CBAM and Brazil: Steel and Fertiliser Exporters Face New EU Carbon Requirements

Brazil's CBAM Exposure at a Glance

Brazil's primary CBAM exposures are aluminium and steel, with a combined annual exposure estimated at €300–500 million. Brazil has a unique structural advantage in aluminium: the country's hydropower-dominated electricity grid gives Brazilian primary aluminium smelters some of the lowest embedded carbon intensities globally, potentially 2–4 tCO₂/t compared to the EU default of 12.40 tCO₂/t. This creates a compelling case for actual-value documentation.

Sector-by-Sector Breakdown

Aluminium: Brazil is the world's fifth-largest primary aluminium producer. Hydro-powered smelters operated by Albras (owned by Norsk Hydro and Vale) and Alunorte (Norsk Hydro) in the Pará state achieve actual embedded carbon of approximately 2.0–4.0 tCO₂/t — 65–85% below the EU default. At current ETS prices, this represents a saving of approximately EUR 700–900 per tonne. Documenting actual values is the single highest-leverage CBAM intervention available to Brazilian aluminium producers. See Brazil steel CBAM deep dive →

Steel: Brazil's steel sector is dominated by ArcelorMittal Brasil, Gerdau, and Usiminas. Brazil has a unique charcoal-pig-iron route using sustainably managed eucalyptus charcoal, which achieves lower embedded carbon than conventional BF-BOF. Gas-based DRI production (Companhia Siderúrgica Nacional) also achieves actuals below the EU default. The Brazilian grid's high renewable share benefits EAF producers significantly.

Domestic Carbon Pricing Context

Brazil is developing the Sistema Brasileiro de Comércio de Emissões (SBCE), a national carbon market, but it was not yet operational in 2026. Brazil does not currently have a carbon price eligible for CBAM Article 9 deductions. Brazilian manufacturers should monitor SBCE developments, as operational status could create deduction eligibility in future years.

How Brazilian Producers Should Prepare

CGCRE (Coordenação Geral de Acreditação), part of INMETRO, is Brazil's national accreditation body for ISO 14065 verification. Bureau Veritas Brazil, SGS Brazil, and TÜV Rheinland Brazil all offer CBAM verification services. Brazilian aluminium producers should treat actual-value documentation as a competitive priority — the savings potential from documenting hydro-grid actuals is among the largest of any CBAM-covered country globally.

Find accredited verifiers: Brazil CBAM Verifier Directory →

Common Challenges for Brazilian Exporters

Brazilian manufacturers face several specific challenges in CBAM compliance. First, the charcoal-pig-iron route requires careful documentation of the biomass carbon cycle to demonstrate that charcoal from sustainably managed eucalyptus plantations qualifies as biogenic carbon under CBAM Annex IV rules. Second, the Brazilian grid's renewable energy mix varies significantly by region and season, requiring careful documentation of the specific grid emission factor applicable to each production facility. Third, the absence of an operational Brazilian ETS means no Article 9 deductions are currently available, though this may change as the SBCE develops.

Frequently Asked Questions