In the Wake of Rio+20, Will Brazil Walk the Talk?

Introduction

Contradiction festers in Rio de Janeiro as international fervor surrounding June’s lackluster Rio+20 Earth Summit quickly subsides throughout Brazil. Though the Rousseff administration has received modest accolades for its leadership at the United Nations Conference on Sustainable Development, the public has directed noticeably less scrutiny towards the model that the country’s looming energy and infrastructure policies will likely set in the region.

Today, renewable resources comprise 46 percent of the Brazilian energy matrix, rendering Brazil the least carbon-intensive of all major economies.(1) Yet, according to a report on green growth published by the World Bank’s Sustainable Development Department of the Latin America and Caribbean Region (LCSSD), Brazil’s share of CO₂ emissions in the region is set to increase from 0.068 percent of all metric tons emitted in 2009 to 22.63 percent in 2030.(2)

Some might speculate that such increases are inevitable for countries like Brazil, as heightened emissions reflect an inescapable reality: that rates of fossil fuel production must keep pace with population growth and economic expansion regardless of the environmental costs. This justification for emission spikes not only contradicts the most basic premise of the Rio+20 Conference but also flies in the face of recent Brazilian history. Compellingly, the country has managed to realize low green house gas (GHG) emissions while achieving record growth and prestige as one of the world’s four emerging BRIC economies. Estimates predict that by the end of 2012 Brazil will surpass France in terms of its nominal GDP as the fifth largest economy.(3)

Already the fifth most populous country in the world, housing over a third of Latin America’s inhabitants, Brazil has demonstrated considerable ability to rise to mushrooming energy and infrastructure demands through the enactment of eco-friendly policies. If the country hopes to replicate its past prowess under the new Rio+20 framework, however, it must focus as much on modifying resource consumption as it does on enhancing modes and levels of production.

As Ede Ijjasz Vasquez, Director for the LCSSD at the World Bank, has observed, “The decisions we make today lock us into patterns that are sustainable or unsustainable.”(4) In Brazil, the public and private sector reforms initiated to-date do not exude clear promise that the country will remain a leader in green growth. While Brazil has produced a number of innovative programs, much needs to be done if it hopes to solidify its place at the forefront of sustainable development.

Dangers of Fossil Fuels: A Look at Energy Production

On the Thursday leading up to the Rio+20 Conference, for instance, Brazilian energy giant Petrobras released its 2012-2016 Business Plan. With annual investments totaling $47.3 billion USD, it represents the largest corporate investment program in the world.(5) Sixty percent of approved expenditures will fund exploration and production (E&P) projects in Brazil’s celebrated pre-salt oil and natural gas fields, whereas only 1.3 percent will buttress bio-fuel production.(6) Such figures speak to the country’s anticipated pivot towards fossil fuels.

As the majority shareholder of Petrobras, the Brazilian government will no doubt profit from this design. Still, enhanced deepwater technology is not likely to generate rosy results for the environment. Lodged between a thick layer of salt and the ocean floor, as far below sea level as airplanes fly above land, the freshly discovered Espirito Santo deposits along with those in the Campos and Santos basins come with a fixed high-risk path to production. In light of the latest tallies on the Chevron oil spill off Rio de Janeiro in November, which place the actual damage at over 10 times the company’s original 3,000-barrel count, deep-sea drilling has provoked reasonable opposition from environmental groups in Brazil.(7)

Aside from the foreboding capability that Petrobras has to pollute key river basins and aquifers, such as the Guarani Aquifer, the largest underground reservoir in the world, concerns about hydrocarbons coalesce around fears that the Brazilian success story with renewables may prove too onerous to reproduce.(8)

In spite of having three river systems that drain into the Amazon basin, thereby conferring the country with tremendous hydroelectric capacity, large-scale dam installations in Brazil have proven costly and time-consuming to conceptualize and construct.(9) What’s more, intermittent droughts have gripped the country during the past decade, with Brazil only narrowly escaping electric rationing in 2008. Thus, though hydropower has generated 80 percent of the country’s electricity since the state first developed hydroelectric dams in the 1970s, subsequent power shortages have exposed the dangers of depending on it as a stable source of energy. The emergence of other renewable electricity sources such as wind and solar power may be fast approaching, but energy suppliers must first increase capacity and reduce related costs before they can become major players in the Brazilian energy matrix.(10)

Indeed, what is unsettling about the company’s expected expenditures is not that Brazil would readily tap into its reserves but rather that the country has not championed a concrete vision for jettisoning hydrocarbon exploration with investments in alternative energy. Perhaps this lack of regard for sustainability ought not come as a surprise, especially considering Brazil’s primary motive for fostering energy diversification in the first place during the 1970s.

Paradoxically, oil dependency prompted the initial investments that have engendered the country with such eminence in the realm of green growth.(11) Triggered by the 1973 Yom Kippur War and OPEC’s subsequent decision to suspend production, both of which sent prices soaring, tripling the cost of oil imports for Brazil, a coalition of elite technocrats, energy analysts and business entrepreneurs lobbied the government to devise alternative energy strategies. Their push, along with the colossal debt Brazil had amassed from decades of borrowing to finance its penchant for oil, spurred the creation of Pró-Álcool, the Brazilian sugarcane ethanol program, in 1975.

Despite their contribution to total energy supply, renewable energies do not appear as poised to revamp Brazil’s energy matrix this time around.  As was not the case in the early 1970s, powerful interests in Brazil now stand to benefit from its oil-centric arrangement.

Tolls on the Environment: The Consumption of Natural Resources

Though political analysts assign much emphasis to how growing energy demand will revolutionize balances of power in the coming century, food security poses an equally, if not more critical, issue awaiting most countries. To satisfy escalating demand for food, projections show that Latin America and the Caribbean will have to virtually double their production of grains and meats over the next 40 years.(12)

Such forecasts for food production expose the dangers of unsustainable resource consumption, specifically deforestation in Brazil, which accounts for a staggering 60 percent of the country’s GHG emissions.(13) Fueled by the booming agricultural and livestock sectors, Brazilian deforestation dwarfed that of every other country between 1990 and 2010 at over 5,500 hectares – more than twice the gross forest loss reported by the second biggest offender.(14) In fact, from 1990 to 2002, 80 percent of the growth in Brazil’s livestock population took place in the Amazon.(15) Considering that Brazil is home to 40 percent of the world’s rainforests, it is essential that the country preserves these vast, invaluable pockets of oxygen.

While deforestation has seen a steep decline since 2005 when Brazil enshrined its commitment to achieve an 80 percent reduction of deforestation rates by 2020 in federal law, agribusiness has retained an alarming, almost lethal sway over the Brazilian government. President Rousseff recently revealed a $57 billion USD loan program that augments farmers’ access to loans while lowering interest rates. As the fastest growing sector of the economy, for which family farmers generate 70 percent of production, agriculture enjoys understandable clout as a budding source of jobs in Brazil.(16)

The more worrisome part of the agricultural industry’s progress, rather, is its vociferous lobby, which recently spawned a bill revising the country’s 47-year-old forestry code.  Voted into law on April 25, the initiative substantially reduced the amount of protected areas in Brazil and granted amnesty to farmers for violations of the forestry code, absolving them of their obligation to reforest their lands as well as permitting them to evade property registration without fines. Ms. Rousseff vetoed 12 of the 84 articles in that new code, but current provisions still downsize protections on riverbanks and mangrove swamps, two ecosystems rich in biodiversity.(17)

Enforcement of the forestry code within the past decade has shown, however, that cultivating a more prudent consumption of natural resources is not mutually exclusive to maintaining flourishing agricultural and cattle ranching industries. Though the old law still trumps the new regulation in its preservation of the environment, Ms. Rousseff’s vetoes denote a net improvement from the lax forestry code Congress had proposed.

Regardless of this perceived setback, a handful of other ground-breaking measures in Brazil have elicited hope that the country is not backtracking on its pledge for sustainable development. The Federal Public Prosecutor’s Office has, for example, collaborated with meat-packing companies and supermarkets to prohibit the purchasing of meat from illegally deforested parts of the Amazon. Likewise, the Brazilian Association of Meat Exporters has agreed to boycott cattle from recently deforested segments of the Amazon. More generally, the Brazilian Development Bank has fostered a domestic laboratory for green growth since 2008 by providing grants for “avoided deforestation projects in Brazil” through its Amazon Fund.(18)

In order for such initiatives to be institutionalized in Brazil, the government must cultivate a stronger regulatory environment so as to shield its natural endowments from degradation. Other than continuing to resist pressures to neglect implementation of the forestry code as it did in the past, it must act to prevent agriculture and cattle ranching from inflating the harms they exact on soil quality and water supplies. Despite what critics say, regulations need not stifle growth. After all, those up-and-coming industries depend on nature for their liveliness.

Conclusion

Truly, considering the extent to which Brazilian natural resources have accentuated the country’s grandeza (national greatness), it is only intuitive that the government monitor how global and domestic actors utilize Brazilian water, land and minerals. Within such discussions about oversight, the country’s recent oil and natural gas discoveries have attracted the most media attention, as they mark the largest finds in over a decade. The National Petroleum Agency projects the Santos and Campos sub-salt deposits alone contain approximately fifty billion barrels of hydrocarbons. These figures constitute a sixfold increase from the country’s previously known reserves, catapulting Brazil to the top ten list of oil reserve holders in the world.(19)

Not surprisingly, the National Congress of Brazil has granted Petrobras exclusive operating rights to the subsalt strata. Though Brazil signifies one of only two countries in the Western Hemisphere positioned to become a major oil exporter in the coming century, its renewed emphasis on hydrocarbons does not indicate an unavoidable regression in terms of sustainable development. Brazil may very well use its profits from fossil fuels to invest in education and infrastructure.

If so, the country would do well to heed the suggestions promoted by the World Bank in its Inclusive Green Growth report. Besides working to mitigate GHG levels and pollution, Brazil must take steps to guarantee more efficient resource usage and mitigate burgeoning urban sprawl, as low-density development impedes many Brazilians from reaping the benefits of public infrastructure such as transportation services.(20) Former U.S. Ambassador Alexander Watson has attested to the merits of such recommendations. Founded on real-world experiences and on-the-ground exposure, “This report is the type of document that should have legs,” he has noted.(21)

According to Carlos Manuel Rodriguez, the regional vice president of Conservation International, the obstacles that governments face for sustainable development are twofold. First, no major political incentives exist for leaders to put more sustainable programs in place, as voters elect and evaluate politicians overwhelmingly on job creation. Second, the organization and purview of federal ministries in Latin America often hampers greener approaches to development. In many countries, Rodriguez points out, the task of implementing the forestry codes still lies with ministries of agriculture.(22)

While Brazil may represent an exception to that last point with its esteemed ministry of environment, such insights call into question the influence that Ms. Rousseff’s former post as minister of mines and energy may have on her response to the allure of extraction. Together, Brazilian oil and natural gas have the undeniable potential to promote national interests. Yet, if the government cannot overcome its conflicting responsibility of extracting without destroying – or, as they say in Brazil, extrair sem destruir – it risks fixing Brazil into a development model that is perhaps not only incompatible with green growth but a detriment to economic prosperity in general.

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Citations:

[1]Rohther, Larry. Brazil on the Rise: The Story of a Country Transformed. New York: Palgrave MacMillian, 2010: 187.

[2]“Inclusive Green Growth in Latin America and the Caribbean.” World Bank Sustainable Development Department of the Latin America and Caribbean Region (May 2012): 23.

[3]Bodman, Samuel W., James D. Wolfensohn, and Julia E. Sweig. “Global Brazil and U.S.-Brazil Relations.” Council on Foreign Relations Independent Task Force Report no. 66 (2011): 14.

[4]Vasquez, Ede Ijjasz. “The Road to Rio+20: Green and Inclusive Growth in Latin America and the Caribbean.” Presentation at the Woodrow Wilson Center for International Scholars, Washington, D.C., May 31, 2012.

[5]“Analysis: Petrobras $237 billion plan a fiction without a fuel hike.” Reuters, June 15, 2012. Accessed July 15, 2012. http://www.reuters.com/article/2012/06/15/us-petrobras-brazil-idUSBRE85E1B220120615

[6]Petrobras. “Investor Relations: 2012 – 2016 Business Plan.” Accessed July 15, 2012. http://www.investidorpetrobras.com.br/en/business-plan/2012-2016-business-plan.htm

[7]“Brail awakens to offshore oil’s mixed blessing.” Alaska Dispatch, June 27, 2012. Accessed July 24, 2012. http://www.alaskadispatch.com/article/brazil-awakens-offshore-oils-mixed-blessings

[8]“Water Statistics in Brazil: An Overview.” International Work Session on Water Statistics in Vienna (2005): 4. http://unstats.un.org/unsd/environment/envpdf/pap_wasess4a4brazil.pdf

[9]Moreira, Susana. “Brazil: Keeping the Lights On.” The Whitehead Journal of Diplomacy and International Relations (2008): 115.

[10] “Inclusive Green Growth in Latin America and the Caribbean.” World Bank Sustainable Development Department of the Latin America and Caribbean Region (May 2012): 23.

[11]Brainard, Lael, and Leonardo Martinez-Diaz, eds. Brazil as an Economic Superpower?  Understanding Brazil’s Changing Role in the Global Economy. Washington: Brookings Institution Press, 2009: 5.

[12] “Inclusive Green Growth in Latin America and the Caribbean.” World Bank Sustainable Development Department of the Latin America and Caribbean Region (May 2012): 51.

[13]“Brazil sets modest GHG targets for three sectors.” AlertNet: A Thomas Reuters Foundation Service, June 18, 2012. Accessed July 23, 2012. http://www.trust.org/alertnet/news/brazil-sets-modest-2020-ghg-targets-for-three-sectors/

[14] “Inclusive Green Growth in Latin America and the Caribbean.” World Bank Sustainable Development Department of the Latin America and Caribbean Region (May 2012): 53.

[15]Commission for Biodiversity, Ecosystems, Finance and Development. “Latin American and the Caribbean: A Biodiversity Superpower.” United Nations Development Programme Policy Brief (2010): 9. http://web.undp.org/latinamerica/biodiversity-superpower/Policy_Brief/Policy_Brief_ENG.pdf

[16]“Brazil unveils USD 57 bn argi loan programme.” SME Times, June 29, 2012. Accessed July 20, 2012. http://www.smetimes.in/smetimes/news/global-business/2012/Jun/29/brazil-unveils-usd-57-bn-agri-loan-programme.html

[17]“Compromise or deadlock? The president’s efforts to balance the claims of forests and farms has satisfied few. An opportunity to promote sustainable farming may be missed.” The Economist, June, 2, 2012.  Accessed July 19, 2012. http://www.economist.com/node/21556245

[18]Commission for Biodiversity, Ecosystems, Finance and Development. “Latin American and the Caribbean: A Biodiversity Superpower.” United Nations Development Programme Policy Brief (2010): 7. http://web.undp.org/latinamerica/biodiversity-superpower/Policy_Brief/Policy_Brief_ENG.pdf

[19]Bodman, Samuel W., James D. Wolfensohn, and Julia E. Sweig. “Global Brazil and U.S.-Brazil Relations.” Council on Foreign Relations Independent Task Force Report no. 66 (2011): 32.

[20]“Inclusive Green Growth in Latin America and the Caribbean.” World Bank Sustainable Development Department of the Latin America and Caribbean Region (May 2012): 19.

[21]Watson, Alexander. “The Road to Rio+20: Green and Inclusive Growth in Latin America and the Caribbean.” Presentation at the Woodrow Wilson Center for International Scholars, Washington, D.C., May 31, 2012.

[22]Rodriguez, Carlos Manuel. “The Road to Rio+20: Green and Inclusive Growth in Latin America and the Caribbean.” Presentation at the Woodrow Wilson Center for International Scholars, Washington, D.C., May 31, 2012.