Brazil pledges carbon neutrality, seeks compensation

  • Market: Crude oil, Emissions
  • 12/10/20

Brazil reaffirmed its commitment to climate neutrality by 2060 amid rising international pressure to check growing Amazon deforestation, but it is demanding financial compensation from developed nations to preserve the environment.

The country could adopt a more ambitious emissions target in the future, but this would depend on the "proper functioning of market mechanisms provided for in the Paris Agreement," Brazil said in its updated nationally determined commitment (NDC) on 8 December, a requirement under the Paris Agreement.

Specifically, the Brazilian government said it could reach net-zero emissions ahead of schedule, but would need to receive an annual payment of $10bn for environmental preservation from developed countries starting in 2021.

These payments could eventually be made through carbon-trading mechanisms which are stipulated as part of the agreement, environment minister Ricardo Salles said after a meeting of the inter-ministerial climate change committee, which issued the updated NDC.

Brazil also reaffirmed its pledge to reduce its greenhouse gas emissions by 37pc from 2005 levels by 2025 and by 43pc in 2030.

Brazil saw a 9.6pc increase in GHG emissions in 2019 from a year earlier, according to the emissions-monitoring system (SEEG) developed by local environmental NGO Observatorio do Clima. According to SEEG estimates, deforestation accounted for 44pc of total GHG emissions in 2019. Emissions from deforestation increased by 23pc from 2018.

The agriculture sector accounted for 28pc of total emissions in 2019, down from 30pc in 2018.

The energy sector produced 19pc of total emissions, down from 20pc in 2018. This is largely because of the large share of renewable power in Brazil's power mix.

The country passed sweeping biofuels legislation in 2017, known as Renovabio, which aimed to reduce emission by 10pc by 2028 through an increase in biofuels use.

Despite its sweeping biofuels program, the country remains committed to pre-salt oil production, although state-controlled Petrobras recently announced its goal of reducing emissions by 25pc from 2015 levels by 2030.

Emissions are likely to continue to rise in 2020 after deforestation in Brazil's Amazon basin reached the highest level in over a decade in the 12-month period ending in July, marking the second consecutive year of increasing environmental devastation. Brazil lost 11,088km2 of rainforest in the 2019-20 season, which runs from August to July, up 9.5pc from the 10,129km2 in the previous period.

The steady increase in deforestation is a growing risk for Brazil, especially after US president-elect Joe Biden takes office in January. Biden is expected to join European leaders to pressure Brazil to make concrete progress towards reducing deforestation.

With the 2019-20 number, Brazil is far from reaching the goal of reducing 2020 deforestation to a maximum of 3,925km2, which was established as part of its 2009 national climate change policy (PNMC).


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