Brazil–China Mega Rail Deal and Expanding Chinese Influence in Brazil’s Infrastructure, Ports, and Energy

Brazil and China have taken a major step toward deepening their strategic partnership with the signing of a new agreement to restart studies for a transcontinental railway linking the Atlantic and Pacific Oceans. The project, often called the Brazil–Peru Bioceanic Railway, would begin on Brazil’s northeastern coast, in Bahia, cross several states, enter Peru, and reach the Port of Chancay, which is a mega–terminal recently inaugurated by Chinese president Xi Jinping and financed through China’s global Belt and Road Initiative.

Although the accord does not authorize construction yet, it revives a plan first studied in 2015 and shelved afterward. Officials from both countries emphasized that updated studies are essential to move the project forward. The railway could cut export transit times from Brazil to Asia from 40 days to about 28, significantly boosting competitiveness for agricultural and mineral shipments.

The initiative aligns with China’s broader strategy in Latin America: using infrastructure investment to expand commercial, logistical, and diplomatic influence. Even though Brazil is not formally part of the Belt and Road Initiative, Chinese capital is already deeply embedded across the country’s key economic sectors.

China’s Expanding Footprint in Brazil

Agriculture:

China has quietly become a dominant player in Brazil’s grain trade. COFCO, China’s state-owned agribusiness giant, is now Brazil’s largest agricultural exporter, handling 17 million tons of soy, corn, and sugar last year. Nearly 80% of Brazilian soy goes to China, and 9% of all soy sacks exported pass through COFCO-operated terminals.

In the Port of Santos, COFCO is boosting its capacity from 4 to 14 million tons per year with its new STS11 terminal, set to become its largest facility outside China.

Ports and Logistics:

China also controls major container and oil logistics hubs:

• CMPorts, China’s biggest port operator, controls the TCP terminal in Paranaguá, responsible for 11% of Brazil’s container movement. The company recently committed R$ 1.5 billion to expand operations.

• CMPorts is set to acquire 70% of the Açu oil terminal, which handles 30% of Brazil’s crude exports and potentially grant China influence over one-fifth of Brazil’s oil outflow.

Rail and Passenger Transport:

Chinese influence has expanded into passenger mobility as well.

The São Paulo–Campinas Intercity Train, auctioned in 2024, is being built by a consortium in which CRRC, China’s state rail manufacturer, holds a 40% stake. The project requires R$ 14 billion and is slated to open in 2031.

CRRC also secured a R$ 3.1 billion contract in 2025 to supply 44 new trains to the São Paulo Metro.

Energy and Industrial Ecosystem:

China’s infrastructure network in Brazil is supported by Chinese-owned energy giants:

• State Grid, controlling CPFL, manages 15% of Brazilian electricity distribution.

• CTG (China Three Gorges) produces 3.5% of Brazil’s energy.

These companies rely heavily on Chinese-made solar panels, which represent 80% of global production.

Meanwhile, part of the oil passing through Açu comes from Chinese offshore operators CNOOC, CNPC, and Sinopec, reinforcing an integrated investment chain.

A Global Strategy That Works

Experts say China’s approach — creating interconnected investments across rail, energy, ports, and agriculture — mirrors what some Brazilian entrepreneurs once dreamed of, but with far greater financial and political backing. Unlike failed private attempts at building integrated industrial ecosystems, China’s state-supported model has succeeded across continents.

What Comes Next?

The revived bioceanic railway studies signal a new phase in Brazil–China relations. If the project moves ahead, it will reshape South American logistics, accelerate trade with Asia, and deepen China’s already significant influence in Brazil’s most strategic sectors — from grains to oil, from electricity to railways.

And although Brazil has not officially joined the Belt and Road Initiative, the scale and depth of Chinese investments suggest that, in practice, the partnership is already well underway.

China, for example, avoided the rise of slums through long-term urban planning that decentralized economic development and controlled internal migration through the hukou system. By creating economic hubs across the country, it reduced the need for mass movement to major cities.

Brazil took the opposite path: jobs concentrated in Rio de Janeiro and São Paulo, triggering disorganized urban growth, the expansion of favelas, and the strengthening of criminal networks, fueled in part by the country’s role as a major drug route.

Experts argue that recurring police operations have failed to address the structural causes of urban disorder. Lasting solutions will require coordinated, long-term public policies that move beyond political polarization and primarily target large infrastructure projects, which are essential because they make domestic production more competitive and attract new businesses. At the same time, they generate direct and indirect jobs, increasing people’s purchasing power and further boosting the economy.

Brazil’s Unemployment Hits Record Low, but Job Creation Slows: Economists Warn of a Productivity Bottleneck

Brazil’s labor market continues to defy expectations as new data released this Friday, November 28, shows the national unemployment rate falling to 5.4%, the lowest level recorded since the current PNAD Contínua survey series began in 2012. Despite global markets operating with reduced liquidity due to the U.S. Thanksgiving holiday, Brazil stands out with what analysts describe as near-full employment.

However, beneath the headline and historic number, specialists warn that job creation is decelerating, even as the market remains historically tight.

Slowing Job Creation, Despite Record-Low Unemployment

According to the PNAD Contínua, unemployment is dropping further and is expected to reach 5.3% by the end of 2025, according to projections from labor-market economist Bruno Imaizumi of 4intelligence. But seasonally adjusted data reveals a more nuanced picture: once temporary or calendar-related effects are removed, Brazil’s unemployment rate stands at 5.8%, a low level, but one that has remained flat since July, indicating stabilization rather than continued improvement.

Economists also foresee a temporary rise in unemployment in early 2026, driven by the annual reversal of holiday-season hiring. Companies typically lay off workers in the first quarter after expanding production and sales for the Christmas period. Still, even with this seasonal uptick, Imaizumi expects the early-2026 unemployment rate to remain below the level seen in the first quarter of 2025.

Caged Data Confirms Labor-Market Cooldown

Signs of deceleration are also visible in the latest Caged report, which tracks formal employment based on company filings. In October, Brazil created 85,000 formal jobs, a 35% decline compared with October 2024 and the weakest result for the month in the past five years. The slowdown reinforces economists’ assessment that while the labor market is still hot, its momentum is gradually easing.

A Heated Labor Market Still Showing Structural Weakness

Brazil’s job market remains historically strong. Companies report difficulty finding workers, voluntary resignations have hit multi-year highs, and admission wages have risen 7%, indicating strong competition for labor. Real wages are up 4% year over year, and the real wage mass has increased by 5.5%, helping 1 million families leave the Bolsa Família program as average monthly household income climbed from R$3,000 to R$3,500.

But economists as Paulo Gala warn that Brazil’s growth is concentrated in low-complexity service sectors, with only modest industrial recovery and limited gains in productivity or technological sophistication. This pattern reflects a neoclassical growth model, where employment expands but productivity stagnates, creating structural limits for wage increases and fueling inflationary pressure.

Without productivity gains, companies protect margins by raising prices, risking an economy that may stall under inflation, unable to sustain current levels of wage growth and job creation over the long term.

Monetary Policy Outlook

Given the combination of record-low unemployment and slowing, but still tight, labor indicators, analysts argue that Brazil’s Central Bank is unlikely to begin cutting interest rates in January. A possible move may come in March or April, depending on how inflation, productivity, and labor-market dynamics evolve.

The Challenge Ahead

Brazil’s economy is generating jobs, lifting incomes, and reducing dependency on social programs — all milestones worth celebrating. But economists stress that without a shift toward higher productivity, reindustrialization, and greater economic complexity, the current cycle may be difficult to sustain.

The country now faces the critical challenge of transforming today’s labor-market strength into long-term, productivity-driven, sustainable growth.

What Is SEGOB? How Brazil’s New Biomethane Certificate Market Will Work in 2026

Brazil’s new SEGOB system is set to reshape the biomethane market in 2026, creating a regulated pathway for producers to generate and sell environmental certificates tied to biomethane production. Today, much of the biomethane used for self-consumption is not registered with ANP because producers do not need to meet strict fuel-quality standards when using the gas internally. With SEGOB, however, internal users can monetize environmental attributes, as long as their plants comply with ANP specifications and certification rules.

This change in regulations has made it very significant for the biogas professional. The installations will have to purchase chromatographs, have lab reports, and install monitoring systems (all these upgrades could together cost up to R$ 2 million). The large producers will be able to adapt without much of a problem, but the small ones might find it hard to bear the compliance costs.

One of the main doubts is whether double counting will happen or not. The ANP has to decide whether SEGOB can be used alongside other environmental certificates, for example, Guarantees of Origin or RenovaBio CBIOs. The matter is very crucial for landfill-based biomethane as theoretically the same molecule could give rise to two different certificates.

The first mandatory target of 240,000 m³/day of biomethane is seen as small and not creating a new wave of projects. Biomethane-producing facilities are constructed because the buyers need the molecule and not just the certificate. In any case, the mandate can prove advantageous for financing as it allows for long-term contracts with gas distributors having high credit ratings.

In 2026, the SEGOB market will enter a learning phase. Producers, certifiers, and registrars will need to adapt quickly, and the system’s evolution will depend on ANP’s final definitions, especially on validity rules, autoconsumption verification, environmental claims, and double-counting prevention. Broader discussion is expected throughout 2026, including at industry events such as IRC Day, when the regulatory framework and market behavior will be clearer.

Apart from that, the new provisions explicitly state that it is not sufficient for environmental declarations to merely procure physical biomethane. Along with it, the companies have to acquire the respective origin certificate as well. This move not only aligns with the Greenhouse Gas (GHG) protocol but also empowers the voluntary market by giving corporations the authority to retire the certificates as part of their decarbonization plans.

Biogas vs. Biomethane: Key Differences and Why They Matter for Brazil’s Clean Energy Future

Biogas and biomethane, are you familiar with them? They are not identical products, though their names are quite alike. Nonetheless, by these means the waste of daily life could be transformed into energy that is both clean and renewable.

In Brazil, organic waste is a problem that is often associated with environment. Yet this very material can turn out to be one of the major energy solutions of the country.

What Is Biogas?

Biogas is produced naturally when organic matter decomposes in environments without oxygen. This includes food scraps, animal manure, agricultural waste, vinasse from ethanol production, and the organic fraction of urban waste that ends up in landfills.

During decomposition, microorganisms break down this material and release biogas, a mixture primarily composed of carbon dioxide (CO₂) and methane (CH₄).

And here’s the key point:

Methane is a greenhouse gas about 25 times more powerful than CO₂.

If released into the atmosphere, it accelerates global warming. But when captured and treated, methane becomes a renewable energy source with significant environmental and economic value.

Today, biogas is widely used around the world to produce electricity, heat, and fuel. In Europe, industrial plants convert agricultural waste into energy capable of supplying entire communities.

Brazil’s Untapped Potential

With a strong agricultural sector and a high volume of urban waste, Brazil has one of the world’s largest potentials for biogas and biomethane production.

Because the country already has a predominantly clean electricity mix, the greatest opportunity lies in upgrading biogas to biomethane.

What Is Biomethane?

To produce biomethane, biogas undergoes purification. During this process, impurities are removed, humidity is eliminated, and CO₂ and nitrogen are separated.

The result is biomethane, a gas containing around 95% methane, with high calorific value and performance comparable to natural gas. In other words, a 100% renewable fuel capable of replacing fossil fuels in industry and transportation.

Biomethane can:

• Supply boilers, furnaces, burners, and other industrial equipment
• Fuel light and heavy vehicle fleets, including buses and trucks
• Reduce dependence on diesel and natural gas
• Lower emissions and improve energy efficiency
• Double Environmental Benefit
• Using biomethane offers two major environmental gains:
• It prevents methane from waste from reaching the atmosphere.
• It replaces fossil fuels, significantly reducing greenhouse gas emissions.

Replacing the diesel used by a single truck is comparable to planting more than 100 trees per year, showing how large-scale adoption can generate massive climate benefits.

Driving Local Development

Produced in Brazil, biomethane strengthens the local economy, creates green jobs, and stimulates new value chains. Every ton of CO₂ avoided contributes directly to national decarbonization and the global energy transition.

Biogas + Biomethane: A Circular Economy Solution

To sum up:

Biogas is generated from the decomposition of organic waste.

Biomethane is the upgraded, purified version of biogas, a high-efficiency, 100% renewable fuel capable of replacing fossil sources in industry and transportation.

This technology brings together circular economy principles, sustainability, and innovation, positioning Brazil as a global leader in clean energy.

Unioeste Boosts Renewable Energy Innovation in Western Paraná

Unioeste (Toledo campus) is emerging as a key research center for renewable energy in western Paraná, in the southern region of Brazil, a region dominated by agroindustry and high waste production. Led by professor Carlos Eduardo Borba, the university is developing advanced technologies to convert locally abundant biogas into biomethane and hydrogen, clean fuels essential for Brazil’s energy transition.

The team focuses on two core areas:

Biomethane production through selective adsorption that removes CO₂ and H₂S, creating a renewable fuel comparable to natural gas.

Hydrogen-rich syngas generation using dry reforming and shift reactions to transform methane and CO₂ into high-value industrial gases.

The research integrates major innovation networks such as NAPI-H2 and NAPI-Biogás and uses advanced mathematical models to determine the most efficient and economical use of biogas in each scenario.

These technologies help reduce methane emissions, convert agricultural waste into energy, and support cleaner transportation and industrial processes. Unioeste strengthens the regional circular economy by turning scientific research into real-world sustainable solutions.

New Oil Discovery in Campos Basin Boosts Petrobras’ (PETR3; PETR4) 2025 Exploration Record

Petrobras revealed a new oil discovery this week in the Campos Basin, off the coast of Rio de Janeiro, reinforcing momentum in what has become one of its strongest exploration cycles in years. The find, located 108 kilometers from the coast in the southwestern portion of the Tartaruga Verde field, sits in the post-salt layer at a relatively shallow depth of 734 meters, conditions the company says will help reduce extraction costs.

This marks Petrobras’ third oil discovery of 2025, following earlier announcements in February and May in the prolific Santos Basin. Unlike those pre-salt finds, located nearly 2,000 meters underwater, the latest discovery is in a more accessible geological layer.

According to sources familiar with the project, Petrobras plans to accelerate development by leveraging existing platforms and infrastructure. A dedicated working group will design the production strategy, which is expected to rely on pipeline connections to nearby facilities with available processing capacity.

The new discovery fits perfectly with Petrobras' main plan to restore the Campos Basin which used to lead Brazil's oil production but currently produces only around 20% of the country's total output. According to analysts production levels have the potential to increase from 820000 barrels per day to reach 1 million barrels per day. 

The announcement comes as production levels reach their highest point. In the third quarter of 2025, Petrobras’ operated output reached 4.5 million barrels of oil equivalent per day, with the company itself producing 3.1 million barrels, a significant increase compared to the same period in 2024. 

The company plans to increase its exploration activities on the Equatorial Margin which scientists estimate contains 30 billion barrels of oil that exceed Petrobras' current reserves by almost three times. 

The company directs large financial resources toward maintaining its fast exploration and production growth. The third quarter saw CAPEX reach its highest level at US$5.5 billion which represents a 28.6% increase in total investments from the previous year.

The company has achieved strong performance results which provide benefits to its shareholders. 

Petrobras distributed more than R$ 32 billion in dividends across the first three quarters of 2025 and is projected to deliver an annual dividend yield above 9% at current share prices. 

Through recent discoveries and increased production efforts and substantial funding dedicated to unexplored areas Petrobras continues to strengthen its position as a top-performing global oil producer.

Brazil’s Biogas Sector Accelerates, With Biomethane Set to Surge by 2032

National policies for transforming waste into energy were a highlight of the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) this month. The discussion took place at the House of Science, a space hosted by the Ministry of Science, Technology and Innovation (MCTI) at the United Nations Climate Change Conference (COP30).

In recent years, Brazil has been undergoing a true revolution with regard to biogas and bioethanol. The former is a renewable energy source generated from the decomposition of organic waste produced in different economic activities. The latter is a flammable biofuel produced from the fermentation of plant biomass, such as sugarcane, corn, and beet, and their residues, such as bagasse.

Brazil's biogas industry will experience a period of quick growth according to the 2024 Biogas Outlook from SEI Biogás. The report shows that the country operates 1,633 biogas plants which represents an 18% increase in renewable gas production comparing to 2023. 

Therefore Brazil's renewable energy landscape is undergoing a significant transformation, driven by the burgeoning potential of biogas, biomethane, and waste-derived fuels. Recent policy discussions and market data underscore the country's ambition to leverage organic waste and residues to enhance energy security, reduce reliance on fossil fuels, and meet environmental sustainability goals. This report synthesizes the current state, future projections, and key regulatory dynamics shaping Brazil's waste-to-energy sector.

The Biogas and Biomethane Revolution

Biogas, a renewable energy source generated from the decomposition of organic waste, and bioethanol, a flammable biofuel produced from plant biomass, are at the forefront of this energy shift. Brazil's biogas industry is poised for a period of rapid expansion, fueled by improved regulations, favorable economic conditions, and the growth of integrated waste management systems.

According to the 2024 Biogas Outlook from SEI Biogás, the country currently operates 1,633 biogas plants, representing an 18% increase in renewable gas production compared to 2023. This growth is a direct result of three primary factors:

1. Improved Regulatory Frameworks: Creating a more predictable and attractive investment environment;

2. Favorable Economic Conditions: Making biogas projects increasingly competitive;

3. Integrated Waste Management: Expanding the availability of feedstock for biogas production.

Looking ahead, specialists project a profound energy transformation. Talyta Viana, Regulatory Technical Coordinator at ABIOGÁS, projected that Brazil could reach 200 biomethane plants by 2032. These facilities would be capable of generating 7.92 million cubic meters of biomethane per day, which is enough to supply over 10% of the nation’s 2024 natural gas demand.

The sugar-energy sector is expected to be a crucial anchor for this growth, with Viana noting that "More than 52% of upcoming projects will rely on sugarcane residues such as vinasse, filter cake, and potentially bagasse and straw, which are under technological assessment." With strong feedstock availability and a favorable regulatory landscape, analysts predict that biomethane production could triple by 2026, positioning Brazil as a global leader in renewable gas.

Regulatory Momentum and Industry Leadership

The sector's positive trajectory was a key highlight at the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) during the United Nations Climate Change Conference (COP30).

The Brazilian Association of Waste-to-Energy (BREM) is playing a central role in advocating for and shaping the regulatory environment. A discussion hosted by Gás Orgânico, featuring CEO Giovane Rosa and BREM President Yuri Schmitke, demonstrated the positive sector trends resulting from recent regulatory changes.

A crucial turning point for the industry was the federal government's approval of the “Fuel of the Future” law, which BREM actively supported. Following this legislative success, BREM is now working to establish the National Biomethane Zero Program and a biogas electricity certification system to ensure these resources are properly valued.

BREM's efforts extend to integrating biogas into the broader energy matrix. Schmitke highlighted how biogas systems can complement distributed solar power by using gasometers to store biogas when solar generation is high and release it when solar power decreases, thereby stabilizing the grid.

Furthermore, BREM has made an extensive contribution to the development of Brazil’s sustainable finance taxonomy. The association submitted a 45-page report, created with the support of the European Union Climate UCD project, which studied successful European regulatory models. The example of Denmark, which already supplies 30% renewable gas to its grid and aims for 100% by 2030 through certificates of origin, serves as a model for Brazil. To support further technical and regulatory progress, BREM has signed cooperation agreements with both the Brazilian Electricity Commercialization Chamber (CCE) and the European Biogas Association.

Untapped Potential and Remaining Regulatory Gaps

Despite the strong momentum in biogas, the broader waste-derived fuels sector still faces regulatory challenges.

Refuse-Derived Fuel (CDR)

Brazil is already utilizing Refuse-Derived Fuel (CDR), wich is a blend of industrial and urban waste, to replace fossil fuels in cement production. Currently, the country replaces 30% of the fuel used in cement production with CDR, substituting petroleum coke in clinker manufacturing. Experts believe this substitution rate could climb to 50-80%, matching European levels, provided there is investment in cement-plant upgrades and new blending facilities.

However, the CDR sector currently operates without official targets or a dedicated regulatory agency, relying only on voluntary standards issued by ABNT.

Biogas and Biomethane Potential

The biogas landscape reveals an even larger untapped opportunity. Brazil currently exploits just 3.4% of its biogas potential and 1.4% of its biomethane potential, representing what analysts describe as a R$ 300 billion market still in its infancy.

A major regulatory shift is anticipated in 2026, when a mandatory 1% biomethane blending requirement comes into force, increasing by one percentage point annually until 2036. This rule is expected to enable renewable gas to supply up to 10% of Brazil’s total natural gas demand.

Biogas also holds vast potential for electricity generation, theoretically capable of supplying 40% of national electricity consumption and offsetting up to 70% of diesel use. While full utilization is constrained by technical and economic factors, biogas is seen as a key complementary source for stabilizing an increasingly intermittent grid dominated by solar and wind power.

Industry representatives emphasize that the ongoing electricity-sector reform must properly account for the value of dispatchable renewable sources. Without clear rules for compensating biogas plants for ancillary services, such as grid stability and load balancing, the market's growth may be hindered.

Brazil's waste-to-energy sector is at a critical juncture. The combination of ambitious industry projections, supportive legislation like the "Fuel of the Future" law, and the efforts of organizations like BREM are creating a robust foundation for growth. However, unlocking the full potential of this R$ 300 billion market, particularly in CDR and electricity generation, will require strengthening the regulatory framework to provide clear targets, compensation mechanisms for grid services, and dedicated oversight. Stakeholders agree that a fresh policy framework is essential to drive new investments, create higher earnings, and ensure better environmental protection.