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Cablegate: Brazil's Climate Position Is in Flux and Could Strengthen;

VZCZCXRO3688
RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTM
RUEHTRO
DE RUEHBR #1308/01 3131846
ZNR UUUUU ZZH
R 091846Z NOV 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 5343
INFO RUEHSO/AMCONSUL SAO PAULO 0051
RUEHRI/AMCONSUL RIO DE JANEIRO 0012
RUEHRG/AMCONSUL RECIFE 0084
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 BRASILIA 001308

SENSITIVE

SIPDIS

NSC PASS TO RESTREPO AND ROSELLO

E.O. 12958: N/A
TAGS: SENV EFIN EAGR EAID KGHG BR
SUBJECT: BRAZIL'S CLIMATE POSITION IS IN FLUX AND COULD STRENGTHEN;
FOR NOW THEY ARE BEING CAUTIOUS

REF: A) BRASILIA 1136, B) 2008 BRASILIA 1462

BRASILIA 00001308 001.2 OF 004


(U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR INTERNET
DISTRIBUTION.

1. (SBU) SUMMARY. The Government of Brazil (GOB) is finalizing its
position for the Conference of the Parties-15 (COP-15) to the UN
Framework Convention on Climate Change (UNFCCC) in Copenhagen.
Despite earlier signals that it might announce an economy-wide
emissions reduction target, President Luis Inacio Lula da Silva
declared on November 4 that Brazil will not do so for now. Instead
the GOB will offer some domestic measures to reduce emissions, most
notably, an 80 percent target for reducing the rate of deforestation
in the Amazon Forest by 2020. Further, Lula plans to call President
Obama and other leaders to suggest constructing a global emissions
target, to which Brazil could contribute its share. During the
call, Lula plans to urge Obama to attend Copenhagen. Lula's staff
says Obama's attendance would make it likely that the GOB would
improve its proposal.

2. (SBU) At the same time, the GOB is making greater demands on the
United States, Europe, and Japan for much deeper emissions
reductions - reducing their 2020 emissions by 25 to 40 percent from
the 1990 level. The GOB is calling on developed countries to
provide substantial public financial assistance (apart from private
sector funding), and technology transfer. Further, the Ministry of
External Relations has not really embraced the concept of carbon
credits for forests, despite an impressive array of supporters for
the proposition from the Environment Ministry to the nine state
governors in the Amazon region. Meanwhile, the GOB is working on a
joint declaration with France to be released before Copenhagen,
which should address a wide variety of the climate change issues,
mitigation, adaptation, financing, technology transfer, and forests.
Lastly, Lula plans to meet on November 26 in Manaus with leaders
from the other South American countries that have a part of the
Amazon forest to develop common positions for COP-15 on mitigation
involving forests, adaptation, and financing. END SUMMARY

DECIDING TO PLAY IT SAFE

3. (SBU) With the Copenhagen UNFCCC COP-15 fast approaching, the
Government of Brazil (GOB) has been developing its proposal on
mitigation actions. Lula and other senior GOB officials repeatedly
have said they will go to Copenhagen with an "ambitious" proposal.
The types of domestic mitigation actions that Brazil could take,
their costs, and the implications for greenhouse gas (GHG) emissions
are now fairly well understood by the GOB. There has been a
significant and detailed inter-governmental process to identify what
Brazil can do to reduce emissions. There has been a contentious
conversation happening within the GOB as to whether Brazil should
announce an economy-wide reduction target at or before Copenhagen or
whether it should limit itself to its domestic deforestation
reduction goal with possibly some other domestic measures too. On
November 3, President Lula, Dilma Rousseff (his head of the
Presidency and also head of the Brazilian delegation to Copenhagen
as well as Lula's hand-picked candidate to succeed him as
President), and the cabinet met to try to decide whether to have a
potential economy-wide target and what that target would be.
Environment Minister Carlos Minc pushed hard for an economy-wide GHG
emissions target of a 40 percent reduction below "business as usual"
for 2020. Rousseff feared that this might be a difficult target to
meet without threatening robust economic growth, which would damage
her chances of winning the election. The meeting broke up without
agreement and is scheduled to resume on December 13. After the
meeting, Rousseff told the press that she wouldn't let the Brazilian
proposal impede economic growth, a perspective that is at the heart
of the Brazilian negotiation position.

4. (SBU) On November 4, Lula said that Brazil would not announce
any economy-wide GHG reduction target prior to Copenhagen, though it
would register some measures it plans to take to reduce emissions
particularly on deforestation. Instead of becoming the "savior of
Copenhagen" as Minc proposed, Brazil is taking the path urged by
Ministry of External Relations, namely adopting a "wait-and-see"
approach and holding back to see what other countries will do. One
justification for not announcing an economy-wide target, according
to Lula, was "we don't want to arrive with our numbers and seek to
impose them on the international community."

COMPONENTS OF BRAZIL'S PROPOSAL

5. (SBU) Brazil has already announced that it will take some
domestic mitigation actions, most notably reducing the rate of
deforestation of the Amazon Forest by 80 percent by 2020, compared

BRASILIA 00001308 002.2 OF 004


with the 1996-2005 average rate. This means slashing the annual
rate from almost 20,000 square kilometers to about 4,000 square
kilometers. According to Minc, this measure alone would represent
about a 20 percent reduction in Brazil's economy-wide GHG emissions
from business as usual. To reach a 40 percent GHG emissions
reduction target, Minc said that other domestic measures that are
already planned would need to be included in the proposal. These
other measures include the following:

Agriculture sector - no till planting; reforestation of degraded
lands; mechanizing the harvest of sugar cane; more intensive
ranching; mixing orchards and crops.

Energy sector - use more wind and solar power; increase the use of
biodiesel.

Industrial sector - implement a "green steel" program whereby only
charcoal from sustainable sources - rather than from the Amazon -
for producing pig iron.

6. (SBU) The Ministry of External Relations, which is leading the
negotiating team, has suggested several times that Brazil might
eventually agree to an economy-wide emissions reduction target, but
one that would be less than the expected results from the
deforestation reduction goal and other planned domestic measures.
These officials appear to be suggesting a possible economy-wide
target closer to 20 percent than 40 percent for 2020 compared with
business as usual. The Finance Ministry's Deputy Executive
Secretary Francisco Franco worried about committing to results from
too many measures. He pointed to their analysis and that of a
McKinsey study showing the costs to the Brazilian economy start to
rise sharply once you move beyond reducing deforestation and
reforestation. McKinsey estimates that Brazil will release about
2.8 GtCO2e in 2030 with business as usual and of that an estimated
1.7 GtCO2e would possibly be abated at low cost (less the
10Euro/tCO2e), but after that the cost of abatement soars. Further,
the GOB is worried that as Brazil addresses deforestation emissions,
its overall emissions will begin to increase as its deep-water
oilfields come into operation and their industrial economy continues
to grow.

7. (SBU) Thus, the GOB today is willing to announce only its
deforestation reduction target. Lula has defended this measure as
being pretty "ambitious" by itself. He told reporters in New York
on September 22, that with the 80% reduction "[w]e will reduce CO2
emissions by 4.8 billion tons, which is an amount greater than the
sum of all the commitments by the developed countries combined."
What the GOB is holding in reserve are (1) translating the
deforestation reduction into an economy-wide target, which would be
about 20 percent from business as usual for 2020, and (2) including
the expected results from other planned domestic measures (described
above), which they could conservatively infer an additional five to
possibly as high as 10 percent reduction from business as usual
(i.e., 25 to 30 percent).

LULA PLANS TO CALL OBAMA ABOUT COPENHAGEN

8. (SBU) On November 4, Lula announced that at the request of
British Prime Minister Gordon Brown, he would call President Obama
and others to see if world leaders could agree to construct jointly
a global emissions target, to which Brazil then could contribute.
During the call, Lula said he would press Obama to come to
Copenhagen, in which case Lula would also attend. A senior
international advisor to Lula, Marcel Biato, told Charge d'Affaires
that if Obama were to go to Copenhagen, then Brazil would likely be
able to improve its proposal a bit. COMMENT. Encouragement from
President Obama and/or other senior USG officials, and the prospect
of President Obama's attendance at Copenhagen, could well persuade
Brazil to be more forthcoming and finally to put an economy-wide
target on the table. END COMMENT.

TARGETS FOR DEVELOPED COUNTRIES; NAMAS FOR OTHERS

9. (SBU) The GOB has been consistent on its view of the structure
of an agreement at Copenhagen. This is reflected in the October 6
Joint Statement that came out of the European Union-Brazil Summit in
Stockholm, Sweden, which said: "[The EU and Brazil] committed
themselves to contributing to strengthening the global climate
regime, including through clear and ambitious mid-term targets and
legally binding commitments for developed countries, as well as
Nationally Appropriate Mitigation Actions (NAMAs) for developing
countries, supported and enabled by technology, financing and
capacity building." In short, the GOB wants to see the Kyoto
Protocol reinvigorated with a new set of more ambitious reduction

BRASILIA 00001308 003.2 OF 004


targets and with the United States taking on comparable binding
targets, and the developing countries would register their NAMAs.
The MRE negotiators see their NAMA targets (such as the 80%
reduction figure), as aspirational goals and not legally binding
obligations.

TURNING THE HEAT UP ON DEVELOPED COUNTRIES

10. (SBU) The GOB lately has been much more vocal about demanding
greater GHG emissions reductions by the developed countries than
currently proposed. President Lula at UNGA set the tone when he
demanded that "the developed countries make much deeper reductions
of emissions than their actual proposals, which represent a mere
fraction of what was recommended by the IPCC." Senior negotiator
Luiz Figueiredo Machado from the Ministry of External Relations and
Suzana Kahn from the Environment Ministry have been saying that
developed countries must reduce their GHG emissions by "between 25%
and 40%" by 2020 from their 1990 levels. Environment Minister Minc
has publicly said that the reductions envisioned by the United
States for 2020 in the Waxman-Markey legislation were not enough.
Leandro Waldvogel, who is on the Ministry of External Relations'
negotiating team, explained to Science Counselor that Brazil is
satisfied with the 2050 target in the Waxman-Markey bill, but
believes that the 2020 mid-term target in the bill is not
sufficient.

11. (SBU) The GOB is calling for a massive infusion of financial
assistance to help developing countries implement mitigation and
adaptation measures. The MRE insists the while markets and the
private sector can make a contribution, Brazil is looking to public
financing from the developed countries. Moreover, the GOB looks
kindly on the idea of compensating developing countries for the harm
caused by historic emissions from the developed countries, according
to Andre Odenbreit, MRE's Director of the Environmental Policy
Division.

12. (SBU) With respect to technology transfer, Brazil joined India
and Saudi Arabia in mentioning the possible use of compulsory
licensing for clean energy technologies in their plenary statements
during the UNFCCC meeting in Bangkok in April 2008. Further, the
French Deputy Chief of Mission told Post that during President
Sarkozy's September 8 visit the Brazilians pressed for free transfer
of French green technology.

MIXED MESSAGES ON REDD

13. (SBU) While the MRE has shifted from its adamant opposition to
carbon credits for forests, including through Reducing Emissions
from Deforestation and forest Degradation (REDD), it is fighting a
rearguard effort to undermine them. Waldvogel explained that there
is a fear that the developed countries will avoid having to make
their own domestic emissions reductions by using offsets, especially
with forest credits. He said that the MRE wasn't too concerned
about the United States, with the Waxman-Markey bill having just a
five percent allotment for overseas credit. The real problem is
that the Europeans could use this on a much larger scale, he said.
Nonetheless, a powerful group of nine governors from the Amazon
region are putting intense pressure on President Lula to include
REDD. Consequently, the EU and Brazil in early October jointly
stated that they "committed to step up efforts to ensure the
inclusion of REDD in the Copenhagen agreed outcome and to establish
and effective and reliable means of support for REDD under the
Convention, with public finance offering strong incentives for
action in this sector."

14. (SBU) Odenbreit from the MRE said that the GOB is thinking
about limiting carbon credits for forests to only where they are
supplemental and do not offset another country's emissions
reductions target. COMMENT. If Brazil adopts such a position, then
this threatens to preclude almost all carbon credits for forests.
Yet, it is unlikely at the end of the day that the powerful
coalition of governors, the Environment Ministry, Finance Ministry,
business, environmentalists, and Presidential advisors will allow
the MRE to block the introduction of carbon credits for forests.
END COMMENT.

JOINT DECLARATION WITH FRANCE

15. (SBU) At an October 22 meeting, the MRE's Waldvogel briefed
Science Counselor on progress in developing a French-Brazilian joint
declaration on climate change. During the September 8 visit of
French President Sarkozy to Brasilia it was announced that the two
countries would work on a joint position going into Copenhagen. The
French Embassy in Brasilia earlier had downplayed this announcement

BRASILIA 00001308 004.4 OF 004


as basically public relations. Now it appears there may be more
substance to the initiative. Waldvogel indicated that the French
and Brazilians are crafting text for a joint declaration on climate
change, which they are aiming to release after the climate change
meeting in Barcelona, but before Copenhagen.

16 (SBU) Waldvogel described this joint initiative as an effort to
create a "bridge" - a word that he said is used in the first
paragraph of the declaration - between the developing and developed
world. Brazil would serve as the gateway to the G-77 and France to
the developed world, he explained. The joint declaration would
cover a wide range of topics, he said, such as mitigation, forests,
adaptation, financing, and technology transfer. COMMENT. This
initiative fits nicely into President Lula's and the MRE's tendency
to favor all things French, during this "The Year of France" in
Brazil. Since the GOB has not decided on its position for
Copenhagen and France is acting in its individual capacity, it is
hard to see that the joint declaration will unveil major,
substantive initiatives. This attention to France does not mean
that the GOB doesn't want closer ties with the USG on climate
change. The GOB is well aware of the USG's partnership and links
with China and other countries. It wants to be part of these closer
ties too, which is why it has submitted a draft Memorandum of
Understanding on climate change. END COMMENT.

SOUTH AMERICAN AMAZON FOREST SUMMIT ON NOV. 26

17. (SBU) President Lula has invited the leaders of the other South
American countries having a part of the Amazon forest to meet in
Manaus, Brazil, on November 26. The objective of this summit is to
develop common positions going into Copenhagen on (1) mitigation
involving forests, especially with regards to REDD, (2) adaptation
involving forests, and (3) financing mechanisms. COMMENT. It is
hard to see how a common position by this group would be
constructive to reaching agreement in Copenhagen, given the demands
by some for enormous compensation for harm caused by historic
emissions, antipathy toward intellectual property, and unwillingness
to commit to economy-wide reduction targets. END COMMENT.

COMMENT

18. (SBU) The GOB is girding itself for the final stretch of
negotiations going into Copenhagen. While promising to present an
"ambitious" position they have decided to play it safe. They are
keeping in their pocket an acceptable economy-wide GHG emissions
reduction target (which would be between 20 and 30 percent). At the
same time, they are pressing the developed countries to be much more
forthcoming on emissions reduction targets, financing, and
technology transfer. The debate has been heating up. Lately, the
new voices on the scene - Finance Ministry, the governors from the
Amazon region, and business - have tended to weigh in on the side of
taking bolder steps. Unfortunately, as Vice Minister of the
Environment Izabella Teixeira has pointed out to Post, the Ministry
of External Relations remains very concerned about breaking ranks
with the G-77. This suggests the GOB will leans toward a defensive
posture, while laying on excessive demands for developed countries.
As evidenced by the GOB's posturing at the Major Economies Forum
meeting in Washington and in London, Brazil is still willing to come
out siding with China and India on key issues. Nonetheless, it
appears that the GOB has room to improve its position going into
Copenhagen and interventions by President Obama and/or senior USG
officials with Brazilian counterparts may help tilt the balance.
END COMMENT.

KUBISKE

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