GREEN GROWTH: FROM RELIGION TO REALITY - Sustainia

Chapter 8Deforestation’s challenge to green growthin Brazil1 IntroductionUnderstanding Brazil’s green growth and emissions storyrequires a second look. Brazil’s energy matrix is approximately46% renewable, so when one compares theshare of greenhouse gas (GHG) emissions from energyin Brazil to that of most OECD countries, Brazil is doingrelatively well (IPEA 2010, 133). However, looking atenergy alone misses the core GHG story in Brazil: Theprincipal drivers of GHG emissions in the country arenot energy production or heavy industry, but rather deforestationand agriculture. Deforestation is responsiblefor about 55% of Brazil’s GHG emissions, and agriculturefor another 25% (McKinsey & Company 2009, 7).In fact, the two areas of emissions are intimately linked:deforestation is principally a problem of agriculture. Cattleranching and soybean and sugar cane farming are themajor industries contributing to Brazil’s emergence todayas an agricultural and agroenergy superpower – andare directly and indirectly responsible for deforestationin Brazil’s largest forests, the Amazon and Atlantic (BancoMundial 2010, Barros 2009, Margulis 2004, McAllister2008b, Nassar 2009, Nepstad et al. 2008, Sennes andNarciso 2009). By extension, because Brazil’s large andgrowing renewable energy sector is principally based onagriculture, it has ties to deforestation and may not be asgreen as it first appears.In short, the problem of deforestation cuts across severalof Brazil’s fastest growing economic sectors, includingrenewables.Brazil therefore faces contradictory imperatives on theroad to green growth: First, cattle ranching and soybeanfarming revenues – which contributed 25% toBrazil’s gross domestic product (GDP) in 2008 – riskbeing squeezed by enforcement of legal restrictions oncultivation and grazing in the Amazon forest.1 Second,Brazil’s energy grid has a comparatively high proportionof renewables in it, but each major renewable – sugarcane-based ethanol, biodiesel, and hydropower – comesat some cost to forests and biodiversity because of its extensiveland use. In short, the problem of deforestationcuts across several of Brazil’s fastest growing economicsectors, including renewables. As a result, the potentialfor divergence between “greenness” and “growth” in theBrazilian case is particularly great. The analysis below exploresthis problem in greater depth.This study examines the problems of deforestationrelatedGHG emissions and green growth in Brazil in cattleranching and agriculture; sugar cane-derived ethanoland other biofuels; and in hydropower. Section 2 beginsthis analysis by discussing Brazil’s GHG emissions profilein greater depth, detailing the contributions made by deforestation,agriculture, and energy. Section 3 shows howranching and agriculture contribute to Amazon deforestation,the leading cause of GHG emissions in Brazil; andprofiles the strengths and limitations of Brazil’s currentpolicy responses. Finally, Section 4 argues that, despiteits potential to reduce energy-related GHG emissions,renewable energy production in Brazil in the forms ofethanol, biodiesel, and hydropower threaten to increaseGHG emissions from deforestation in the medium run ifstrict zoning and environmental laws are not effectivelyenforced.2 Overview of GHG emissions in BrazilBrazil is a federal democracy of almost 200 million people,has a diversified economy (Baer 2008, 1-3),2 and isthe fourth largest greenhouse gas emitter in the world– responsible for 5% of world emissions, or 2.2 GtCO2ein 2008 (World Resources Institute, cited in McKinsey &Company 2009, 2).3 However, unlike the United Statesof America and other OECD countries, the majority ofGHG emissions in Brazil stem from deforestation – thelogging and burning of large tracts of forest to clear landfor cattle pasture or agriculture in the Amazon rainforest– not from energy and industry.4 Thus, GHG emissionsin Brazil are primarily an agricultural, not an industrial,problem.5While annual GHG emissions data from deforestationin the Amazon are not available, it is clear from Braziliansatellite data that high deforestation rates there since1988 have caused the release of massive amounts of CO2and other GHGs into the atmosphere. Deforestation doesappear to be declining: the Brazilian National Institutefor Spatial Research (INPE 2011) uses satellite imagesto calculate annual deforestation rates in the Amazon,and finds that after spikes in 1995 and 2004, the annualdeforestation rate dropped to an estimated 6,451 km2 in1 This study defines green growthas “job creation or GDP growthcompatible with or driven by actionsto reduce greenhouse gases”(see Huberty et al. 2011, 3).2 In 2005, Brazil’s GDP per capitawas US$3,326. That year, servicesaccounted for 56.09%, industry for34.86%, and agriculture for 9.05%of total GDP (Baer 2008, 405).However, agribusiness straddlesthe divide between agriculture andindustry: Counting production,industry, commerce, and inputs,agribusiness is estimated to havecontributed to 31% of Brazil’s GDPin 2003, and to 26% of Brazil’s totalemployment in 2002 (ibid., 303).3 GtCO2e refers to gigatons of carbondioxide equivalent.4 The Brazilian Legal Amazonconsists of nine states (Acre,Amapá, Amazonas, Maranhão,Mato Grosso, Pará, Rondônia,Roraima, and Tocantins), andoriginally had approximately 4.3million km2 of forest (Baer 2008,336). According to Baer (ibid.,332), the Amazon “stores about 60billion tons of carbon, or 8 percentof the total carbon present in theatmosphere in the form of carbondioxide.”5 McKinsey & Company (2009,5) estimates Brazilian per capitaGHG emissions at 12 CO2e, comparableto industrialized countries.However, “if we exclude theforestry sector, Brazilian per capitaemissions drop to 5 tCO2e, whichwould bring this country down tothe level of low/moderate emitters”(ibid.).86