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November 2008

Country Profile Brazil

Flag Brazil Brazil is the largest country in Latin America in terms of land area, population and economy. Since the economic crisis of 1991, when the state was declared bankrupt, the Lula da Silva government has led the country into macro-economic stability (5.4 percent growth in 2007). Nonetheless, pressing problems remain in the form of social disparity, corruption and environmental destruction. Destruction of rainforests accounts for 75 percent of Brazil’s greenhouse gas emissions. Fluctuations in rainfall are on the increase, thus threatening the country’s hydropower-dependent energy infrastructure.
Overexploitation of Brazil’s vast natural resources (precious and industrial metals, oil, timber and water) is causing huge damage to the environment. Clearance of the rainforest is causing a shift in the regional and ultimately the global climate. Soil degradation and compaction mean rapidly dwindling agricultural yields and increased risk of floods. Given that the CDM only allows afforestation projects, it cannot be used to protect primary forest.

In a strategic partnership on climate change, environment protection and sustainable energy supply, Brazil has, however, intensified its traditionally close relations with the EU.

Alongside efforts to combat poverty, German development cooperation activities conducted by GTZ, CIM, DED, KfW, InWent and state-funded foundations also focus on protecting the rainforests and promoting use of renewable energy.

The huge CDM potential is mainly due to Brazil’s abundant natural resources, a sound industrial base and steadily growing demand for energy. Brazil is characterised by strong agribusiness and developed urban areas. The country therefore offers attractive openings for methane capture activities. Hydro and biomass projects also have a large share in Brazil’s CDM portfolio. Established and well-working institutions with a relatively transparent host country approval procedure additionally combine with a prospering CDM environment with a broad range of consultancies and DOEs to make Brazil an attractive country for CDM project developers. The recent PROINFA legislation (Programa de Incentivo às Fontes Alternativas de Energia Elétrica), which targets promotion of renewable energies, should continue to open the country for CDM projects. The legislation has thus already led to growth in the wind energy sector.

The German-Brazilian Memorandum of Understanding (MoU) on energy signed this year is designed to promote renewables, energy efficiency and technology transfer with the express aim of using the CDM. The German Energy Agency (dena) is currently evaluating the potential for using biogas from livestock husbandry for fuel production in the southern-most state of Rio Grande do Sul. In the medium term, the vast potential in the energy efficiency sector could also be tapped into using the programmatic CDM.
Besides Germany, Brazil has signed MoUs with Italy, Japan, Portugal and Spain.

Brazil plays an active role in climate change negotiations and sees itself as a co-initiator of the CDM.

Thanks to the establishment of a project database and a national carbon market (MBRE), project developers can showcase their projects and trade emission certificates. As Brazil is one of the countries covered by the German government’s CDM/JI Initiative, a country expert is already in place.

Up to now, 145 projects have been registered with a total annual volume of 18,752 kCERs, making Brazil the third-largest CDM market behind China and India. The fact that its CDM pipeline contains 310 projects and more than double the number of registered projects illustrates the dynamic nature of the Brazilian carbon market. Germany is involved in four projects so far. At 174, renewable energy projects dominate the portfolio. These take in 94 biomass, 61 hydropower, 12 biogas and seven wind energy activities. With annual carbon savings of almost six million t CO2-eq., an N2O reduction project in the Brazilian state of Sao Paulo registered by the French Rhodia Group in 1995 is by far the largest activity. Huge emission reductions are being achieved in 16 landfill projects that are already underway. 16 projects conducted on methane capture in pig-rearing (see Country Profile on Mexico) by certificate producer and seller AgCert also deserve a special mention. Government programmes to promote renewables – PROINFA (bioenergy, hydropower and wind energy), PRODEEM (solar energy) – and biodiesel appear not to affect the CDM in any way.

The lead organisation in Brazilian energy policy is the National Energy Policy Council (Conselho Nacional de Política Energética, or CNPE). The Ministry of Mines and Energy (Minstério de Minas e Energia) is responsible for implementing CNPE recommendations.
The Interministerial Commission on Global Climate Change (Comissão Interministerial de Mudança Global do Clima (CIMGC)) has been the Brazilian DNA since 1999. The CIMGC oversees ten ministries, of which the Ministry for Science and Technology in Rio de Janeiro assumes the executive function as president. The Ministry of the Environment holds the vice-presidency. The Commission also includes representatives of the Ministries for External Relations, Agriculture, Transport, Mines and Energy, Planning, Finance, Development, Industry and Commerce and the Presidential Staff Office. The CIMGC executive secretary, Dr. Jose Domingos Gonzales Miguez, is also a member of the CDM Executive Board.

According to experts, CIMGC is extremely thorough in its work and acknowledges a particular responsibility for ensuring environmental integrity. At between four and six months, its project approval procedure is much longer than China’s (one month) and India’s (one week). CIMCG is, however, working on a regional baseline for the electricity sector in an attempt to simplify its CDM procedure.

Requirements for host country approval

For approval, the PDD and the validation report need to be submitted to the Commission via the executive secretary in printed and electronic form, both in English and in Portuguese. Proponents must also invite the following to comment on the project, and submit copies of the invitation letters to the DNA: Mayor, city council, state environment administration, municipal environment authority, the Brazilian Environmental and Social NGO Forum, community associations and the Ministério Público, which is responsible for law enforcement. The invitations must be sent by registered mail and the receipts submitted to the DNA together with the copies of the letters. If one or more of these institutions does not exist in a specific instance, an explanatory note is required. The submission has to be accompanied by a letter listing all documents submitted.

Each entity has to submit a declaration of responsibility. Environmental licenses and a declaration of conformity with environmental and labour law are also required. The Designated Operational Entity (DOE) needs to be based within Brazil.

Downloads:

GTZ CDM Market Overview

gtai CDM-Market Brief Brazil

Further selected information: