World Bank: Brazil Can Take the Lead in Green Growth

The regional debate on the benefits of adopting low-carbon growth strategies gathered new momentum this week following a World Bank study outlining Brazil´s potential to reduce greenhouse emissions as a path to sustainable growth.

Beyond its economic and development credentials, including its role as a growth engine leading the region’s recovery, Brazil is an environmental superpower, home to the Amazon rainforest and its enormous biodiversity. It has made impressive progress in addressing many of its development issues, especially a dramatic reduction in deforestation, and in applying innovative solutions that reconcile growth and sustainability, experts say.

Still, a new World Bank study notes that Brazil could yet reduce its gross greenhouse gas emissions by up to 37 percent between 2010 and 2030 – the equivalent of taking all of the world’s cars out of circulation for three years – while maintaining the government’s development goals for that period with no negatively impact on growth or jobs. The study was launched on June 17, in Brazil’s capital Brasilia, at a seminar attended by government officials and experts.

Despite its recent progress, Brazil remains among the top world sources of greenhouse gases, especially if deforestation and land use are factored in. Approximately 40 per cent of Brazil’s gross carbon emissions come from deforestation, even though recent efforts to protect forests have been quite successful. Still, together with agriculture and ranching, 75 percent of Brazilian emissions derive from changes in land use.

Deforestation, fires and land use represent about 75 percent of Brazil’s greenhouse emissions.

Conscious of this issue, Brazil announced emission reduction goals of 36.1 percent to 38.9 percent by 2020 ahead of the November 2009 Climate Change Conference COP 15 in Copenhagen. At the same time it reaffirmed its strong position that developed countries have been responsible for most of the climate problem and should contribute proportionately to the solution, and not at the expense of the developing nations.

“Brazil is one of the leading nations at climate negotiations, with one of the world’s cleanest energy matrixes, and is offering creative and constructive solutions both at the global and national levels. The Bank’s study joins others proving Brazil’s potential,” said Izabella Teixeira, Brazil’s Environment Minister.

Climate change is central in both Brazil’s internal policy and external voice. Many developing nations see their own concerns in Brazil’s predicament, and the country has been seen acting as an informal climate and environmental steward in international forums such as the G20.

The Bank’s Brazil low carbon study significantly substantiates the debate on Brazil’s climate protagonism.

Comparison of sector emission distribution

Opportunities to Cut Emissions in Multiple Sectors

The report states that Brazil has a great opportunity to mitigate and reduce emissions, mainly in land use (like agriculture and deforestation), energy, transportation and waste management. In each of these areas, the study identifies opportunities that would have no impact on economic development. Efficiency is measured against a reference scenario, tracing the current path into the future while incorporating different development levels. Reaching the so-called “low carbon scenario” would require additional investments of around US$ 400 billion over twenty years, the reports notes.

Despite such cost, Nelson Barbosa, Economic Policy Secretary at the finance ministry, believes that the study debunks the long-standing myth that achieving a low-carbon economy is at odds with economic and social development.

Makhtar Diop, World Bank Brazil Country Director, opens the event in Brasilia, with representatives from government at the table.

According to Barbosa Brazil is well placed to become a world leader in ‘green’ initiatives while maintaining a healthy economic growth. But it needs to develop public policies and consider incentives for gradual substitution in sectors that emit the most CO2.

In the past two decades, the environmental debate has been increasingly mainstreamed in Brazilian government and society, and grew to be a consensus among policymakers. For example, in the last five years Brazil’s federal government has requested almost US$ 2 billion in World Bank loans for environmental issues, mostly linked to climate change.

For these reasons, the Bank’s report drew considerable interest in government, academia and the media. The study was almost three years in the making, much of which in close interaction with the numerous government agencies involved in all aspects of climate change, including its economic and social impacts. It involved approximately 15 technical events throughout the country and abroad, and a core team composed overwhelmingly by world-class Brazilian researchers.

In his opening remarks at the launch, World Bank Country Director Makhtar Diop, stressed that the Bank is acutely aware of the importance of the issue to developing nations.

“Global climate change negotiations are very complex and have enormous interests at stake. If not handled well, efforts to reduce emissions and stop climate change could have a deep impact on development, and that would be a disaster for Brazil, but even more so to the poorest nations of the world, who would see their prospects for development dwindle even more,” Diop said.

Avoiding Deforestation is Critical

The main message coming out of the study seems to be that avoiding deforestation is by far Brazil’s best option to reduce green house emissions, says World Bank senior energy specialist and study coordinator Christophe de Gouvello.

“The good news is that the Brazilian government has been fighting deforestation quite effectively through forest protection policies and programs, but it also has the opportunity to use other instruments — such as increasing the use of pastures and reintegrating degraded areas to the production cycle, avoiding encroachment on new areas,” adds de Gouvello.

Christophe de Gouvello, coordinator of the study, explains to reporters how the low carbon scenario would affect the Brazilian economy and agriculture.

The report estimates that a new land use dynamic in Brazil would reduce deforestation by up to 68 percent by 2030, compared to the reference scenario estimated for that same year. It notes that market mechanisms would not be enough to take advantage of all the opportunities Brazil has to mitigate emissions. Public policies and planning are essential, especially with regards to managing land competition and forest protection, the report adds.

De Gouvello believes that the dialogue and technical work behind the low carbon study succeeded in helping Brazil build an even stronger base for environmental and development policies. “The report also strongly upholds the message shared by Brazil and the World Bank: that there cannot be global solution to the climate change challenge if the point of view of developing countries are not taken into account, and that this cannot be done at the expense of development and poverty reduction,” he says.

Given that emissions are already relatively low in Brazil’s energy sector in light of its renewable matrix, opportunities for reduction are lower. Similarly, the Brazilian transportation sector is low- carbon in comparison to other countries, due to the widespread use of ethanol.

Nevertheless, public transportation policies in cities could reduce emissions by 26 percent by 2030. Combining these with an increased use of ethanol could double these reductions. The waste management sector accounts for the lowest share of Brazilian emissions, 4.7 percent in 2008, but the implementation of adequate policies could reduce sector emissions by up to 80 percent by 2030, a volume comparable to Paraguay’s entire emissions, the report argues.

“The sum of all the necessary investments for each sector and the collateral effects on the rest of the economy would counterbalance the potential negative effects and even promote growth and job creation,” added Makhtar Diop. “As an investment, the low carbon scenario generates profits in three ways: economic growth, long term environmental sustainability and global benefits.”

The Brazil Low Carbon Study is part of a series of analytical works on low carbon development scenarios for several countries. The World Bank recently published the Global Development Report on Climate Change and the Latin America and the Caribbean Report on Low Carbon Development.