Climate Action

Brazil and its 2015 National Climate Commitments

By Joyce Penagos – April  2015

Brazil_466

The impacts of climate change have become increasingly severe, like extreme weather, sea level rise, tropical storms or hurricanes, ocean acidification, floods, and so on; this situation can be noticed everyday in different parts of the world, affecting all Earth citizens. In that context, is imperative the need from governments to adopt the same level of effort, to limit warming below 20C increase above pre-industrial level in the 21st century, which means that the greenhouse gases need to be reduced substantially in the coming years.1 That is the reason why countries across the globe under the U.N. Framework Convention on Climate Change (UNFCCC) committed to create a new international climate agreement in preparation to the next Conference of the Parties (COP21) in Paris in December 2015, they are known as Intended Nationally Determined Contributions (INDCs); they are designed to outline what post-2020 climate actions are being planed by the different participants countries.

The international climate agreements create a constructive feedback loop between national and international decision-making on climate change.2 Which means that with this contributions based on national contexts, countries will determine their priorities, circumstances and capabilities, with a global framework that drives collective action towards a low-carbon, climate-resilient future. So in that way, these agreements will lead to a transition out of carbon-intensive sectors and industry, a key factor to address climate change.

Here is where Brazil as an emerging global economy and megadiverse country has to create a strong national climate commitment, and also has to assume a leadership position in Paris, that is to say that Brazil has to assume carbon emission-reduction commitments, consistent with its climate reality and scientific research and recommendations (IPCC). As one of the most vulnerable countries to the effects of climate change, Brazil is being affected in several ways:

  • Temperature and precipitation trends: in 2014, parts of Brazil experienced the hottest January on record, including São Paulo with a maximum of 31.90C (89.40F). 3

  • Sea-Level rise: the country’s northeastern coast is especially vulnerable. In the 14-city metropolitan region -including Recife with nearly 4 million people- there are large concentrations of poor neighborhoods near the coast where high tide is already a problem. 4

  • Extreme weather: a severe drought has impacted central and southeastern of the country through much 2014 and the current year, leading to a need for water rationing in at least 142 cities in 11 states including in and around São Paulo. 5

  • Impacts on human health: in early 2007, more than 85,500 cases of dengue fever were reported in Southwestern Brazil –an increase of 30 percent over those reported in 2006. 6

  • Impacts on water stress or scarcity: severe drought struck the eastern Amazon in 2005 –the largest in the last 100 years- leaving some rivers as low as six centimeters per day and decimating water and food resources and river-transport for coastal communities. 7

  • Impacts on forests: up to 40 percent of Amazonian forests could be affected by even slight precipitation decreases. The Amazon is one of the most biodiverse places in the world. As forest cover decreases and natural habitats are disrupted, some species of birds and plants will be dislocated southwards. 8

  • Impacts on agriculture: studies indicate that climate change may result in reduces soybean, maize, and rice yield. 9 Brazil’s crops are not expected to benefit from global warming, which may lead to severe impacts to food security and nutrition. 10

  • Impacts on infrastructure and economy: in 2014, increased temperatures led to pressure on Brazil’s electricity system, due to increased energy consumption from indoor air conditioning, and energy prices were expected to double as a result. 11

The list of impacts mentioned, was just overview of the challenge Brazil is facing regarding climate change, but is completely understandable now that is fundamental to assume significant efforts in terms of adaptation and mitigation to climate change, also the importance of this decisions will affect the principal sectors (water, food security, economy, pollution, etc.) as well as the future of the nation. In order to propose national commitments, the overall adaptation panorama of the country has to be evaluated:

Key government policies and support :

  • Copenhagen Pledge: Brazil has committed to reducing its emissions growth 36-39 percent below “business-as-usual (BAU) levels” by 2020. 12

National Adaptation Plans of Actions:

  • The private sector in Brazil has registered a number of adaptation activities with the UNFCCC, including reinforcing coastlines, encouraging resilient agriculture, and building capacity for sustainable land use management. 13

Agriculture:

  • Brazil’s 2008 National Plan on Climate Change calls for incentives for recovering degraded pastureland, integrating pasture and crops, and more sustainable farming practices, among others.

  • Brazil’s Low-Carbon Agriculture Program extends lines of credit to farmers, aiming to reduce carbon emissions through best practices in agriculture.14

Deforestation:

  • The new forest code does not guarantee zero-deforestation, since it still allow legal deforestation outside of the mandated reserves. Furthermore, its complex compliance structure leaves loopholes and makes it challenging for third parties (such as commodity traders) to verify a property’s compliance. Studies have estimated that 88 million hectares of forest could still be legally felled under a fully enforced forest code.15

Moreover, a national climate commitment has to be analyzed from the scope of Brazil’s position as the 4th largest emitter, accounting for approximately 7 percent of the world’s emissions (2,842 MMTCO2e). Per capita emissions are 15.3 metric tons of CO2e (18th highest in the world). 16 For that reason, the analysis from the Climate Action Tracker17 (review document below) will be studied:

[…] Brazil pledged to reduce its emissions by 36.1% to 38.9% in 2020 compared to business-as-usual (BAU) emissions. According to our analysis, the country will meet this pledge with current policies. We rate Brazil “medium” And the conditions to achieve this goal are the provision of adequate financial and technological support, but this target depends on international financing (review climate financing strategies below).

In addition, what the last statement implies is described in the Article 4, paragraph 7 of the convention (United Nations, 1992):

[…] The extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective implementation by developed country Parties of their commitments under the Convention related to financial resources and transfer of technology and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of the developing country Parties.

Consequently the analysis provides a suggestion for Brazil’s strategy, so its pledge could be rated as “sufficient:” by removing the condition on international finance officially; however, taking into account past commitments stablished in 2010, known as the Copenhagen Pledge18 (review document below), which states for Brazil that in order to achieve its nationally appropriate mitigation actions: is fundamental the finance, technology and capacity building support from developed countries. Likewise for ambitious goals like the protection of the native forests as the Amazon from illegal deforestation, the country needs a high level political support and the collaboration between Federal Police, Armed Forces and the Brazilian Environment Institute (IBAMA).19 As a result, integrated national entities and international cooperation are the key to propose the 2015- COP21 Climate Actions that will represent Brazil’s needs:

1. Reduce emissions by 40% by 2030 compared to 1990 rates.
2. Reduce deforestation rate by 80% by 2020.20

This last item must include the improvement of the accurate and transparent deforestation monitoring, understanding the drivers of deforestation21 as well as the application of forest conservation and sustainable management practices. 22

Finally, to sum up, the national climate commitments and international climate agreements are being discussed mainly by civil society, calling on stronger action on climate change, we all have responsibility over the global warming observed; the COP21 will determine the world’s roadmap to the major challenge civilization is facing now: Climate Change, and we are on time to create, propose and develop real strategies for every country in this Planet: “the blue marble.”

We are the first generation to feel the effects of climate change and the last that will be able to do anything about it“.

-Jay Inslee

Important Documents:

imageBrazil INDC Submit

Climate Action Tracker

Brazil Copenhagen pledge

Notes:

Metric tons of carbon dioxide: Total emissions are expressed as MTCO2 that is calculated by adding the metric tons of carbon dioxide emissions with the metric ton carbon dioxide equivalents for methane and nitrous oxide.

Total Emissions (MTCO2) = Emissions MTCO2+ CH4 Emissions (MTCO2 Eq.) + N2O Emissions (MTCO2 Eq.)

Related Information/Documents:

Brazil National Plan on Climate Change (NPCC)

Brazil’s National Energy Plan

The Climate Reality Project Brazil

The Landscape of Climate Finance 2012-Climate Policy Initiative

UNFCCC: The United Nations Framework Convention on Climate Change

References:

  1. Climate Action Tracker: http://climateactiontracker.org/
  2. World Resources Institute: http://www.wri.org/indc-definition
  3. Reuters, “Record Brazil heat pressures crops, energy prices, government,” January 31, 2014. http://www.reuters.com/article/2014/01/31/us-brazil-heat-idUSBREA0U1PM20140131
  4. Union o Concerned Scientists, “Climate Hot Map –Recife, Brazil,” 2011. http://www.climatehotmap.org/global-warming-locations/recife-brazil.html
  5. Randall Hackley, “Brazil Cities Rationing Water as Drought Saps Reservoir Supplies,” Bloomberg, February 17, 2014. http://www.bloomberg.com/news/articles/2014-02-17/brazil-cities-rationing-water-as-drought-saps-reservoir-supplies
  6. UNICEF Brazil, “Climate Change and Children in the Brazilian Amazon Region,” 2009. http://www.unicef.org/sitan/files/SITAN_Climate_Change_and_Children_in_the_Brazilian_Amazon_Region.pdf
  7. Ibid.
  8. Intergovernmental Panel on Climate Change, Fifth Assessment Report, Working Group II. “Chapter 27. Central and South America,” October 28, 2013. https://www.ipcc-wg2.gov/AR5/images/uploads/WGIIAR5-Chap27_FGDall.pdf
  9. U.K Met Office, “Climate: Observations, projections and impacts- Brazil,” 2011. http://eprints.nottingham.ac.uk/2040/7/Brazil.pdf
  10. UNICEF Brazil, “Climate Change and Children in the Brazilian Amazon Region,” 2009. http://www.unicef.org/sitan/files/SITAN_Climate_Change_and_Children_in_the_Brazilian_Amazon_Region.pdf
  11. Reuters, “Record Brazil heat pressures crops, energy prices, government,” January 31, 2014. http://www.reuters.com/article/2014/01/31/us-brazil-heat-idUSBREA0U1PM20140131
  12. Natural Resources Defense Council, “From Copenhagen Accord to Climate Action-Tracking National Commitments to Curb Global Warming.” http://www.nrdc.org/international/copenhagenaccords/
  13. Nairobi Work Programme -Private Sector Initiative Database (United Nations Framework Convention on Climate Change, 2014). https://unfccc.int/adaptation/workstreams/nairobi_work_programme/items/6547.php
  14. Stephen Russell and Sarah Parsons, “A New Tool for Low-Carbon Agriculture in Brazil,” World Resources Institute (blog), May 28, 2014. http://www.wri.org/blog/2014/05/new-tool-low-carbon-agriculture-brazil
  15. Brutal do Soares-Filho, Raoni Rajão, Marcia Macedonia, Arnaldo Carneiro, William Costa, Michael Coe, Herman Rodriguez, Ane Alencar, “Cracking Brazil’s Forest Code,” Science 344 (April 25, 2014) 363-364. http://www.spde.org/documentos/noticias/Science-2014-Soares-Filho-363-4.pdf
  16. Natural Resources Defense Council, “From Copenhagen Accord to Climate Action-Tracking National Commitments to Curb Global Warming.” http://www.nrdc.org/international/copenhagenaccords/
  17. Brazil Analysis – Climate Action Tracker. http://climateactiontracker.org/countries/brazil
  18. Copenhagen pledge: (Federative Republic of Brazil, 2010) https://unfccc.int/files/meetings/cop_15/copenhagen_accord/application/pdf/brazilcphaccord_app2.pdf
  19. Brazil’s Environmental Defense Fund https://www.edf.org/sites/default/files/10438_Brazil_national_and_state_REDD_report.pdf
  20. InfoAmazonia Research Results http://infoamazonia.org/
  21. Brazil’s Environmental Defense Fund https://www.edf.org/sites/default/files/10438_Brazil_national_and_state_REDD_report.pdf
  22. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel of Climate Change (IPCC)- Technical summary. http://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-ts.pdf 

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Climate Change Financing Strategies

By Joyce Penagos

To adapt and mitigate a country to climate change, climate finance mobilizes enough funds to address the needs of a country, creating programs such as the Green Climate Fund to support projects, policies, activities and financial mechanisms; as well as the development of methodologies for reporting, transparency and predictability. Also by integrating climate change considerations into national development plans, according to the national situation. So in that way it is imperative to support more sustainable projects and having an unbiased investing program for small and medium projects in all regions of the country.

BRAZIL CASE

Landscape of Climate Finance

  • In order to enable the climate funding interventions, the costs to remove barriers should be covered by the government, they are are specially institutional, regulatory, financial and technical costs, and Through Public and Private founding, as the most suitable sources for covering the costs identified.

  • The sources that provide the largest climate finance flows in the country are the government budget that is mainly channeled to renewable power generation projects.1

  • The potential for scaling-up climate finance flows can be found in private flows: they can include households, commercial financial institutions, as well as venture capital, private equity and infrastructure funds.

  • There are some strategic climate finance instruments that can be utilized more in Brazil, like: Policy incentives: to enhance the investments to alternative energy options and Risk Management Instruments: to prevent the low return over investment in the first sustainable proposals without experience on the market.

Readiness to Use Climate Finance

  • In overall Brazil counts with the general aspects of climate finance readiness, because the country counts with Effective Panning: finance flows assessments and integrating the resources. Regarding to Access, the country has a wide range of financial instruments to manage and implement resources; in Delivering: there is a coherent coordination among entities and local skills, to implement and execute projects. However Monitoring is not developed enough to provide a real feedback about climate financing actions within the country.

  • The specific areas of climate finance readiness that should be addressed are: Where the financial resources are flowing: by monitoring financial expenditures on climate change activities within and outside the national budget. And the effectiveness of the resourcing building resilience: by identifying the developments impacts of climate finance resources, and also analyzing feedback lessons to the climate finance planning process.

  • One of the climate finance readiness initiatives that can be applied is The Forest Carbon Partnership2: by developing the necessary policies and systems, including adopting national REDD+ (Reducing emissions from deforestation in developing countries: approaches to stimulate action) strategies; developing reference emission levels (RELs); designing measurement, reporting, verification (MRV) systems; and setting up REDD+ national management arrangements, including proper environmental and social safeguards.

Innovative Approaches to Leverage and Deliver Climate Finance

  • The principal obstacles to climate investments identified are related to strong oil markets, as well as the status of this industry which gets most of the financing support to develop more projects and technologies. Additionally to the centralization of the investments in climate change most to develop hydroelectricity, limiting other growing alternatives. Finally the lack of recognized markets models for alternatives energies make those projects to seem excessive risky and to have insufficient returns.

  • Some climate finance solutions that can be utilized is to enhance the delivery of financial flows by reducing delivery time and costs, through Leveraging: technical assistance, risk mitigation instruments and loan guarantee; also blending provides an interesting approach by catalyzing investments and combined finance generates new solutions like having access to alternative sources of financing for SMEs (small and medium-sized enterprises) crow-founding, which works perfectly for municipal projects and small initiatives.

Risk Mitigation Instruments

  • A low-carbon investment program that can be improved is the Waste Management Program: minimization, re-use and recovery; as an adaptation and mitigation option towards national climate commitments. Some risk categories that apply to this climate finance investment are:

    Social: misappropriation of the public and private resources.

    Technical: construction risks, operation risks, physical output risks, environmental risks and decommissioning risks

    Outcome: emission reduction, co-impact risks and budget risks

  • Some instruments that can be be used to mitigate or eliminate those risks and effectively unlock and protect the investment are:

    Bilateral contracts: to cover technical risks related to the implementation or the operation phases of the projects, covering output price risks.

    Revenue support policies: to reduce outcome price risks and financing risks.

    Direct concessional investments: to mitigate financing risks, providing loans or equity funding that enhances the financial viability.

    Indirect political and institutional support: to enable sustainable energy policies and capacity building activities.

National Development Banks (NDBs)

  • The roles that NDBs play in scaling up climate finance, are mainly to increase the demand for investments and supply of finance in climate-friendly projects by:

    Addressing a sector and country specific constraints.

    Promoting appropriate enabling environment for investing.

    Building awareness, capacity to analyze and structure climate-related interventions.

    Bringing projects and companies to a state of investing readiness.

    Offering financial instruments on adequate terms and risk-return conditions for such projects.

    Supporting private investors and local financial institutions in understanding and tackling the real and perceived risks currently preventing private actors from engaging in climate change mitigation projects.

  • The Brazilian Development Bank3 (BNDES) support climate finance by:
  • Strengthening public policies related to sustainability as well as social and environmental responsibility.
  • Developing and improving financial products, methodologies and other tools that incorporate social and environmental criteria while contributing, in particular, to local and regional sustainable development.
  • Strengthening the approach to social and environmental responsibility in planning, management and operational processes.Inducing and recognizing the best practices in social and environmental responsibility of its suppliers, customers, accredited financial institutions and other partners, contributing to the advancement of sustainability in Brazilian society.
  • Developing and refining methodologies as well as other tools for monitoring and evaluating social and environmental impacts in addition to results generated by the Bank itself and by the financially supported efforts.
  • Guaranteeing that the standard of corporate communication reflects the importance of social and environmental efforts and the BNDES’ commitment to sharing responsibilities with transparency and dialogue.
  • Enhancing knowledge and disseminating the culture of sustainability as well as social and environmental responsibility.
  • Developing partnerships and sharing experiences with other organizations in order to foster social and environmental responsibility and to strengthening transparency and dialogue among stakeholders while reinforcing citizen participation in public management.
  • Adopting policies that set great store by employees and promoting their personal and professional development, with emphasis on social and environmental commitment and human rights.Implementing the most recent sustainability requirements in their facilities and administrative efforts, contributing to the preservation of the environment.
The analysis was self-authored with information from the course Climate Finance Essentials by the World Bank Group

References

  1. Buchner Barbara, Falconer Angela, Hervé-Mignucci Morgan, Trabacchi Chiara. “The Landscape of Climate Finance 2012-Climate Policy Initiative,” December 2012, http://climatepolicyinitiative.org/wp-content/uploads/2012/12/The-Landscape-of-Climate-Finance-2012.pdf
  2. Forest Carbon Partnership https://www.forestcarbonpartnership.org/participants-page
  3. The Brazilian Development Bank http://www.bndes.gov.br/SiteBNDES/bndes/bndes_en/Institucional/The_BNDES/
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