Current Policy Projections
According to our most recent assessment, with currently implemented policies Brazil will reach emissions levels (excluding LULUCF) of 1.079 MtCO2e in 2025 and 1.121 MtCO2e by 2030 (respectively, 27% and 32% above 2005 levels and 92% and 99% above 1990 levels). Brazil will need to implement additional policies to meet its NDC targets.
Bolsonaro’s administration is at odds with the urgent need for climate action in Brazil. Despite backing off his most extreme campaign positions on climate change, such as the intention to withdraw from the Paris Agreement, Bolsonaro and his team of Ministers have publicly expressed their opposition to many of Brazil’s existing climate policies and have passed legislation that weakens the institutional and legal framework to fight deforestation and other environmental offenses, as well as reforms that weaken substantially the participation of civil society, including pro-environment groups, in policy making and oversight of policy implementation (NBC news, 2019; Observatório do Clima, 2019b, 2019c; The New York Times, 2019).
The appointment of a climate denialist as foreign minister (The Guardian, 2018)and further budget cuts to the Ministry of Environment that eliminate 95% of the budget for climate change related activities (Jornal O Globo, 2019) clearly shows the shift in climate and environment policy direction Brazil has taken with the new administration.
The current situation is so critical that, for the first time in Brazilian history, a number of former Environment Ministers from different political parties have released a joint declaration encouraging the civil society and the official institutions to pay close attention to the decisions that are being made under the current government in detriment of the environment, which should raise concern (IEA USP, 2019).
Recent economic and political turmoil has resulted in an economic recession and non-LULUCF emissions growing at a slower pace than in the last decade and even decreasing slightly in the period between 2015 and 2017. However, under currently implemented policies, emissions in most sectors are expected to resume and rise at least until 2030 and the remarkable progress in forestry emissions mitigation observed over the last decade has stopped with deforestation emissions reverting to an upward trend. Recent developments in energy infrastructure planning and the reversal of LULUCF policies already in place reflect a worsening of national climate policy implementation and ambition.
To contribute to a global peak in emissions followed by a steep decrease in the coming decades, as required under the Paris Agreement, Brazil will need to reverse its current trend of weakening climate policy by sustaining and strengthening policy implementation in the forestry sector, reversing present steps to expand fossil fuel energy sources, and accelerating mitigation action in other sectors.
The main policy instruments included in our current policy projections pathway are the energy efficiency national plans and the incentives for the uptake of renewables in the energy sector, including capacity auctions in the power sector and the ethanol and biodiesel mandates in the transport sector (IEA, 2018). In addition to the policies included in the World Energy Outlook, we estimate the impact of The Resolution Nr 5 of June 2018, which includes the annual national emissions intensity targets of the national biofuels policy RenovaBio (Conselho nacional de política energética, 2018).
Brazil has enacted other sectoral plans to reduce emissions in other sectors of the economy, including the Mitigation and Adaptation to Climate Change for a Low-Carbon Emission Agriculture (ABC Plan), the Steel Industry Plan, the Low Carbon Emission Economy in the Manufacturing Industry Plan, The Sectoral Transport and Urban Mobility Plan and the Low-Carbon Emission Mining Plan. Most of those policies and instruments, however, are still not part of national development planning and are therefore not included in our current policy projections emissions pathway.
Energy supply sector
Brazil’s energy mix has been characterised by a high share of renewables, especially large hydroelectric generation in the electricity sector. Taking into account that Brazil’s energy market is expanding and will continue to do so at least until 2030 (IEA, 2015), the renewable energy NDC targets of a 45% share in the primary energy mix and a 23% share of renewables (other than hydropower) in the power supply mix by 2030 would, if met, contribute to an improvement in Brazil’s carbon intensity.
However, plans to decarbonise the Brazilian power sector appear to be contradicted by recent policy developments. In fact, the share of fossil fuels in the Brazilian energy matrix is increasing while the share of renewable energy sources in the energy supply has been declining— from around 50% in the 1990s to only 39% in 2014 (see below), and has only started to rise again in the last three years, reaching 47% in 2017 (IEA, 2018).
Fossil Fuel Share in Energy Supply for Brazil
This trend has been driven by an increase in energy demand and challenges the hydroelectric sector has faced in times of scarce water resources (US Energy Information Administration, 2016). Special concern is raised by the current government energy infrastructure planning, which seems to continue favouring fossil fuels, including coal and gas, as opposed to what is required under the Paris Agreement (Climate Action Tracker, 2016).
To meet Brazil’s increasing energy demand, the government is planning to maintain a diverse energy mix by increasing investments in renewable energy and fossil fuels. The Ten-Year Plan for Energy Expansion has planned an increase in the share of investments in fossil energy sources to 76.1% of total energy investments in the period 2018-2027 (Ministerio de Minas e Energia, 2018). Recent long-term energy scenarios released by the Energy Ministry show a 2050 energy mix projection that has very similar shares of fossil fuels compared to current levels, surpassing half of the final energy consumption (Ministério de Minas e Energia., 2019b).
In the second half of 2016 the Senate approved a provision on a bill on electricity sector privatisation that could result in subsidies for the modernisation of the coal fleet and the addition of new coal plants from 2023 onwards (Senado Federal, 2016). The government also sent negative signals to the wind and solar industry by cancelling its only reserve energy auction for wind and solar in December 2016, arguing for an expected power oversupply in the country (Reuters, 2016). In December 2017 the National Congress approved a further tax exemption to oil and gas exploration, valid until December 2040 which will add up to over a trillion reais (USD 309 billion) lost from the public purse (Câmara dos Deputados, 2018).
However, market developments seem to favour renewable energy over fossil fuels: even though coal generation was allowed to participate in the latest national energy auction for new capacity, no coal was actually contracted. In fact, 60% out of the 2.1 GW contracted went to wind energy (with average price of 90,45 BRL/MWh, equivalent to 24 USD/MWh), 22% went to hydroelectric (with average price of 183 BRL/MWh, equivalent to 46 USD/MWh)and 1.36% to biomass (Reuters, 2018). The only contracted energy from fossil fuels came from a single gas power plant that represented 17.3% of the total capacity contracted, at a price of BRL 179.98/MWh, equivalent to 48 USD/MWh (Reuters, 2018).
While recent developments may ultimately limit the options for long-term deep decarbonisation of the Brazilian economy as a consequence of unnecessarily locking in a high level of carbon-intensive energy infrastructure, market developments bring hope for renewable energy. Brazil’s Ministry of Energy and Mines has published a new schedule for energy auctions up to the end of 2021, with six procurements for new large-scale power projects (Ministério de Minas e Energia., 2019a).
Under current policy projections, the indicative NDC target of a 45% share of renewables in the total energy mix by 2030 will be achieved. This is confirmed by the latest projection from the National Energy Plan, which expects renewable energy to represent 47% of the energy mix in 2027 (Ministerio de Minas e Energia, 2018). However, unless additional policies are put in place, emissions in the energy sector will continue to rise (IEA, 2015), leaving the huge national potential for renewable power generation untapped.
Agriculture is an important industry in Brazil, due to the immense land resource available. The most significant products are coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus and beef (FAOSTAT, 2017). Agriculture is the second biggest contributor to Brazil’s GHG footprint, being responsible for around half of the country’s emissions once the LULUCF sector is excluded. If the indirect emissions of the agriculture sector (mostly related to deforestation resulting from the expansion of the agricultural frontier) were taken into account, this would be by far the single largest emissions source in Brazil.
Given the importance of agriculture and deforestation in Brazil’s emissions profile, mitigation policies in these sectors play a pivotal role in the achievement of the national emissions reductions targets, which is now in jeopardy after the 2018 elections. The “agriculture caucus” (bancada ruralista)— a party that responds to demands from the agriculture lobby, and which generally opposes land preservation efforts and other anti-deforestation policies— is the second largest coordinated legislative group in the National Congress, with wide representation in State legislatures (Gazeta do Povo, 2018). This political party has been a strong supporter of President-elect Jair Bolsonaro, who signalled his alignment with their agenda during his election campaigns.
Land Use and Land Use Change
Inventory emissions data available shows that the land use and forestry sector had been by far the largest source of GHG emissions in Brazil since the early 1990s. This picture changed significantly after 2004, when effective anti-deforestation policies, including the National Forest Code, the Action Plan for Deforestation Prevention and Control in the Legal Amazon (PPCDAm) and the Cerrado (PPCerrado), were implemented and resulted in a reduction on LULUCF emissions of about 86% between 2005 and 2012 (Ministry of Science Technology and Innovation of Brazil, 2016a).
Brazil’s remarkable progress in forestry emissions mitigation observed since 2005 has stopped, with deforestation and resulting emissions increases picking up speed again in recent years. In 2018, Brazil recorded the highest loss of tropical primary rainforest in the world, reaching 1.3 million hectares, mostly due to deforestation in the Amazon, with several hot spots near and within indigenous territories (Weisse & Goldman, 2019). National estimates show total deforestation reaching 7900 km2 in 2018, which is an increase of 13.7% from 2017 levels, and 72% from the historic low reached in 2012 (PRODES, 2019). The most recent national data shows a continuation in the increasing trend in deforestation for the first months of 2019 (Instituto Homem e Meio Ambiente da Amazônia (Imazon)., 2019). This trend takes Brazil in the opposite direction of its commitments under the Paris Agreement, which include a target of zero illegal deforestation in the Brazilian Amazonia by 2030.
This recent increase in deforestation represents a reversal of the trend over the last decade and local authorities have declared they lack the resources to control illegal deforestation in the entire national territory (Messias, 2017). The enforcing capacity of national authorities has deteriorated due to sharp spending cuts under the recent fiscal austerity principle implemented as a response to the spiralling fiscal deficit. In 2017, the Government cut the Environment Ministry budget by more than 50% (Climate Home, 2017a), with continued cuts in 2018. The National Institute for Space Research (INPE), responsible among others for the satellite monitoring of deforestation in the Amazon, suffered nearly 70% reduction in its budget in the past 7 years (Estado de São Paulo, 2017)
Not only has the enforcing capacity of authorities been reduced, but the Government has also started to reverse LULUCF policies already in place. The previous administration signed legislation, previously approved by Congress, to regularise more illegal land-grabbing practices and sent a bill to Congress that that would remove protection from 349,000 hectares (862,000 acres) of Jamanxim National Forest, in the Amazon state of Pará (Climate Home, 2017b). Bolsonaro’s administration has continued with the reversal of key environmental policies and weakening of environmental institutions.
The changes include transferring the body responsible for certifying Indigenous territory from National Indian Foundation to the Ministry of Agriculture (The New York Times, 2019); easing the rules for converting environmental fines into alternative compensations (Climate Policy Initiative, 2019b; Observatório do Clima, 2019b); changes in the Forest code to extend deadlines for enforcement measures (Climate Policy Initiative, 2019a); and the abolition of most committees and commissions for civil participation and social control in the Federal Government (Observatório do Clima, 2019c). While it is hard to predict the effect these regulatory changes will have on emissions, most of them have the potential to drive up illegal deforestation and other environmental offenses.
These negative developments in LULUCF policies are projected to have negative consequences for deforestation, potentially causing Brazil to miss its 2020 and NDC deforestation targets by a large margin (Rochedo et al., 2018; Soterroni et al., 2018). To illustrate this, we have added alternative projections for LULUCF produced by national experts (Rochedo et al., 2018)to our main graph, showing they stand in stark contrast with the official government projections.
Given the key role of the Land Use and Forestry sector in Brazil’s NDC and the huge global importance of its forests for environmental services, biodiversity, and carbon sequestration, the Brazilian government urgently needs to strengthen mitigation action in this sector—instead of weakening it. Bolsonaro’s agenda on environment is at odds with the pressing need for climate action in Brazil.
According to the latest World Energy Outlook (2018), the transport sector accounted for 47% of energy-related CO2emissions in Brazil in 2017. Emissions have been increasing over recent decades mainly due to increased vehicle ownership. Brazil is currently the world’s second largest producer and consumer of biofuels. In 2017, the country produced an estimated 27.7 billion litres of ethanol and 4.2 billion litres of biodiesel (Berk & Barros, 2017).
In its latest National Communication, Brazil identifies the Sectoral Transport and Urban Mobility Plan for the Mitigation and Adaptation to Climate Change (PSTM) as its key policy to tackle transport sector emissions (Ministry of Science Technology and Innovation of Brazil, 2016b). This Plan aims at contributing to mitigating GHG emissions through initiatives that lead to the expansion of cargo transport infrastructure and using more energy-efficient modes; and in the sector of urban mobility, increasing the use of efficient systems of public passenger transportation.
The Resolution Nr 5 of June 2018 approved the annual national emissions intensity targets under RenovaBio, a new national biofuels policy (Conselho nacional de política energética, 2018). The policy aims to increase the use of all biofuels in Brazil, including ethanol, biodiesel and biomethane, aiming to increase energy security and reduce GHG emissions. Under our current policy projections, the CAT has estimated transport emissions will grow 4-6% from 2017 levels by 2030, which is significantly lower than our previous estimates (23% growth by 2030) that didn’t consider the new RenovaBio targets.
While biofuels have contributed significantly to improve the emissions intensity of the road transport sector in Brazil (see below), full decarbonisation of the transport sector will require a fast uptake of electric vehicles (EVs). In terms of EVs, Brazil is a laggard, with a very small penetration rate and without a clear strategy to substantially increase the adoption of this technology. In the reference case scenario of the Ministry of Energy’s long-term scenarios, EVs will continue to account for an insignificant share of the market until at least 2035, reaching a very modest 11% penetration rate (72% if hybrids are included) in 2050 under the reference scenario (Ministério de Minas e Energia., 2019b).