrated cropland-livestock-forestry systems.

Using the MIT EPPA model, this study evaluates the costs associated with these and alternative policy instruments by 2030, as well as policy options to further reduce emissions after 2030.

The study projects that the cost of the Brazilian NDC will be just 0.7% of GDP in 2030. Further efforts to reduce carbon emissions beyond 2030 would require policy changes, since all potential emissions reductions from deforestation would be completed, and the capacity to expand renewable energy sources would be limited. Given these constraints, the study finds that an economy-wide carbon pricing system would help substantially to avoid higher compliance costs.