Brazil allocated R$ 54.1 billion in subsidies to fossil fuels in 2025, more than twice the amount invested in renewable energies, according to a recent study by Inesc.
The debate over the energy transition and the use of public funds in the country has taken on new dimensions with the release of alarming data from Inesc (Instituto de Estudos Socioeconômicos). In 2025, Brazil dramatically prioritized resources for the exploration and consumption of polluting energy, highlighting a disconnect between the official sustainability rhetoric and the federal government’s fiscal practice. While the clean energy sector seeks room to grow, state incentives continue to sustain a heavy dependence on oil, natural gas, and coal.
The study shows that for every real invested in renewable sources, fossil fuels received an impressive R$ 2.35. This scenario demonstrates that Brazil’s energy mix still moves slowly toward real decarbonization, requiring an urgent overhaul of public and economic policies so the country can meet its international climate commitments fairly and strategically.
The weight of fossils in the budget
The survey details that federal subsidies directed at fossil resources totaled R$ 54.12 billion in 2025. This staggering amount equals more than 11 times the entire budget allocated to the Ministry of the Environment and Climate Change in the same period. The persistence of these incentives underscores the urgency of a deep assessment of who truly benefits from these tax concessions and what the long‑term socio‑environmental impacts are.
Alessandra Cardoso, political advisor at Inesc, stated:
The numbers show that Brazil’s subsidy policy still supports a strong dependence on fossil fuels. It’s not just about comparing how much the country allocates to each energy source, but about evaluating which activities are being incentivized, who benefits from these resources, and how these choices relate to energy transition commitments. Brazil must transform subsidies into tools for a public policy guided by social and environmental justice.
The electric bill and the consumer’s wallet
Another critical point raised by the monitoring is how these subsidies are financed. A large portion of incentives for fossil fuels is directly borne by consumers through the electric bill. Mechanisms such as the CCC (Fuel Consumption Account) and tariff flags heavily impact household budgets, shifting the costs of fossil dependence onto the population, especially lower‑income classes.
Cássio Cardoso Carvalho, political advisor at Inesc, explained:
A significant portion of incentives for fossil fuels is financed directly by electric power consumers. It is essential to see who actually pays this bill and how these costs are distributed among Brazilian families, especially those with lower incomes.
The rise of renewables and their challenges
Despite a 20.89% growth in subsidies directed at renewable sources—primarily driven by distributed generation—the current financing model also creates distortions. Much of this support is passed through tariff charges, which can burden consumers who do not have their own solar energy systems or other clean technologies at home, creating a scenario of unequal access to the benefits of the transition.
Cássio Cardoso Carvalho added:
Expanding incentives and capacity for renewable sources is essential, but it does not, by itself, guarantee that the energy transition is being built in a socio‑environmentally just way. When financing mechanisms shift costs to consumers who cannot access the benefits of self‑generation, there is a risk of deepening inequalities.
The future energy landscape of Brazil directly depends on the public sector’s ability to redesign its subsidy policy. In light of Inesc’s warnings, it becomes imperative to build a strategy that gradually reduces dependence on fossil fuels, promotes the fair expansion of clean energy, and protects the most vulnerable populations from economic and tariff impacts in the coming years.