BRICS Climate Deal 2015

Sustainability in Post Election Brazil: New Conditions, Old Models?

The Brazilian government will face major political, economic, and climate challenges in 2015. Short-term concerns dominate domestic politics and this poses a challenge: Will the country table an ambitious climate commitment for COP21 in Paris? The broader question is whether the on-going water and energy crises could help increase public awareness about the linkages between climate change, politics and economics. Broader awareness of these linkages might providing an opportunity for change. The sharp decrease in oil pricing and a shortage of investment resources by Petrobras due to corruption scandal may also mark the biggest chance for Brazil to re-think its energy matrix away from fossil fuels and towards stronger renewables.

Brazil’s Political Context after the Elections

Brazilians elected their President and Parliamentarians in October last year. President Dilma Rousseff’s reelection suggests continuity, but the political context has become more complex and governing the country will be more difficult in her second term. More than 40% of Brazil’s National Congress representatives changed, and the already pluri-party Congress increased in number of parties with seats from 22 to 28. Due to shifts in the balance of powers, the new Congress composition is now even less environmentally friendly than before. In the Senate the largest parties lost a few seats, but the impact of change on political alliances has been smaller.

The influence of President Rousseff’s Workers´ Party (PT) has been weakened in both Houses. This is forcing the government to broaden its already heterogeneous coalition, gathering support from parties that are even more populist and less knowledgeable or interested in long-term policy and sustainability. These alliances also allow smaller parties the opportunity to negotiate with PT for better positioning in controlling strategic Ministries or influencing Ms Rousseff’s decision-making about the appointment of new ministers.

Marina da Silva, the former Minister of Environment who ran as presidential candidate but finished a distant third, has disappeared from the public agenda and still struggles to establish her new political party the Sustainability Network.

New Ministers in Charge

The new Brazilian Ministerial composition is very unfriendly to the cause of pushing for more ambition in tackling climate change. It evidences the government´s lack of priority or even skepticism towards environmental issues. An overview of the most influential issues is provided below.

The Communist Party’s Aldo Rebelo, Minister for Science, Technology, and Innovation, is well known for his position against environmentalists. He has publicly declared that climate change is a plot by developed countries to keep weaker countries underdeveloped.

Minister of Agriculture Katia Abreu from PMDB, the largest Brazilian political party, is also well known for her position against environmentalists and indigenous groups. She was President of the National Agribusiness Association (CNA) until recently, and was the ‘architect’ of the new Brazilian Forest Code, which has undermined forest protection measures across the country.

“Large landholding [in Brazil] does not exist anymore” - Katia Abreu

The new External Relations Minister Mauro Vieira, a career ambassador formerly based in Washington, keeps a very low profile in Brazil. His expertise in trade matters – particularly with Latin American neighbors – indicates President Rousseff’s priorities for the country’s foreign affairs in the coming years. Vieira replaces Luis Alberto Figueiredo, the lead Brazilian negotiator on climate change until 2014.

The current Minister of the Environment Izabella Teixeira, from President Rousseff’s PT, was reappointed and will play a key role in the Brazilian climate position at international negotiations. Although her team is known for being more reactive than proactive in climate change matters, she is the only Minister that has shown any interest in climate issues. She is strongly criticized by environmentalists and is not regarded as a powerful leader within the government, but still holds the trust of the President. Moreover, Ms Teixeira is willing to push Brazil towards a constructive role under the negotiations. Her supportive stance tends to emphasize Brazilian deforestation issues, rather than energy profiles or urban agendas.

In comparison with his predecessor, the newly appointed Energy Minister Eduardo Braga from PMDB definitely represents good news. While not an energy expert, as former Governor of the Amazon State he has been an active advocate of environment protection and climate issues. However, the current national energy crisis will give him little room for long-term thinking.

In a surprising move for everyone, President Rousseff appointed Joaquim Levy to be Finance Minister. He has a very different profile from PT´s previous Finance Ministers, being regarded as very liberal economist. He enjoys great legitimacy among financial market and business players across Brazil. Surprisingly or not, he is fond of economic instruments which might deal with environmental and climate issues. While this may be a positive sign, the country’s fiscal constraints and economic short-term priorities might not allow him to prioritize such an agenda.

Economic and Water Crises

The Brazilian economy is stagnant, and most economists suggest the country had a 2014 GDP growth rate of only around 0.1% – with expectations not much higher for 2015. The government has already begun cutting investments and expenses and more radical cuts are expected, but maintenance of the country’s successful social programs is taken for granted. The government’s finance and planning teams will certainly put much of their focus in “domestic housekeeping”.

In addition to the economic slowdown, over the past year Brazil has faced an unprecedented water crisis. The water shortage is not only affecting the citizens’ supply but also compromising national energy provision – domestic reliance on hydroelectric power is substantial. There is a very real possibility that the larger and more populous cities in the country, such as São Paulo and Rio de Janeiro, will face severe water and energy consumption restrictions in the coming months. This could potentially affect over 30 million of people only counting these two cities’ populations. As if the situation was not critical enough, the government recently cut energy and oil subsidies, which led to a sharp increase in pricing.

Until not too long ago, traditional media kept its attention focused on the government’s ineffective public resource management and uninspired, reactive responses to the crises. More and more, however, newspapers and social media commentators are slowly linking the water crisis to climate change effects with a straightforward narrative.

Thus, the context opens a great and unprecedented window of opportunity in which to raise Brazilian awareness about climate change. Brazilians are rethinking their habits regarding water and energy consumption, with debates about it now a part of daily discussion. Solar and wind energy entrepreneurs are gaining attention from both the media and government (such as here). All these factors provide a unique opportunity to show that a less resource intense and more environmentally responsible development path is possible for the country.

Energy and climate: New Conditions, Old Models

The biggest threat to keeping Brazil´s energy matrix clean is the prospect of developing deep-sea oil reserves. The ‘Pre-Salt’ coastal oil deposit would allow Brazil to become one of the largest oil-producing countries in the world.

The government and some business sectors consider exploiting Pre-Salt as the best opportunity to foster needed economic growth and national infrastructure development. In order to strength the argument, the government has stipulated that royalties from the Pre-Salt oil shall be used to cover some public education and health expenses over the next decades. Accordingly, the government of Brazil has framed Pre-Salt as our “passport” to the future.

“This [Petrobras and governmental control over part of the reserves] is important because it shows that the passport to our future is to transform this perishable and finite wealth - the oil - in an infinite wealth, which is to give education to Brazilian citizens.” - Dilma Rousseff.

Given this context as a whole, the government’s willingness to support measures that curb carbon emissions or limit oil production is remarkably low. Nevertheless, two recent facts have begun changing the scenario: First, in light of sharply falling global oil prices, experts are questioning the economic feasibility of future Pre-Salt exploration; and second, the huge pressures resulting from recent corruption scandals at Petrobras, the Brazilian part-public/part-private oil company crucial to the government’s Pre-Salt strategy (read more here). Considering that President Rousseff herself was Petrobras Board Chair before her presidency, and the fact that Petrobras is a key player pushing national economic growth, the company remains a highly sensitive point for the government. This may fundamentally change the Pre-Salt scenario, at least for the next years.

All of these aspects will have a substantial impact on how the Brazilian government expresses its level of ambition within the UNFCCC climate negotiation context. While the domestic environment and power distribution between different interests among the National Congress and Ministries has always defined the Brazilian attitude in international talks, other external actors can be seen to exert a substantial influence on the country’s role within this negotiation process.

Brazil in the international climate negotiations

Since Copenhagen’s COP15 in 2009, and particularly since 2010, Brazil has played a constructive but low-key role during UNFCCC negotiations, effecting a low-ambition position. Brazil seeks a universal and legally binding agreement at the 2015 conference in Paris, with all countries having some responsibility to deal with climate change, but still tends to insist on a reinterpretation of the “common but differentiated responsibilities” (CBDR) principle to avoid setting binding mitigation targets on itself or other developing/non-Annex I countries.

The CBDR principle has historically created a deadlock in negotiations. Brazil´s proposal at COP20 in Lima on the “concentric differentiation”was a concrete step to move away from deadlock, but posed new challenges such as setting criteria for country assessments, measurement of capabilities and progress, and other such issues.

Although there was little recognition and debate on it at the time, the proposal is so far the only concrete ‘on the table’ scenario that deals with a key impasse between developed and developing countries within the UNFCCC negotiations. While the Brazilian position in Lima was more constructive than expected, it lacked ambition and still resisted establishing legally binding mitigation targets for developing countries.

Changes in the domestic and external climate positions of China, India, and the US are somehow the strongest forces pushing Brazil to review its position at the UNFCCC process. American, Chinese, and Indian efforts are more aggressive in pushing solar energy investment, and their openness to the debate about the linkages between climate issues and national development agendas is creating more space for Brazil’s own internal debate on the issue. The share of wind and solar energy in the Brazilian energy matrix is growing, but still negligible.

The two main reasons behind Brazil’s new openness are: In the long term, the threat to Brazilian competiveness due to Chinese economic power; and in the short term, the fear of eventual loss of Brazilian international leadership in negotiations or as a representative of developing countries. The signals from China, India, and the US in the forthcoming months will likely have a huge impact on the Brazilian level of ambition in defining its Intended Nationally Determined Contributions (INDCs) and its role during COP21.

Regionally, Brazil is also losing leadership. Chile, Colombia, Costa Rica, and Mexico have been more active in creating a space for low-carbon entry points in public policy, and they have all defended more ambitious measures at UNFCCC negotiations, in Lima in particular.

With regards to European Union (EU) influence, it is important to bear in mind that Brazil and Europe share a sentiment of losing leadership in climate negotiations. However, they also share the common goal of strengthening multilateralism – an arrangement that both perceive to be weakened and possibly threatened by a Chinese-US bilateral climate deal. By working together, Brazil and the EU can perhaps regain lost ground on international climate negotiations.

Final Remarks

Brazil needs to face its two biggest challenges in order to develop and implement a sustainable development pathway: First, its limited ability to develop long-term plans; and second, the ideological bias of the current government’s insistence on a natural resources, export-led growth model that avoids investment in environmentally friendly policies in order to obtain weak socioeconomic gains. These gains only work in the short term, and there is no doubt that the biggest challenge for Brazil is to create conditions for a development path that embraces sustainability.

The current water and energy crisis and the problems faced by Petrobras may represent possible drivers for Brazil to increase its climate ambition at the UNFCCC conference in Paris. While the government’s budget cuts leave little room for massive changes to public policy, public opinion is putting more pressure on the need to find solutions that open space for investment in solar and wind energy. If the crises persist, the changing behavior of Brazilians towards their country’s natural resources may be a very important legacy of this crossroad.

Ana Toni and Alice Amorim are part of the Nivela team; they are based in Rio de Janeiro, Brazil. More information about their work is available at nivela.org/people.

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