Centerpiece

Region brings contradictions to climate talks

Region

When Latin American officials head to the United Nations climate summit in Paris this month, they’ll present a contradictory portrait of their region. That’s because Latin America will be seen not only as a place where there is passion for reducing greenhouse-gas emissions, but also one in which the prevailing economic model virtually guarantees such emissions will rise.

A few key Latin American nations have stood out in the effort to get the world’s often-chaotic climate negotiations on a firmer footing, analysts say. Mexico, with its keen management of the 2010 climate conference in Cancún, helped rescue the United Nations process after a fiasco in Copenhagen the year before, when negotiations nearly unraveled. Mexico and six other Latin American nations—Chile, Colombia, Costa Rica, Guatemala, Panama and Peru—worked to bridge the gap between developing and developed countries by insisting that all countries take on emissions-reduction targets. Then Peru kept the UN process on track at the climate summit last year in Lima.

Those achievements, analysts say, will be noted when 196 nations convene in the French capital just 17 days after the Nov. 13 terrorist attacks. There, from Nov. 30 to Dec. 11, they will try to seize what some experts regard as the world community’s last opportunity to take meaningful collective action on climate change. Specifically, conferees will seek to negotiate a comprehensive, legally binding agreement to replace the Kyoto Protocol, which expires in 2020.

While some Latin American nations get credit for helping to keep the UN talks alive, the region as a whole is not perceived as marching toward the cleaner model of production that a climate agreement will prescribe. To be sure, Latin America’s greenhouse gas emissions account for only 9.5% of the world’s total. That’s largely due to the wide use of hydroelectric plants, which produce more than half of the region’s power. But Latin America’s greenhouse emissions from transportation and agriculture are rising, according to a recent report by scholars from Brown University, the Brookings Institution and other research centers. The International Energy Agency forecasts a 33% increase in Latin America’s per capita energy-related emissions from 2005 to 2030.

Much of the problem has to do with a business model weighted heavily toward extraction of oil and gas and deforestation-intensive livestock and crop production. That, analysts say, has kept the region on a high-carbon pathway that only will increase emissions over time. “Latin America has been blessed with natural resources, but also cursed by them,” says Kevin Gallagher, a professor of global development policy at Boston University. “Its natural wealth has given it a comparative advantage, while also baking in a carbon-intensive economic model based on fossil fuels and agriculture that is inherently unsustainable.”

In Venezuela, Brazil, Mexico, Argentina, Bolivia, Ecuador, Colombia and Peru, efforts to attract foreign investment for oil and gas production continue at a frenetic pace. And the hunt for fossil fuels continues apace when high commodity prices fuel growth and when, such as now, lower prices contribute to an economic downturn, analysts say. Meanwhile, the extraction of agricultural commodities such as beef, soybeans and African palm oil expands at the cost of massive deforestation in carbon-rich woodlands such as the Amazon, the Gran Chaco and Mesoamerican regions of Central America and Mexico. Latin America and the Caribbean sacrificed 36 million hectares (89 million acres) of forests and grasslands to crop and livestock production during 2001-12. Still, the impulse to push the limits of the agricultural frontier often endures, albeit for very different reasons, in good economic times and bad. “The region performs poorly on environment and emissions during times of commodity booms, like that between 2003 and 2013,” says Gallagher. “During downturns, governments are so desperate for investment they just do more of the same.”

To be sure, some countries have made progress in slowing forest destruction. Through an innovative program of reforestation and a payment-for-environmental-services program, Costa Rica was able to boost its forest cover from only 21% in the late 1980s to nearly 52% today. Brazil, meanwhile, slashed its deforestation rate by more than three quarters during 2004-11 through the creation of protected areas and improved forest monitoring and enforcement, reducing its total greenhouse-gas emissions by 30% in the process.

And a few Latin nations have moved to reduce their dependence on oil imports. Uruguay, for example, has been extremely aggressive in using public financing and a new regulatory structure to stimulate growth in its wind sector. In 2006, the country had no wind-generating capacity; last year, its installed capacity from new wind farms had increased 800%, to 530 megawatts. By 2016, analysts expect Uruguay to generate as much as 38% of its energy from wind—a share exceeded only by Denmark, with 43%. Chile also has been ambitious, passing a carbon tax last year aimed at large factories and the electricity sector. US$7 billion in investment for solar and wind entered the country, and 3,000 megawatts in installed capacity were added to the grid.

Those cases, however, are exceptions, analysts say. In Latin America, non-traditional renewables still account for only 9% of the energy supply, and economic activity is overwhelmingly dedicated to unsustainable agriculture and fossil-fuel exploitation. Indeed, about 40% of the energy supply in the region still comes from oil, gas and coal. “With the plummeting cost of renewable technologies over the last few years, you shouldn’t have to rely on fossil fuels,” says Guy Edwards, co-director of Brown University’s Climate and Development Lab. “But some short-term thinking and an ongoing bias toward using natural resources drives a dependence on them.”

During 2003-13, soaring Chinese demand for commodities fueled an unprecedented export boom in Latin America, which by 2008 had boosted its sales to the Asian nation by around 400%. China bought billions of dollars worth of soybeans from Brazil and Argentina, mainly for use as animal feed, made huge investments in Venezuelan and Ecuadorian oil projects and provided loans of more than US$70 billion for the construction of refineries, roads, ports and other infrastructure intended to help Latin America get its goods to Chinese consumers. Such projects not only fueled growth; they also raised the value of Latin American currencies. That, in turn, made it hard for the region to compete with Chinese manufacturing, further increasing its dependence on the export of raw materials to earn foreign exchange. As a consequence, the share of commodities in Latin American exports rose from around 27% in the late 1990s to more than 50% by the late 2000s.

The boom also had a potent political effect, analysts say. It strengthened the leverage of key interest groups—particularly in the ranching, farming and oil and gas sectors—that profited from the uptick in exports and engaged in activities that increase carbon emissions. Politicians interested in expanding the agricultural frontier for cattle and soybean production boosted their power, most notably within Brazil’s Congress, analysts say. Ministries of mining, agriculture and energy, always strong, began to assert even greater authority over the environment ministries and other institutions concerned with climate change.

Those effects have intensified now that commodity prices have crashed and the boom is over, analysts say. “During this period where economic growth isn’t as fast, and countries are trying to secure investment, these powerful political actors are sometimes able to call the shots, and inevitably green and climate agendas suffer,” says Edwards.

Examples of this are everywhere to be seen. In Brazil, the agricultural lobby in 2012 helped push through a change in the forest code that granted amnesty to farmers that had deforested beyond their legal limits. In Peru, the government last year eliminated the Environment Ministry authority over the approval and oversight of extractive projects, handing the power instead to the Energy and Mines Ministry. The governments of Ecuador and Bolivia over the last two years have expanded oil and gas drilling into national protected areas and parks. And in Bolivia, the government has pushed a massive expansion of ranching and agriculture that environmentalists say will threaten fragile Amazonian and Chiquitano forests.

Changes in the economic model, analysts say, will be very difficult to achieve. Shifts to a greater reliance on renewable energy, apart from hydropower, require investments in new equipment and infrastructure. Those deliver returns only over the long term, curbing the impetus toward transformations to cleaner systems. In agriculture and land-use change, where most of the emissions are generated, there seems no end to methane-producing cows, oil-based fertilizers, and deforestation. “In many countries there are strong social and economic groups tied to the agricultural sector, ranging from the broad base of peasant farmers to small businesses and large agro-industrial corporations,” says Eduardo Gudynas, director of the Montevideo-based Latin American Center for Social Ecology (Claes), a think tank focused on development and the environment in Latin America. “That imposes great political costs on any government trying to modify the agricultural sector.”

Cause for optimism

Some analysts believe there is hope in more efficient and sustainable agriculture. This could take the form of livestock and crop production among trees, rather than in clear-cut areas; the substitution of natural chemicals for oil-based fertilizers and pesticides; or the recycling of animal wastes as energy or compost. Research shows that sustainable farms can release half the greenhouse gases produced by industrial ones. “You can’t change the productive structure overnight,” says Andrés López, director of the Center for Transformation Research (Cenit), a Buenos Aires nonprofit dedicated to technological innovation, trade and the environment. “But there are ways to produce commodities that are less harmful to the environment and less carbon intensive. The organic production that we see among some of the region’s coffee growers is a good start.”

Other analysts point to efforts to make cities more efficient. They cite rapid transit bus systems, such as those in Curitiba, Brazil, and Bogotá, Colombia, which carry commuters in dedicated, high-speed lanes and have had a significant impact in reducing automobile use and related pollution. They also praise broader efforts such as Mexico City’s two-decade-old ProAire program, which has emphasized vehicle inspections, public transport improvement and even the closing of a refinery to reduce contamination and greenhouse-gas emissions.

Still other experts talk of the importance of stabilization mechanisms, such as Chile’s Economic and Social Stabilization Fund, which allows the government during boom times to put aside windfall profits into a trust. That not only protects the economy from boom and bust cycles; it gives the government financial strength to build up social and environmental institutions and potentially to move towards diversifying the economy. The Brazilian National Development Bank also has a trust, which it has used in the past to invest in everything from sustainable agriculture to nanotechnology and wind and solar power.

Goal requires change

But as Latin American officials join their counterparts in Paris, they’ll find their region is regarded as one still dominated by resource extraction and resulting emissions growth. Until the region moves away from that model, analysts say, it will be unable to do its part toward the world goal, agreed upon at the Cancún climate summit, of limiting global warming by 2100 to 2 degrees Celsius (3.6 degrees Fahrenheit) above the pre-industrial level.

As a prelude to the Paris summit, UN member nations committed to presenting plans, called “intended nationally determined contributions” or INDCs, that specified their future emissions reductions and how they would obtain them. An analysis of the INDCs of four Latin American countries by the Climate Action Tracker, an independent assessment of climate commitments by four European research organizations, gave Brazil and Peru a medium rating, and ranked the Chilean and Argentine plans as inadequate. The methodology is complex, involving countries’ goals and various fairness factors, such as their historic responsibility and financial capacity. But not one of the four nations’ climate plans was found to be ambitious. “These countries are mostly following current policies and taking targets that are very safe,” says Márcia Rocha, a Brazilian who headed the analysis. “They are absolutely not doing enough.”

- Steven Ambrus

Contacts
Guy Edwards
Research Fellow and Co-Director
Climate and Development Lab at the Center for Environmental Studies
Brown University
Providence, RI, United States
Tel: (401) 863-3503
Email: guy_edwards@brown.edu
Kevin Gallagher
Professor of Global Development Policy
Boston University
Boston, MA, United States
Tel: (617) 353-9348
Email: kpg@bu.edu
Eduardo Gudynas
Director
Latin American Center for Social Ecology (Claes)
Montevideo, Uruguay
Tel: +(59 82) 402-9128
Email: egudynas@adinet.com.uy
Andrés López
Director
Research Center for Transformation (Cenit)
Buenos Aires, Argentina
Tel: +(54 11) 4373-3714
Email: anlopez@fund-cenit.org.ar
Márcia Rocha
Head of Climate Policy Team
Climate Analytics
Berlin, Germany
Tel: +(49 30) 2592-29524
Email: marcia.rocha@climateanalytics.org