Brazil at COP26

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By RICARDO ABRAMOVAY*

Relying fundamentally on private sector initiatives to combat the climate crisis is covering the sun with a sieve

No country has better conditions than Brazil to reduce greenhouse gas emissions. This privilege does not come from the advancement of our competent scientific research or spectacular technological advances, but from the fact that today we are the only nation where half of emissions derive from deforestation. As difficult as it is to eliminate deforestation (even more so with government officials consistent with what they had announced in the electoral campaign and who have been dismantling the entire institutional apparatus aimed at preserving forests and protected territories in the country), this does not compare with the challenge of encourage the emergence of an economic life that is not organized around the large-scale use of fossil fuels.

The business world is globally (and in Brazil) committed to the search for techniques that allow production, generating less and less greenhouse gases. The automobile industry itself seems to be taking a turn in this direction, as shown by the interview by Luiz Carlos Moraes, president of Anfavea, showing the urgency of “clear goals for decarbonization”. There are numerous business associations that seek to mobilize companies towards net zero emissions. There is a growing (although often only rhetorical) commitment by the financial sector and central banks to decarbonization. The cheapness of modern renewable energies, energy storage, green hydrogen and biogas, offer a solid material basis for transformations that are often disruptive.

But fundamentally relying on private sector initiatives to fight the climate crisis is covering the sun with a sieve. And, as much as consumers are aware of the issue, it is not up to the initiative of each citizen that the impetus for the markets to reject polluting products may come.

The first and foremost responsibility lies with governments themselves, and their starting point boils down to a phrase that could hardly be more unpopular: carbon taxation. And this tax needs to be high enough to quickly dissuade the use of fossil fuels. The greater the procrastination around this objective, the more the illusion is fed that the private sector and consumers will end up preferring non-polluting products or that new technologies will displace the hitherto predominant ones, the more disorganized and costly will be the transition and worse will be the impacts of extreme weather events.

The idea, defended for years by the Nobel Prize in Economics William Nordhaus, was recently revived, in a report commissioned by President Macron to Jean Tirole, Nobel Prize in Economics (2014) and professor at Toulouse School of Economics and Olivier Blanchard Chief Economist at the International Monetary Fund (2008-2015) and Professor at the Massachusetts Institute of Technology. Academic celebrities such as Philippe Aghion, Dani Rodrik, Nick Stern, Paul Krugman and Laurence Summers also make up the team that addressed what they consider the three most important global problems: climate change, increasing inequality and ageing.

Thirty years after Rio-92 and despite the strong engagement of the business sector and civil society, emissions continue to rise and the post-pandemic economic recovery is not attenuating it: of all global investments made for post-pandemic economic recovery by countries of the G20, only 18% are committed to decarbonizing the economy. And 90% of these green investments are concentrated in just seven countries: China, France, Germany, Japan, South Korea, Spain and the United Kingdom. Of the G20 members, investments considered “highly negative” are concentrated in Argentina, Australia and Brazil, according to search from the University of Oxford, the Green Tax Policy Network, the OECD and the United Nations Environment Program, cited in Emissions Gap Report of 2021.

In other words, despite the vigor of corporate speeches, even after the trauma of COVID-19, data on investments for the post-Covid recovery show that the global economy remains locked in initiatives that tend to perpetuate and not reduce emissions. This horizon will not change as long as the activities that destroy humanity's most important common good (the climate system) do not have significant costs for companies and consumers.

The problem is that a carbon tax on fossil fuels tends to penalize the poorest and those most dependent on the use of cars or motorcycles (such as precarious app workers, for example). What is at stake here is the social sharing of transition costs. The Yellow Vests movement in France, when Macron tried to consistently increase taxes on fossil fuels, shows how politically sensitive the topic is.

To face the problem, the Blanchard/Tirole report proposes using the resources derived from the taxation of fossils to finance transfers of income to the poorest. But, despite the awareness of the seriousness of the climate crisis and even under the perspective that the losses resulting from carbon taxation can be compensated, most people are opposed to this tax, according to survey conducted in France in 2020. Worse, opposition to the tax was even greater among those who were heavily engaged in the Yellow Vests movement. Faced with evidence showing that the tax could be beneficial to them and the poorest, they still rejected it. The refusal is so important that the Citizen Convention for the Climate did not agree to include a carbon tax in its proposals.

Carbon taxation at levels capable of inhibiting the use of fossil fuels and the redistribution of this collection among the poorest is the proposal with the greatest chance of approaching the ambition of climate justice. At the same time, it is the elephant in the Glasgow Conference room and, at least so far, the signs that it can be achieved are tenuous, even in the face of evidence that it is illusory to imagine the progress of alternatives, without their adoption.

*Ricardo Abramovay is a senior professor at the Institute of Energy and Environment at USP. Author, among other books, of Amazon: towards an economy based on the knowledge of nature (Elephant/Third Way).

Originally published on the portal UOL.

 

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