Brazil falls short as Cop 27 nears

  • Market: Biofuels, Crude oil, Electricity, Emissions, Hydrogen, Natural gas, Oil products
  • 19/10/22

Brazil has struggled to meet its environmental goals and the country's total emissions may have risen last year

Brazil is heading to the UN Cop 27 climate talks in Egypt next month with little to celebrate, after the country failed to make good on its promise to reduce deforestation, while energy sector emissions have increased.

Brazil committed to cut deforestation by 15pc/yr to 2024, by 40pc in 2025 and 50pc in 2027 at last year's Cop 26 meeting in Glasgow. But the government has not announced a concrete plan to achieve the goal.

Brazil lost 13,235km² of Amazon rainforest between August 2020 and July 2021, up by nearly 22pc from 10,851km² during the previous period, data released in November by national space research institute Inpe show. Although the government has not yet released the official data for the August 2021-July 2022 period, preliminary figures produced by Brazilian environmental think-tank Imazon point to a 3pc increase.

Energy sector emissions rose last year, owing to the increased use of fossil fuels in power generation and declining ethanol output following a once-in-a-century drought that depleted hydroelectric reservoirs and trimmed the sugarcane crop. Emissions rose by 12.4pc to more than 445mn t, government-controlled energy research agency Epe estimates. The increase, combined with higher rates of deforestation, means that Brazil's total 2021 emissions are on track to rise when data are released later this year.

But Brazil has made some progress towards the creation of a voluntary carbon market. The government in May issued a decree that laid out the regulatory framework for a carbon and methane offset market, with the goal of becoming a major exporter of credits. The decree paves the way for the government to set targets for emissions reductions, and establishes a national registry that will certify the credits. Development bank Bndes has been working to set up the market, with plans to purchase up to 100mn reals ($19mn) of offsets. But there is a consensus that legislation needs to be approved for it to expand on a solid regulatory footing, and a draft version of the law remains stuck in committee.

Pledge of the world

Brazil is part of a global pledge to reduce methane emissions by 30pc by 2050 from 2020. The government has launched incentives to reduce methane emissions through increased investments in biomethane production and by extending tax benefits for new biomethane projects, on top of developing methane credits.

Environment minister Joaquim Leite has promised that the Brazilian delegation will not arrive in Cairo empty-handed. The government is installing 10 bases in the Amazon basin to combat illegal deforestation, and plans to replace old, inefficient heavy vehicles with electric or biofuel vehicles.

Brazil's future climate policy will hinge on the outcome of the 30 October presidential election. President Jair Bolsonaro would struggle to convince global leaders that he is serious about reducing deforestation, after environmental devastation reached 15-year highs during his government. His challenger and frontrunner, former president Luiz Inacio Lula da Silva, has a better track record when it comes to the Amazon and has promised to push a more environmentally friendly growth agenda if he is elected for a third term.


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