|February 23, 2009|
Brazil: Overview of the Environmental Sector in Brazil
Environmental experts estimate that Brazil’s environmental technologies market (including equipment, engineering / consulting services and instrumentation associated with pollution control and cleanup projects) is valued at roughly US$ 4.9 billion, of which US$ 2.3 billion is related to the water and wastewater sub-sector (water and sewage US$ 2 billion, industrial investments about US$ 300 million); solid waste management at US$ 2.5 billion (US$ 500 million private investments) and air pollution control at US$ 400 million.
Water and Waste Water
There is limited participation of international firms and private Brazilian firms operating water / wastewater utilities in Brazil. The Brazilian sanitation sector consists of 27 state owned companies, autonomous municipal companies and municipal water departments. International firms participate in this market through exports of technologies, laboratory products and engineering services. In order to sell to public sector companies in Brazil, Brazilian private companies and international firms participate in open tenders, limited tenders and sometimes pre-approved vendor lists. Utilities do not import directly, but purchase from local suppliers or commercial representatives of international companies.
New legislation (Law 11455 approved in January 2007, the Public Consortium Law 11107/05) plus funds from the Program for Accelerated Growth (PAC) and federal programs such as the Sanitation Social Action Program (PASS) - with partnership with the IDB and the "Sanitation for All" program are expected to foster investments in the Brazilian sanitation sector.
The Program for Accelerated Growth (PAC) attracted R$ 40 billion (about US$ 20 billion) for the Brazilian sanitation sector (water, sewage, solid waste, and rainwater) until 2010. The funds come from the federal, state and municipal governments, as well as from private investors and service providers. One of the objectives of the PAC is to stimulate private sector investment.
Public-private partnerships (PPP) approved by the Federal Government in 2004 have the objective of attracting private investments to several activities in Brazil. SABESP, the Sao Paulo state water / waste water utility should be the first sanitation company to establish the partnership, to increase the water production from 10,000 to 15,000 liters per second; expansion of the Taiaçupeba water treatment plant and construction of 18 kilometers of water mains which will take the water to four new storage reservoirs.
Business opportunities for international companies in the Brazilian market are mostly for innovative solutions and technologies, rather than supplies. Some of the critical segments in Brazil’s water industry offer potential for
international technologies, particularly in the areas of water loss and water reuse. The water loss rate in Brazil corresponds to 40 to 50% of the potable water produced in the urban areas. Losses that result from inaccurate consumption metering and leakages are responsible for financial loss of about US$ 5 billion per year. Opportunities include complete solutions related to water distribution systems, including services and equipment.
Water reuse is becoming increasingly important in Brazil, especially in the large centers where water scarcity represents high operational costs for water impounding and adduction. Recent legislation imposing charges for collecting and disposing effluents in water bodies, increases the demand for specialized consulting services and effluent treatment technologies.
Air Pollution Control
The need to comply with the existing legislation on pollution emissions, the reutilization of raw materials and adoption of environmentally friendly policies, determine investments in air pollution control equipment and services. Industry experts estimate that this market is to increase by about 20% per year. In addition to the industrial market, the increased number of CDM projects in sanitary landfills in Brazil, is also creating a demand for gas emission monitoring technologies.
Although urban cleaning and public waste management services are under the responsibility of municipalities, some major private sector companies participate through contracts or long-term concessions. In addition, there are several Brazilian manufacturers of solid waste treatment equipment. There are also a number of companies, several of them international firms, in the business of hazardous waste treatment. All of these companies visit solid waste expositions in the United States.
Figures from the Brazilian Association of Urban Cleaning and Hazardous Waste Collection and Treatment Companies (ABRELPE), indicate that the sector generates annual revenues of R$ 5 billion (US$ 2.17 billion), has a fleet of 9,600 compactor trucks and invest R$ 300 million (US$ 130 million) in compactor trucks / year. Investments in sanitary and hazardous waste landfills are expanding significantly, as 90% of Brazil’s 5,562 municipalities lack sanitary landfills for waste disposal.
Although smaller than the public sector, the private sector is an important market for pollution control technologies. Some of the driving forces affecting this market are stricter environmental legislation, pressure from communities and clients, the introduction of environmental management practices by a growing number of industries and increased number of industries with ISO 14001 certificates. The ISO 14001 certificate requires continuing improvement in production processes and adoption of pollution prevention measures. Industries in Brazil demand technologies for water reuse, solid waste treatment, recycling, CDM for greenhouse gases, etc.
Participation of U.S. companies
U.S. companies generally export products such as soil/water contamination treatment equipment and services; healthcare waste treatment technologies; laboratory instruments; odor control products, recycling technologies, etc.
Excerpts from: Brazil: Overview of the Environmental Sector in Brazil, April, 2008, US Commercial Service