Brazil’s Climate Plan Focuses On Healthy Forests, With Role Of Markets Uncertain

Steve Zwick

No country has reduced greenhouse-gas emissions more than Brazil has, and the country this week promised to reduce even further – by preventing a backslide in deforestation rates and by accelerating the use of renewable energy and green agriculture. Still unclear, however, is the role that market mechanisms will play in moving the process forward.

29 September 2015 | Brazil has already slashed its greenhouse-gas emissions more than the entire European Union has, mostly by clamping down on deforestation. This week, it unveiled its new climate plan, which promises the country’s emissions will be 37 percent lower in 2025 than they were in 2005, with a further decrease of 6 percent by 2030. To achieve that, it aims to preserve the progress it’s made on deforestation while ramping up its use of renewable energy and expanding its sustainable agriculture programs.

The role for market mechanisms, however, is unclear. Wording in the document leaves room for international emission-reduction “units”, but it explicitly prevents other countries from using those units to offset their own emissions. Adriano Santhiago de Oliveira, Director of the Environment Ministry’s Department of Climate Change, told Ecosystem Marketplace that’s because the ministry sees market mechanisms as a tool for Brazilian emitters to use domestically.

He also reiterated the federal government’s longstanding view that international funding for programs that slow deforestation (“REDD+”) should be performance-based, but not offset-based – meaning that foreign governments can fund REDD initiatives within Brazil, but they cannot use emission-reductions achieved to offset their own emissions. He added that the federal government would not interfere with emerging REDD initiatives between individual Brazilian states and states abroad, even if those initiatives recognize offsetting, but he reiterated that the federal government would also not recognize those offsets in its national carbon accounting.

“The US state of California and the Brazilian state of Acre can do what they want, but we will not recognize the use of these units in the federal carbon accounting of other Parties to the UNFCCC,” he said. “That means if the US federal government wants to count results coming from these kinds of projects, we are not going to recognize this.”

Under the United Nations Framework Convention on Climate Change (UNFCCC), however, results generated by individual states within a federal system will be folded into one national carbon account under the federal government. If the federal government doesn’t recognize the emission-reductions, then the state’s recognition is irrelevant.

Most sources agree that the measures should not impact voluntary carbon markets, provided there is a way to prevent double-counting.

“It does not affect the voluntary markets,” said Pedro Gandolfo Soares, coordinator of the Carbon Neutral Program for the Brazilian NGO Idesam. “But Brazil´s Federal Government will not consider – as they have never considered – the credits generated under the voluntary markets for the UNFCCC processes or negotiations.”

Project developers, however, say that what’s technically feasible isn’t always marketable, and that the mixed messaging could give international investors pause, even in the voluntary sphere.

“On one hand  it is a bad signal for voluntary projects,” said one, speaking on condition of anonymity. “I would doubt that a private, serious investor would invest into a REDD+ project knowing that the government doesn’t approve the transfer of units.”

Land-Use and Forests

On the land-use front, Brazil reiterated its promise to end illegal deforestation and restore 12 million hectares of forest by 2030 – mostly by continuing to implement its Forest Code, which was overhauled two years ago  and amended last year to create incentives for the country’s six million private landowners to join the Rural Environmental Registry System (Cadastro Ambiental Rural / “CAR”), which is linked to a satellite monitoring system that tracks land use.

“Brazil’s climate plan marks the first time a major developing country has committed to an absolute reduction of emissions,” said Rachel Biderman, director of the World Resources Institute’s Brazil office. “This is an important shift because it offers greater certainty that emissions can be cut even as Brazil’s economy expands.”

Paulo Moutinho, a senior climate researcher at the Amazon Environmental Research Institute (IPAM), also praised the government’s willingness to establish an absolute target, as opposed to a reduction against a hypothetical future, as other developing countries have done, but said he was disappointed in the forestry component.

“Taking 2012’s emissions as a reference, the reduction target for 2025 is around zero percent,” he said.

Market Mechanisms and Forests: The Nitty-Gritty

The document contained just three paragraphs on the use of markets, and they clearly leave the door open to international offsets – but just a crack:

Brazil reserves its position in relation to the possible use of any market mechanisms that may be established under the Paris agreement.

Brazil emphasizes that any transfer of units resulting from mitigation outcomes achieved in the Brazilian territory will be subject to prior and formal consent by the Federal Government.

Brazil will not recognize the use by other Parties of any units resulting from mitigation outcomes achieved in the Brazilian territory that have been acquired through any mechanism, instrument or arrangement established outside the Convention, its Kyoto Protocol or its Paris agreement.

The environment ministry’s de Oliveira said the first two paragraphs simply reiterate the federal government’s right to employ international offsets in the future.

“Basically, we want to recognize units coming from mechanisms agreed under the UNFCCC and the Kyoto Protocol, as well as whatever comes from the Paris agreements,” he said. “In the second sentence, we are trying to reserve some position regarding units coming from sub-national or other mechanisms, but only with prior informed consent by the federal government.”

The third paragraph, however, is the one that says other countries can’t use offsets to reduce their national carbon footprints under the UNFCCC. Sources in the governments of both California and Acre said they believed there was still room to generate offsets that bring more private-sector finance to the forests of Brazil through California’s compliance regime, and that the wording does not impact the viability of voluntary markets. None, however, had yet reviewed the INDC in full, and declined to speak on the record.

Steve Zwick is a freelance writer and produces the Bionic Planet podcast. Previously, he was Managing Editor of Ecosystem Marketplace, and prior to that he covered European business for Time Magazine and Fortune Magazine and produced the award-winning program Money Talks on Deutsche Welle Radio in Bonn, Germany.

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4 thoughts on “Brazil’s Climate Plan Focuses On Healthy Forests, With Role Of Markets Uncertain

  1. Everything looks fine and pleasing on the surface of Brazil’s climate proposal, but what Dilma failed to mentioned is the 12 million hectares of reforestation is actually 12 million hectares of a-forestation of Palm Oil and other Mono-culture tree plantations. A law was passed a few years ago that deemed palm oil a native species and any area planted with palm oil would be considered what is known as forest or reserve area. She also lead us to believe there would be 12 million hectares of reforestation in the Amazon Biome. This is not true, she is counting all the reforestation since 2005, and anywhere in Brazil. I.e. In the south of Brazil there is massive Eucalyptus plantations in Mato Gross do Sul, a total of 820,000 hectares in that state alone. Thus this is new operations and will count as 820,000 hectares of the 12 million and has nothing to do with the Amazon.

    After living in Brazil for the last 30 years, and living in the Amazon, and reading the news. What also was not listed was that in the first half of 2015 Dilma had cut most of the funding for preservation initiatives in the Amazon – due to the recession.

    Another point not mentioned is the following: Dilma’s earlier pledge was to reduce deforestation by 85% by 2020 and 100% by 2030. Since 99.9% of the land deforestation is consider legal deforestation on private property, this means by 2020 most of the large industrial farms in the Amazon will have been deforested to there max. Between 2015 to 2020 that is about 3 million hectares. After this 3 million hectares is deforested there will be a sharp NATURAL drop off in deforestation. From 2020 to 2030, we will see small family farmers continue to deforest their land but by 2030 these small plots under 200 hectares will all be deforested as well. About 2 million hectares over this time. The conclusion is: Dilma will clear every hectare that is LEGAL to be cleared by 2030 and by 2030 there will be no forest land remaining that is legal to be cleared. From an economic standpoint an extra 5 million hectares is equal to at least 10 billion dollars of economic growth versus nearly no economic growth with forest land.

    Norway should be ashamed of itself and all their pandering to Dilma and Lula with their tongue and check commitments. Norway treated Brazil like a European country, but what we learned is that Brazil is nothing close to the level that Europe is, just from the news of Petrobras and how in summary 50% of the politicians in Brazil are as corrupt as one can be. This is sad to say the US$1 billion went to the Environmental Registry System (CAR) to help implement a system that was for the most part implemented. Most money from Norway simply replaced the federal funding which saved money for the government. Since I have done a few of these CAR’s for property I have, it costs about 2 dollars per hectare to complete a CAR on land, so if Norway really wanted, they simply could have paid for everyone to get their CAR done for the Environmental Registry System. It would have been more effective that what is present today.

    If Norwegians and the world thought like a Brazilian they could have adopted good ol’ USA style lobbying and basically donate to the campaigns US$500,000 dollars to each off the Congressmen in Brasilia (Deputadas Federais) and US$1 million to each of the Senadors, and asked for a law that would make the Legal Deforestation illegal. Also while they were at it, make a law that would make illegal cattle pasture burning, which is done by many of the less educated Brazilians once per year and actually puts alot of carbon in the air and burns up good kilocalories from pasture land. It would have cost US$180 million and deforestation in Brazil would be a thing of the past.

    1. Thanks, Peter. You’re raising some issues I’d like to know more about. Would you mind sending me an e-mail?

      1. Hey Peter, I’m brazilian and what are you saying is non-sense. 12 million hectares is less than would be recovered with new forest code. Most of it will be native areas.
        And we are not competitive in palm oil, and it’s not a driver of deforastation.
        Amazon was deforested on max, actually Lula created a lot of Conservation Units and Indigenous Territories what reduces deforestation, besides around 82% for Amazon forest are conserved.
        Acually, nowadays, most of deforestation comes from small land ownerships, that’s trying to survive with agriculture and cattle, once forest management needs great areas, and bigger investments, while people won’t be paied for keep forest they will try to raise their conditions.
        Eucalyptus plantation occupies degradaded areas from the past, most pasture, as you should now FSC certification not allowed deforestation to plant trees.
        Much more than payed for CAR, you should think that money should be invest on communicated the CAR, there is non-sense in registrated an area of you dont know who lives there, and what area their needs, AND, as capitalist country we respect propriertie in way that people can consider to protect 80% of its land a very invasive politian.
        I’m sorry for you and other that don’t know anything about Brazil

    2. Hello. I have to agree to Gustavo on the part that palm oil is an unsignificant crop in Brazil of probably less than 1 M ha according to a recent CIFOR paper:

      I am not aware of studies where it was identified as a primary driver of deforestation Brazil as it is in SE Asia – though certainly it can excerpt a secondary drive when cattle pasture or staple food area is converted to palm oil. Many studies show though that soy and sugar are actually the largest secondary deforestation driver, with cattle and staple food dominating primary drivers.

      I think what Peter wanted to bring to attention and where Gustavo did not directly respond is the large number of other monocultures such as Eucalyptus etc. counted as “revegetação”. I do not have numbers on this, but would it imaginable that a lot of primary forest was deforested and later “recovered” by monocultures in order to be eligible for a CAR. Would be great to see data here.

      Can you give references Peter, Gustavo or someone else? In Portuguese is fine.

      Thank you

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