(Foreign Policy, Lisa Viscidi and Nate Graham, 4.Jan.2019) — This coming November, delegates from nearly every country had been scheduled to gather in Brazil to discuss climate change at the 25th United Nations Conference of the Parties. When the meeting was planned, Brazil seemed a logical choice to host it. Not anymore.
Brazil depends more on renewable energy sources (including biofuels) than any of the world’s other large energy consumers. And between 2005 and 2012, it also ran a successful campaign to reduce deforestation by about 80 percent. But the election of Jair Bolsonaro as Brazil’s president has thrown the country’s status as an environmental beacon into doubt.
In November 2018, Brazil withdrew its offer to host the climate conference, citing the government transition process and budgetary constraints. Bolsonaro, who took office Jan. 1, clearly believes that economic development is at odds with environmental protection and that considerations about the planet should not be allowed to inhibit industry, particularly Brazil’s huge agricultural sector. During the campaign Bolsonaro earned the support of Brazil’s agribusiness lobby, the ruralistas, which make up one of the country’s most powerful congressional blocs. While corporate campaign donations are illegal in Brazil, many wealthy ruralistas are able to self-fund their campaigns and get elected; as a result, they have become a powerful force in Congress, and Bolsonaro needs their backing.
The newly inaugurated president has grumbled that environmental policy is “suffocating” the economy. He has threatened to withdraw Brazil from the Paris agreement on climate change (although he recanted after an international backlash). His environment minister, Ricardo Salles, is a former legal director of the Brazilian Rural Society, an agricultural group, and was fined this past December for changing plans for an environmentally protected area to benefit businesses in the state of São Paulo when he was head of an environmental agency there. Bolsonaro has also promised to remove some protections for the Amazon rainforest, including by rolling back indigenous reserves, such as Raposa Serra do Sol—he has advocated for agriculture and mining exploration there and said the area is too large for its inhabitants. In one of his first acts as president he shifted the power to regulate and create indigenous reserves—which account for about 13 percent of Brazil’s territory, including vast swaths of rainforest—from the National Indian Foundation agency to the agriculture ministry. On the plus side, Bolsonaro does advocate expanding wind and solar energy and reducing dependence on coal and oil for power generation, but he has offered few details on how he plans to do so. He also supports ethanol incentives, popular with Brazil’s sugar cane lobby, but has expressed no plans to support other forms of clean transport.
Brazil already has one of the cleanest electricity portfolios in the world. Throughout 2018, about 65 percent of its electricity supply came from large hydropower projects, and more than 15 percent came from wind, solar, and biomass. Interest in large-scale hydropower development is waning, as most remaining potential projects are located in environmentally sensitive or indigenous areas. Meanwhile, auctions for wind and solar projects have generated bids to produce renewable power at some of the lowest prices in the world and attracted $6 billion of investment in 2017.
Even if large-scale hydropower development has reached a point of diminishing returns, there is still progress to be made on other renewable sources. For now, wind power accounts for nearly 8 percent of electricity supply. Solar makes up just 0.5 percent but is growing at an impressive clip. Bolsonaro’s campaign website proposed speeding up environmental licensing for small-scale hydroelectric plants and developing a local industry to produce, install, and maintain solar panels in the country’s impoverished northeast, which is home to abundant solar and wind resources. However, the new president himself has scarcely addressed the issue in public remarks, and it’s unclear that renewable energy will be a priority for his government.
Meanwhile, as the largest car market in Latin America—it accounts for over half the region’s vehicle sales—Brazil also needs to build on advances in reducing transport sector emissions. It is already the world’s second-largest biofuels producer, and it has the largest market of flex-fuel vehicles, which can run on pure ethanol. The RenovaBio program, launched by the government in 2017, aims to reduce the carbon intensity of gasoline by 10 percent by 2028. The program will do this by introducing carbon savings credits that incentivize fuel distributors to blend their products with more biofuels. The aim is to gradually increase the share of biofuels in Brazil’s total fuel supply from 20 percent to nearly 30 percent. Since the election last October, Bolsonaro has expressed his support for Brazil’s biofuels sector, a stance consistent with his close ties to agricultural interests. Thus biofuels are one point where agricultural and environmental interests converge, a political opportunity that Bolsonaro could seize.
The country also has a nascent but promising electric vehicles market. Electric vehicles improve local air quality and, when charged with renewable electricity, produce zero emissions—something biofuel cars cannot achieve. São Paulo and nearby Campinas have been regional leaders in launching public fleets of electric buses, which are estimated to be less expensive over their lifetime than conventional buses because of lower fuel and maintenance costs. There is potential for a new local industry, too. For now, few electric vehicles are made in Brazil. But in 2015, the Chinese car and bus manufacturer BYD opened its first Latin American factory in Campinas to make buses, and the company is expected to begin manufacturing electric vehicle battery cells in Amazonas state using locally sourced lithium by the end of the year. This development demonstrates how promoting clean transport policies can also create jobs and boost economic development, something that may well appeal to Bolsonaro.
But the most important contribution Brazil can make to global climate health is reducing deforestation. Under the Paris climate agreement, Brazil committed to eliminating illegal deforestation in the Amazon and reforesting 12 million hectares by 2030. The country’s efforts in this respect matter on a global scale: The Amazon is estimated to contain 10 percent of the world’s biomass, absorbing and storing massive amounts of atmospheric carbon dioxide. In 2015, 46 percent of Brazil’s greenhouse gas emissions resulted from land use change, such as deforestation and increase in croplands, and the huge decline in Brazil’s emissions between 2005 and 2012 owed mostly to a reduction in deforestation. This suggests that progress is possible, but the rise in deforestation since 2012 means Brazil has to do more. Unfortunately, Bolsonaro has actively undermined forest protection efforts, foreshadowing dire results.
Policies to promote renewable power, clean transport, and conservation have made Brazil a global climate role model in recent decades, but Bolsonaro represents a serious threat to this progress and could lead to the tragic loss of a major world economy from the coalition fighting climate change.
Between now and 2027, the country’s power capacity is projected to grow by more than 30 percent, and renewables will account for only 71 percent of this growth. In other words, clean energy will not even keep pace with demand, much less increase as a share of power in the energy mix. Electricity regulators must oversee the upgrading of the grid to integrate more intermittent renewable energy sources like wind and solar and increase incentives for small-scale generation, such as rooftop solar panels. Tax exemptions, currently offered for solar panels and the like in more than 20 states, should be expanded.
In the transport sector, the expansion of biofuels should not come through clearing protected land for sugar cane production, but rather through land productivity gains, for example through more efficient and sustainable use of fertilizer. And although electric car battery prices continue to fall, the price of electric cars is still prohibitive for most Brazilians. New incentives (and an end to fuel subsidies, which, unfortunately, has proven highly unpopular in the very recent past) will be required to encourage their uptake.
Finally, Brazil must expand protected areas and safeguard existing ones, including indigenous reserves, from encroachment. It should improve deforestation monitoring and better enforce the forest code while also strengthening this set of regulations with more severe penalties. The country could explore an emissions trading scheme, something that is being tested by more than 30 major Brazilian companies. Such a scheme could allow for companies to offset carbon emissions with reforestation, which has a low average cost relative to other mitigation efforts. Although these policies run counter to many of Bolsonaro’s plans, they are critical to fighting global warming and would even yield economic benefits for Brazil.
In addition to preserving biodiversity and combating climate change, deforestation abatement has economic benefits, even for the agricultural industry that supports Bolsonaro. Precipitation regulation provided by the Amazon, through water absorbed through trees’ roots that later evaporates from their leaves, adds between $1 billion and $3 billion of value each year through increased rainfall and agricultural productivity, according to estimates.
If Bolsonaro makes good on his promises regarding renewable energy and biofuels, he could wind up helping the environment in some ways. But his government must still address other issues such as halting deforestation, a measure that is critical to environmental protection but not detrimental to the economy. Bolsonaro has expressed a desire to promote local industry and investment; now that he is at the helm, he must recognize that he has ample opportunity to promote policies that will benefit both the economy and the environment.
Lisa Viscidi is the director of the Energy, Climate Change, and Extractive Industries Program at the Inter-American Dialogue. @lviscidi
Nate Graham is the assistant for the Energy, Climate Change, and Extractive Industries Program at the Inter-American Dialogue.