The uncertain future of environmental legislation in Brazil

After a scare, Brazil’s President reiterates environmental commitments, but the battle continues

On 7 June 2017, Enhesa’s regulatory analysts came across an Associated Press news item which said Brazil was considering following in the footsteps of the USA in stepping back from its commitments under the Paris Agreement on climate change. We asked one of our Brazilian EHS Regulatory Analyst, Larissa Copello, to look into this story in some more depth and provide some more insight…

Two controversial measures recently passed through the Brazilian Congress that could have led to the cutback of around 600 thousand hectares of protected areas in the Amazon forest. The Brazilian President had until Monday 19 June 2017 to sanction or veto these measures.

Fortunately, the pressure put on the government by environmentalists and organizations for its protection led President Michel Temer to veto MP 756 and partially veto MP 758, avoiding what could be a total disaster for the environment and Brazil’s environmental commitments under the Paris Agreement.

MP 756 aimed to change the limits of the Jamanxim National Forest (Flona), which currently totals 1.3 million hectares, by re-assigning 561 thousand hectares of its area for the creation of the Jamanxim Environmental Protection Area (APA). Although it is also considered a conservation area under Brazilian law, the APA status is more relaxed and does allow human occupation and economic activities (through the creation of private areas). The Flona, on the other hand, only allows the presence of traditional populations and requires the expropriation of any particular area included in its boundary.

If MP 756 had been sanctioned, it would have opened the protected areas to human exploration and to the development of activities that could lead to deforestation, such as agriculture, cattle ranching, and more CO2 emissions.

The defenders of the measure, mainly the so-called “Rural Caucus,” representatives of rural landowners (such as agribusiness owners) within the Brazilian legislature, claim that the purpose of the measure was to regulate the possessions of the rural producers located in the area. However, critics argue that most of the occupants of the Flona invaded the region at the time of the creation of the area and that sanctioning the measure would cause harm to a huge area of the Amazon forest in favor of these illegal farmers who invaded public protected lands. In fact, studies have shown that the Jamanxim Flona is located in an area that has the highest rate of illegal deforestation in federal protected areas. Almost 70% of all illegal deforestation in federal protected areas in the Amazon forest occurs here.

Similarly, the other measure under consideration, MP 758, aimed to reduce the Jamanxim’s National Park (Parna) to make room for the “Ferrogrão” railroad, which would link the Midwest to northern Pará and consequently lead to the deforestation of the rainforest.

The World Wide Fund for Nature (WWF-Brasil) and the Ministry of the Environment sent a letter to the President of the Republic asking him to fully veto the measures. Among all the arguments, they maintain that the measures go against the federal government’s efforts to curb deforestation in the Amazon forest and represents a setback in the efforts of the Brazilian government to comply with its commitments under the Paris Agreement to combat global warming. In fact, the Environmental Research Institute of the Amazon (IPAM) estimated that about 160 million tons of CO2 would be emitted by 2030 if the measures had been sanctioned.

However, it should be noted that the Government announced it will send another bill as a matter of urgency to the Congress to re-examine the measures vetoed by the President.

The veto of MP 756 and 758 is not a victory for the environment

Historically, environmental regulatory programs in Brazil have always been substantially influenced by economic and political interests.

The “Rural Caucus,” which represents a big number of parliamentarians in the Congress, has been approving measures in favor of the interests of rural landowners, often to the detriment of environmental protection systems.

Also, the environmental licensing procedure is considered to be a growth restricting obstacle by many Brazilian industries, such as companies in the energy, industry and agricultural sectors. For them, “bureaucracy” can delay construction and their operations and increase costs.

Hence, there is a lot of pressure for the issuance of permits, especially from the big enterprises, which, unfortunately, has led to incidents of corruption in government. For instance, evidence of corruption when acquiring an environmental license was discovered in one of the biggest corruption investigations, called “Lava Jato,” for the Santo Antônio Hydroelectric Plant (Hidrelétrica de Santo Antônio), built by Odebrecht.

Some critics also argue that the “Rural Caucus” is trying to get its interests supported by President Michel Temer, who, in turn, wants continued support within the Congress and to avoid impeachment, the fate that ended the tenure of former President, Dilma Rousseff.

Despite being a presidential regime, the President of the Republic of Brazil does not have absolute discretion. For instance, the President can veto a bill based on two grounds: unconstitutionality of the bill (legal veto) and when the bill is contrary to the public interest (political veto). However, Congress may still overturn the veto of the President with absolute majority of the deputies and senators in a plenary meeting. Once the veto is overturned, the President must promulgate the bill within a period of forty-eight hours.

The biggest issue regarding environmental licensing in Brazil is the absence of a Federal legal norm on the matter. The 1988 Constitution requires it, but Congress has never regulated it. Consequently, with no rules coming from the Congress on this matter federal environmental agencies, such as the National Environmental Council (CONAMA), took over the responsibility to regulate the environmental licensing procedure (Resolutions 001/1986 and 237/1997), as did the governments of the states and of some municipalities. With the lack of a Federal law, big industries began pushing for the creation of a regulation that benefits their businesses.

Unfortunately, environmental protection is still seen by many as a cost to the country, and to the private sectors (especially the agroindustry), it is seen as an obstacle to their economic growth.

This is backed up by a recent bill (PL 3.729/04) being considered in the Congress that wants to make the environmental licensing procedures more flexible. Its provisions are worrisome from the point of view of preservation and conservation of the environment. It aims to relax licensing requirements through reduction of “bureaucracy,” such as the elimination of licensing steps and even the exemption of some projects, like those in agriculture, livestock, and forestry, from licensing.

The defenders of the bill, again the “Rural Caucus” of the Congress, argue that the current licensing procedure requires the approval of some governmental bodies that are not directly related to the granting of the license and that this is unnecessary “bureaucracy” that can be removed. It seems, for them, that the more environmental “bureaucracy” that can be removed, the better.

Moreover, last year, the Constitution and Justice Committee of the Senate approved a Constitutional Amendment Proposal (PEC 65/2012), which was (and is) also heavily criticized by the environmentalists. Critics say the PEC aims to end the environmental licensing process since it establishes that an enterprise could start public work after the presentation of an Environmental Impact Study (Estudo de Impacto Ambiental – EIA) and no longer after the three licensing stages, as is the case today.

Environmental licensing, however, is necessary to balance economic activities and the environment. Nowadays, in Brazil, a company that wants to start an activity needs first prove that its activities will not pollute or degrade the environment. This process is comprised of three stages: the preliminary stage, the installation stage, and the operation stage. The entire procedure is time consuming as companies must present studies and reports demonstrating the risk of their activities, which must be approved in order to obtain the license. However, the environmental licensing steps represent the preservation of the important safeguards that need to be followed for the sake of environment.

Brazil’s environmental regulatory programs threaten the country’s commitment under the Paris Agreement

Through Decree n° 9.073 of 5 June 2017, Brazil recently promulgated the Paris Agreement under the United Nations Framework Convention on Climate Change, which aims to end the era of fossil fuels and to ensure that the global average temperature does not rise over 2 degrees Celsius (3.6 degrees Fahrenheit) relative to preindustrial levels and to pursue efforts to limit the temperature increase to 1.5 Celsius above preindustrial levels. Brazil declared a target to achieve a 37% reduction of greenhouse gas emissions by 2025 and a 43% reduction by 2030, compared to levels from 2005.

With the adoption of the Paris Agreement it is expected that the government take the lead and start acting to achieve the temperature goals set by the accord with the adoption of more stringent legislation and requirements regarding energy efficiency, renewable energy, and greenhouse-gas emission limits. Yet what we see is the emergence of measures that roll back environmental rules, an instable environmental regulatory framework and a strong tendency in the government to see environmental protection as an obstacle to economic growth. Also, as we have seen from the environmental regulatory proposals under consideration in Congress, the Brazilian government actions contradict the international commitment assumed by the country on climate and protection of biodiversity. All this suggests that it will be difficult to meet the Paris climate accord targets.

According to the studies given by the Climate Observatory (Observatório do Clima), the agricultural sector is responsible for 69% of greenhouse gas emissions in Brazil. These emissions come mainly from deforestation for the pasture preparation. More than 50% of the greenhouse gas (GHG) emissions in Brazil originate from the deforestation of the Amazon forest in order to supply the demand for soybeans, beef and other primary products for the rest of the country and for countries abroad, according to studies from the São Paulo University (USP). According to the Greenhouse Gas Emission Estimate System (SEEG), Brazil produced 1.861 billion tons of CO2 in 2014 and 1.927 billion tons of CO2 in 2015. From the 2015 emissions, 884.120 million came from deforestation, 425.247 million from the burning of fossil fuels (energy sector) and 425.499 million from agriculture and cattle ranching.

Furthermore, studies have shown that there is a strong correlation between livestock production, soy production, as well as other agricultural production and emissions from deforestation. In fact, the agricultural sector is the one that contribute the most to GHG emissions in the Amazon forest.

Brazil is wielding a double-edged sword

On the one hand, Brazil tries to present a positive image internationally by signing and promulgating the Paris Agreement and proposing ambitious goals towards the preservation of the environment, but on the other hand, the Brazilian Congress contradicts this commitment by approving measures that threaten the Amazon forest and weaken the environmental licensing procedure.

However, the aim to achieve economic growth can be a double-edged sword. In the future, the relaxation of environmental legislation could cause “severe” impacts on the environment and therefore on human society. For example, the coordinator of the Environment Parliament Front and the Environment Commission, Marcelino Galo, argues that the relaxation of environmental standards harms more than helps agricultural development in Brazil. Galo argues that the dismantling of environmental legislation in practice directly affects the agro-business to the extent that harmful impacts on nature are permitted, such as increasing deforestation and contaminating soil and groundwater by chemicals. In the long term, this dismantling will make water production unfeasible and the soil infertile.

Moreover, according to José Goldemberg, a Brazilian professor, physicist, and politician, the greatest impact, if the 2°C limit is exceeded, will be the Amazon forest “turning into savannah” (savanização), which would bring enormous damage to agriculture.

Unfortunately, one of the Brazil’s worst environmental disasters (the Samarco Dam collapse in Mariana in November 2015) seemed to not be enough to awaken the Brazilian government to the impending need to protect the environment. We can only hope that this lack of awareness and urgency doesn’t cause more damage to the environment and to human society. We hope that the Brazilian Government takes actions towards honoring the country’s international commitments on climate change and protection of biodiversity before too much damage is done.