EU back to Brazil with $2bn green pledge as Von der Leyen visits in post-Bolsonaro thaw

The European Union has pledged to invest €2bn ($2.2bn) to support green hydrogen production and energy efficiency in Brazil as part of a wider package of measures aimed at building closer relations with the South American country.

Starting a Latin American tour on Monday, European Commission President Ursula von der Leyen also told her host Brazilian President Luiz Inacio Lula da Silva that the EU will also unblock funding to help protect the rainforest.

Both leaders said they wanted to resume efforts to conclude a free trade agreement between the EU and the South American trade bloc Mercosur.

Von der Leyen's visit underlined a warming of EU relations with Brazil after a marked reluctance to do business with his predecessor President Jair Bolsonaro over the latter’s record on the environment.

A trade agreement between Brazil and the Mercosur nations was reached in 2019, but never signed.

The support for green hydrogen production and energy efficiency, as well as the disbursement of funding to help stop deforestation were announced under the EU’s Global Gateway initiative.

“We have a project together of €430m to fight deforestation and to indeed promote, which is so important, sustainable land use in the Amazon. I very much welcome Brazil's bid to host COP30 in Belém. It will be a powerful message to bring the Climate Conference to the mouth of the Amazon,” she said.

Brazil is preparing its first tender of offshore wind acreage after creating a new regulatory framework and has South America's biggest onshore wind fleet at 24GW by the end of 2022.

The country is seen as a potential top-ten global producer of green hydrogen and already has already attracted some European entities to planned projects.

Green hydrogen initiatives include a partnership between Port of Rotterdam and Pecem port in Ceara state and potential projects involving Portugal’s EDPR, French gas giant Engie, and others.

Since Russia's invasion of Ukraine, the EU has sought to strengthen relations with nations perceived to share democratic values and able to provide critical minerals for the green transition and other inputs, to help reduce its reliance on China.

Lula da Silva has been reluctant to criticise Russia over Ukraine, however, preferring to maintain a more neutral stance.

In Brasilia, Von der Leyen said: "We are strategic partners, and we need to work together to address global challenges, this also includes Russia's war on Ukraine."