Economic recovery trumps climate action in Latin America

The decision of Brazil and Mexico to delay or even reverse their commitments under the Paris Climate Agreement could have potentially negative effects at the regional level, according to a study published last week. Blinded by the global pandemic, the two countries have embarked on a perilous path of increasing emissions in order to revive their economies, respectively the first and second in the region.

Of the 16 countries studied in Central and South America, the report of the Institute of the Americas on Nationally Determined Contributions – the plans each country must submit under the Paris Agreement to show how they will reduce greenhouse gas emissions – finds that Brazil and Mexico are most at risk reverse climate adaptation and mitigation measures.

Mexican President Andrés Manuel López Obrador has staked his reputation on reviving the country’s oil and gas industry, and last month proposed a bill this would abolish its independent energy regulator and put an end to private investment in green technologies. Another so-called go-to project, the Dos Bocas oil refinery in the president’s home state, Tabasco, is also on the verge of completion despite ongoing local protests.

Meanwhile, in Brazil, under the administration of President Jair Bolsonaro, emissions are expected to rise 35% from previous baseline estimates by 2030, while illegal deforestation in the Amazon has reached an all-time high. 12 years tall between August 2019 and July 2020.

“Instead of seeing the pandemic as an opportunity to reframe the discourse on climate change, most countries have intensified their dependence and consumption of fossil fuels,” explains Sandra Guzmán, head of the Climate Policy Initiative.

Leonardo Beltrán, former deputy secretary for planning and energy transition in Mexico, acknowledges that the country’s oscillating position seems on the surface paradoxical, but says it is the “result of democratic processes”. The key, in his mind, is to find the right balance of stakeholder interests between short-term, carbon-intensive recovery efforts and long-term climate commitments, such as the electrification of public transport infrastructure.

“To this day, there is a moving target – we are definitely heading towards net zero – but there are layers in the way we change course,” says Beltrán. “Maybe some people would call this a setback. Others would say we are taking a different direction.

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In Latin America, these problems are particularly acute. With a drop in GDP of 7.2 percent in 2020, the region suffered the biggest global economic blow from the pandemic. Overall, public finances remain tight. And in a vicious circle, some countries face downgraded sovereign ratings, which further increase the cost of borrowing.

On average, Latin American countries have booked 2.4 percent of long-term recovery spending on environmentally friendly projects, up from 19.2% globally, shows the UN’s Covid-19 recovery tracking.

Part of the challenge of meeting the net zero emissions goals is the mammoth task of analyzing the full cost of the green transition, a endeavor that few countries have even started. But there is another more concrete element: the contingency of climate policies in developing countries on international funding. Currently, less than a third of Latin American countries have made their environmental commitments completely unconditional.

[See also: Emissions tracker: How countries compare ahead of COP26]

“The high level of conditionality means that these climate commitments will rest heavily on the developed world, which the international community must keep in mind at COP26,” said Tania Miranda, director of policy at the Institute of the Americas and author of his report.

Still OECD data shows that developed countries provided less than $ 80 billion in climate finance to the developing world in 2018, more than two years after signing the Paris Agreement. Moreover, between 2016 and 2018, Latin America benefited the least from these funds, collecting only 17% of total inflows, compared to 43% for Asia and 25% for Africa.

Miranda says the best way for Latin American countries to push for more foreign aid and funding is to invest in institutional capacity building and technology, as well as better budget practices and spend more. of their own resources to cover unconditional commitments. Otherwise, it seems that the region is “not serious in its efforts,” she said.

Thomas Singh, director of the Green Institute at the University of Guyana, agrees that voluntary contributions to climate goals have so far not yielded significant results, and suggests stronger policies. “Carbon pricing addresses head-on the weakness of the pledge and review framework, which has a lot to do with our inability to enforce commitments,” he says. “Although the Paris Agreement is a legal instrument, the enforcement mechanisms are just not there. “

One solution provided by the Paris Agreement is a market mechanism that allows developed countries to offset carbon emissions by investing in cheaper green transition projects in developing countries. Although controversial, Switzerland and Peru became the first countries to conclude such a bilateral agreement in November last year. Other countries, including the UK, have said they will not use overseas carbon offsetting strategies to meet their targets.

Nonetheless, it is a testament to the potential of the region. Latin America is uniquely endowed with rich natural assets, which its governments could best defend at COP26 when they discuss the “multiple opportunities” available for cost-effective climate mitigation measures, Miranda said.

For example, hydropower is the largest source of renewable energy in the region, accounting for nearly 70% of electricity production in Brazil and Colombia, and 100% in Paraguay. But this capacity is linked to the health of the environment, such as the tropical forests of the Amazon basin, which are responsible for rainfall over much of the continent. Due to poor management, the hydroelectric potential of the five South American basins decreased by a quarter between the reference period (1961-90) and 2014-19.

The current regime on carbon sinks “rewards additionality as opposed to the existing stock of biodiversity,” says Singh, who believes more could be done to incentivize conservation. This misalignment is best illustrated by the fact that Brazil and Mexico, the region’s two laggards, are the biggest beneficiaries of international climate finance, Guzmán explains.

“The UK already has important agreements with Mexico, Peru and Argentina,” she adds. “It’s not just about increasing the flow of money to the developing world, but how to improve the allocation of funds. [when it gets there]. “

[See also: Is Australian Prime Minister Scott Morrison finally acting in the face of the climate crisis?]

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