As countries transition to a green economy, they will need to identify profitable entry points in which they can favorably compete with other nations in emerging green markets. Identifying and building supply capacity for commercially viable, competitive green product exports can be seen as a fundamental part of supporting green growth and sustainable development. Building on the product space model initially advanced by Hidalgo and Hausmann in 2009, this article proposes a green product space methodology to map the export strengths of countries for a specified set of green products. The methodology does so by identifying green products for which a country is likely to be competitive in the world market based on export performance of related products. Results for Brazil are presented to illustrate the green product space methodology followed by a discussion of its limitations and potential contribution to industrial policy formulation to support emerging green sectors.
Biofuels are a suitable complement for fossil energy in the transport sector and bioethanol is the main biofuel traded worldwide. Based on the assumption that innovation can be influenced by regulation, the Brazilian bioethanol industry is facing new requirements from external actors while reaching for international markets. Until 2010, national environmental laws were the main sustainability instrument that the biofuel industry faced. With the introduction of sustainability criteria for biofuels in the European Fuels Quality Directive (FQD) and Renewable Energy Directive (RED) of 2009, bioethanol producers have been pressured to innovate in respect of the requirements of future markets. Here, the aim is to analyse the case of Brazil, given the potential exports of sugarcane-based ethanol from this country to the EU. Brazil provides an interesting overview of how a bioethanol industry innovated while facing sustainability requirements in the past. A comparison between the European requirements and the industry´s status quo is then explored. The EU criteria are likely to have effects on the Brazilian bioethanol industry and incremental improvements in sustainability levels might take place based on the sustainability requirements. In addition, the industry could follow two other paths, namely risk diversification by engaging in multi-output models; and market leakage towards less-regulated markets. At the same time, an environmental overregulation of the biofuel market may make it more difficult for emerging biofuel industries in other countries, especially in Africa, by creating a barrier rather than contributing to its expansion. The results of this analysis show the main challenges to be addressed and the potential positive and negative impacts of the European Union biofuels policy on the Brazilian bioethanol industry.
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