Current Policy Projections
Taking the impacts of COVID-19 into account, our most recent assessment finds that GHG emissions in 2020 excluding LULUCF will drop from 2019 levels by about 4%. According to an analysis by SEEG and the Observatório do Clima (SEEG, 2020), emissions in the energy and industry sectors are expected to fall in 2020 as a direct result of the pandemic, which caused a reduction in fossil fuel combustion for transport and electricity generation and a downturn in industrial production.
The reduction in emissions from power generation, transport, fuel production and industrial processes is the dominant effect, leading to an overall decline in emissions in 2020. Meanwhile, emissions from agriculture are set to maintain an upward trend due to a reduction in the number of slaughtered animals. after a decade of decline, emissions from deforestation are on an upward trend, driven by a continued roll-back of forest protection policies that is enabling ever higher deforestation rates (INPE-EM, 2020; SEEG, 2020). Including these in the total might lead to an overall increase in 2020 (SEEG, 2020).
By 2030, we expect that Brazil’s currently implemented policies will take total emissions (excluding LULUCF) to 1,001 – 1,010 MtCO2e in 2025 and 1,029 – 1,039 MtCO2e by 2030 (respectively, 18 – 19% and 22 – 23% above 2005 levels and 78 - 79% and 83 - 85% above 1990 levels). Under this scenario, emissions in the energy and industry sectors gradually increase after the post-COVID-19 economic recesession, reaching 2018 levels by 2030, and emissions in the agriculture and LULUCF sectors are expected to continue to increase until 2030 at least.
Brazil’s NDC includes an economy-wide target of 1.3 GtCO2e by 2025 and 1.2 GtCO2e by 2030. However, with rising deforestation rates and LULUCF emissions, Brazil is on track to miss both its 2020 deforestation target and its economy-wide NDC targets by a large margin. These findings have been confirmed by independent assessments (Angelo & Rittl, 2019; Observatório do Clima, 2020b).
Bolsonaro’s administration is at odds with the urgent need for climate action in Brazil. Current energy infrastructure planning, which foresees a very important role for fossil fuels in the decades to come, and the developments in the LULUCF sector reflect a worsening of national climate policy implementation and ambition.
President 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 substantially weaken the participation of civil society, including pro-environment groups, in policy making and oversight of policy implementation (Associated Press, 2019; Observatório do Clima, 2019d, 2019e; The New York Times, 2019).
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, 2019). In addition to the policies included in the World Energy Outlook current policy scenario, 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 will need to implement additional policies to meet its economy wide NDC targets, but is well on track to meet its energy sector NDC targets according to the Ten Year Plan (Ministério de Minas e Energia – MME, 2019), as shown in the table below.
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.
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.
Market developments bring hope for renewable energy, and Brazil is very likely to meet its renewable energy targets. On the other hand, policy developments maintain a substantial role for fossil fuels, which could limit options for the required deep decarbonisation of the economy in the longer term.
Brazil’s energy mix has been characterised by a high share of renewables, especially large hydro generation in the electricity sector. 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 energy carbon intensity. This improvement is even more relevant in light of Brazilian energy demand expansion expected to continue at least until 2030 (IEA, 2019; Ministério de Minas e Energia – MME, 2019). However, this is unlikely to be enough to be Paris Agreement compatible: to be on a 1.5° pathway, Brazil’s emissions intensity of its power sector would need to decline to below 20 gCO2/kWHh by 2030, and to zero by 2040 (see figure below).
Electricity emissions intensity
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) and 48% in 2029 (Ministério de Minas e Energia – MME, 2019).
The latest national energy auction for new capacity, held in October 2019, was a six-year commissioning auction (A-6) for projects to start operation in 2025. Even though coal generation was allowed to participate in similar to previous auctions, no coal was actually contracted. In fact, three quarters out of the 2.9 GW contracted went to renewable energy:
- 35% to wind energy, with an average price of 98.9 BRL/MWh, equivalent to 24.3 USD/MWh,
- 18% to solar, with an average price of 84.4 BRL/MWh, equivalent to 21 USD/MWh,
- 15% to hydroelectric, with average price of 157 BRL/MWh, equivalent to 38.6 USD/MWh, and
- 7.6% to biomass, with an average price of 188 BRL/MWh, equivalent to 46.2 USD/MWh.
The only contracted energy from fossil fuels came from two gas power plants that represented 25% of the total capacity contracted, at a price of BRL 188.8/MWh, equivalent to 46.5 USD/MWh (Brazilian Electricity Regulatory Agency - ANEEL, 2019). This was the first A-6 energy auction where solar energy was allowed to participate, resulting in 20-year power purchase agreements for 11 solar projects that offered the lowest price of all technologies in the auction. The 530 MW of solar capacity awarded is more than double that of the 211 MW awarded in the four year commissioning auction (A-4) held in June 2019 (PV Magazine, 2019).
The capacity auction scheduled for spring 2020 was postponed due to COVID-19. There are some concerns that this delay may provide a competitive advantage to gas generators, who have more time to improve their market share and attract investments, potentially presenting an additional barrier for renewable energy companies at an already challenging time (Vivid Economics, 2020). Many renewable and distributed energy providers will require governmental support as they are small companies and are likely to be severely affected by the declining energy demand that has resulted from COVID-19 restrictions (World Bank, 2020a).
Despite positive market signals, progress in decarbonising the Brazilian power sector is not yet in line with government plans and policy developments. To meet Brazil’s increasing energy demand, the government is planning to maintain a diverse energy mix by increasing investments in both renewable energy and fossil fuels, including oil and gas. The current Ten-Year Energy Expansion Plan to 2029 foresees 77% of investments in energy infrastructure going to oil and gas, with fossil fuels increasing their share in the electricity mix from 14% in 2020 to 18% in 2029 (Ministério de Minas e Energia – MME, 2019).
The plan anticipates that national fossil fuel production will expand substantially in the next decade, with oil production going from 3.2 million barrels in 2020 to 5.5 million barrels in 2029, and gross natural gas production going from 130 million m3/day in 2020 to 253 million m3/day (Ministério de Minas e Energia – MME, 2019). A large part of this expansion in fossil fuel production is expected to come from unconventional resources not yet exploited, which have a much larger associated carbon footprint in their exploration and extraction. This stands in stark contrast with the objectives of the Paris Agreement, which would require a large share of the global fossil fuel reserves remaining unexploited.
If these energy plans come to fruition, they will lock Brazil into a carbon intensive energy system for decades. Recent long-term energy scenarios released by the Energy Ministry show by 2050 fossil fuels are still expected to make up over half of final energy consumption (Ministério de Minas e Energia., 2019). This is not compatible with the need to decarbonise the energy sector by mid-century, and also goes against recent trends. The figure below shows the share of fossil fuel generation in primary energy production fell by over 6 percentage points between 2014 and 2018.
Fossil fuel share
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.
Historically, there is a strong correlation between agriculture expansion and deforestation emissions in Brazil. Recent estimates show that between 1895 and 2018, 89 million hectares (890,000 square kilometres) of native vegetation were lost in Brazil, while the territory dedicated to agriculture and cattle ranching grew by 47 million hectares (Observatório do Clima, 2019f).
It is important to note here that expanding the agriculture frontier through deforestation is not necessary to increase productivity and the expansion of this industry. Brazil has considerable potential to add value and productivity to already available but currently under-utilised land by investing in more sustainable and efficient agriculture methods (Observatório do Clima, 2019a; Stabile et al., 2020).
Given the importance of agriculture and deforestation in Brazil’s emissions profile, mitigation policies in these sectors play a pivotal role in Brazil’s ability to achieve its national emissions reduction targets. However, the government has not brought forward any new low-carbon agricultural policies or regulations, despite the potential for low-cost mitigation options that could also raise productivity. Instead, the government continues to rely on the 2010 Low Carbon Agriculture Plan, even though the plan’s targets are for 2020 and therefore will soon be outdated. 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).
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 2004 has stopped, with deforestation and resulting emissions increases picking up speed again in recent years. In June 2020, the area of deforestation alerts in Brazil was the largest for the month of June since the Deter-B monitoring system started in 2015, and 11% higher than the same month in 2019. The year 2019 saw an area of over one million hectares deforested in the legal Amazon – 34% larger than in 2018, and 120% larger than the historic low reached in 2012 (INPE, 2020). An even greater area is expected to be deforested in 2020, leaving Brazil far off-track from meeting its National Policy for Climate Change (PNMC) commitment to reduce deforestation by 80% from 1996-2005 levels by 2020 (implying a maximum of 0.4 Mha deforested per year) (Observatório do Clima, 2019b, 2020b).
In early June this year, the Amazon Environmental Research Institute (IPAM) issued a warning that if high deforestation rates were to continue into the summer, large amounts of land would go up in flames during the dry season. Brazil’s National Institute for Space Research (INPE) has reported a 28% increase in the number of forest fires this July compared with last year (Reuters, 2020).
The rising trend in illegal deforestation and environmental offences is linked to an accelerated weakening of Brazil’s institutional and legal frameworks for environmental protection.
Weak land tenure has enabled land grabbers to occupy and, in many cases, deforest undesignated public forest. In 2019, 35% of deforestation took place in such public lands (Observatório do Clima, 2020a), and a recent study found that over the period 1997–2018, 2.6 Mha of undesignated public forest was deforested, resulting in 1.2 GtCO2 of cumulative emissions. A further 11 Mha have been illegally registered as private property in Brazil’s Environmental Rural Registry (CAR), and if such registrations are legalised, deforestation in these areas alone could lead to the emission of a further 1.2 – 3.0 GtCO2 (Azevedo-Ramos et al., 2020).
In the past, loopholes in Brazil’s legislation have given land grabbers the opportunity to register ownership of illegally grabbed land, and a new proposed measure would, if approved, do the same again, allowing speculators to declare ownership of public land grabbed before December 2018. The proposed measure has experienced considerable push-back from investors, NGOs and even public prosecutors as it would likely trigger high rates of conflict and deforestation in protected forest and indigenous reserves. However, ruralist legislators have recently sought to push it through the fast-track legislation process put in place for COVID-19 recovery measures (IMAZON, 2020; Observatório do Clima, 2020a).
Meanwhile, the Bolsonaro administration has continued to cut budgets for environmental monitoring and enforcement, leading to a deterioration in the ability of national and local authorities to monitor, inspect, and prevent environmental crimes. The COVID-19 pandemic has further weakened enforcement capacities, as enforcement personnel have been encouraged to self-isolate, reducing their numbers on the ground (Observatório do Clima, 2020a). Under pressure from international investors, the Bolsonaro administration has sent in military personnel to boost enforcement capacity, but this has undermined the authority of experienced environmental agents, and the transparency and effectiveness of the operation has been called into question (Unearthed, 2020).
Other measures that have weakened Brazil’s environmental protection frameworks include:
- Revoking a policy from 2011 that required authorisation by the federal environment agency (IBAMA) for the export of timber, therefore allowing the export of timber without inspection (Mongabay, 2020b)
- Stripping the protected status of indigenous lands that have not yet had their protection confirmed (April 2020) (Imprensa Nacional, 2020)
- transferring the body responsible for identifying, demarcating, and registering Indigenous territory to the Ministry of Agriculture (The New York Times, 2019)
- Easing rules for converting environmental fines to an alternative form of compensation (Climate Policy Initiative, 2019b; Observatório do Clima, 2019d)
- Changes in the forest code to extend deadlines for enforcement measures (Climate Policy Initiative, 2019a)
- Abolishing most committees and commissions for civil participation and social control in the Federal Government (Observatório do Clima, 2019e).
- Revoking a zoning regulation for the sugarcane industry that restricted expansion to degraded land and pasture, opening the door for sugarcane cultivation in the Amazon (Mongabay, 2019)
These policy rollbacks have not gone unnoticed by the international community. In July, a group of international investors met with President Bolsonaro to discuss Brazil’s environmental policies, warning that Brazilian companies could have trouble accessing international markets if their supply chains were exposed to deforestation (Mongabay, 2020c). A recent study found that 20% of soy products and at least 16% of beef exported from the Amazon and Cerrado to the EU could be contaminated by illegal deforestation, indicating the potential scale of the problem (Rajão et al., 2020). However, past experience has shown that Brazil could be a world leader in tackling deforestation, if the right policies were put in place, and the Bolsonaro administration is under increasing pressure both internationally and domestically to tackle deforestation as part of a green COVID-19 recovery (Mongabay, 2020a).
Brazil is already set to miss its 2020 deforestation target. If the Brazilian government continues to roll-back environmental policies and fails to adequately enhance enforcement capacities, Brazil will miss its NDC target of zero illegal deforestation in the Brazilian Amazonia by 2030 by a large margin (Rochedo et al., 2018; Soterroni et al., 2018). To illustrate this, we have included 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.
Transport makes up a large share of Brazil’s energy sector emissions: according to the latest World Energy Outlook (2019), the transport sector accounted for 48% of energy-related CO2 emissions in Brazil in 2018. Transport 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, without taking the impacts of COVID-19 into account, the CAT has estimated transport emissions will grow 6-7% from 2018 levels by 2030, which is significantly lower than our previous estimates (23% growth by 2030) that didn’t consider the new RenovaBio targets.
The effects of COVID-19 are expected to lead to lower transport emissions in 2020. The social isolation measures put in place as a result of the COVID-19 pandemic have reduced sales of transport fuels since March, with an average decline over April, May and June of 8% from the same months in 2019 (ANP, 2020). Diesel saw a smaller decline than ethanol and gasoline, likely reflecting the continued need for freight transportation (SEEG, 2020). The analysis of the impacts of COVID-19 by SEEG and the Observatório do Clima in May 2020 suggests a small decline in transport emissions in 2020. In the aviation sector the Brazilian government has chosen to provide financial support that is not conditional on the uptake of environmentally friendly policies (Vivid Economics, 2020).
While biofuels have contributed significantly to improving 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., 2019). For comparison, the Paris Agreement compatible share of EV sales in Brazil would need to be above 85% by 2040 (see figure below).