1 Nov 2022

Lula cheered for new climate policies after Brazil election

1:08 pm on 1 November 2022
Former Brazilian President Luiz Inacio Lula da Silva is leading many polls in the race for the top seat, over incumbent President Jair Bolsonaro. The election will be held in October.

Brazilian President-elect Luiz Inacio Lula da Silva. File image. Photo: AFP

By Jake Spring for Reuters

Environmentalists, world leaders and sustainable investors on Monday cheered the victory of Brazilian President-elect Luiz Inacio Lula da Silva, who has promised to protect the Amazon rainforest and restore Brazil's leadership on climate change.

In his victory speech, Lula pledged to clamp down on illegal logging, mining and land grabbing that have driven the surging deforestation of the Amazon over the past four years under President Jair Bolsonaro, who lost Sunday's election.

Brazilian President Jair Bolsonaro

Brazil's former president Jair Bolsonaro. Photo: AFP

"Brazil is ready to retake its leadership in the fight against the climate crisis," Lula told a crowd of supporters in Sao Paulo.

"Brazil and the planet need a living Amazon."

Destruction of the Brazilian rainforest hit a 15-year high under Bolsonaro, who rolled back environmental protections, and pushed for more mining and commercial farming in the region.

Bolsonaro's office and the Environment Ministry did not respond to requests for comment.

Lula has vowed a sweeping overhaul of environmental policy, on par with the proposed Green New Deal in the United States, although there are doubts if he can get such an ambitious agenda past a Congress where Bolsonaro's allies have the upper hand.

He may have an easier time re-establishing Brazil's role in international efforts to address climate change.

Lula's environmentalist ally Marina Silva told Reuters on Monday that the president-elect would signal Brazil's renewed global leadership on climate change by sending representatives to next week's COP27 United Nations climate summit in Egypt.

The representatives, who have yet to be selected, would form part of an unofficial delegation, as Lula will only assume the presidency on 1 January, she said.

Lula himself may even join the delegation, at the invitation of some Brazilian state governors, his senior policy adviser Celso Amorim told journalists later on Monday, adding that it would depend on whether the exact travel dates will work.

Silva said that Brazil would demand rich countries provide financing to poor countries to respond to climate change and give compensation for permanent "loss and damage" from climate change. But international funding will not be a pre-condition to protecting the Amazon, as Bolsonaro's government has signaled.

Norway is ready to discuss restarting a fund for Amazon preservation with roughly 3 billion reais ($NZD995 million), its Climate and Environment Minister Espen Barth Eide said in an emailed statement on Monday.

Bolsonaro's government had halted the so-called Amazon Fund in 2019 citing unspecified irregularities.

Under Lula, Brazil will also discuss expanding its national targets for cutting climate-related emissions, Silva said, his former environment minister from 2003 to 2008.

In Lula's third term, he will likely announce targets for cutting methane emissions - a far more potent greenhouse gas than carbon dioxide - from livestock, power plants and other sources, she said.

Lula also planned in early 2023 to hold a summit including Amazon nations and developed countries with an interest in preserving the forest, an adviser told Reuters last month.

Brazil ban lifting?

Investors focused on environment, social and corporate governance (ESG) also welcomed Lula's victory.

Nordea Asset Management, a wing of giant Nordic bank Nordea, said it is considering lifting its ban on buying more Brazil government bonds that was instituted in 2019 when huge fires in the Amazon provoked global outcry to protect the rainforest.

Responsible investing head Eric Christian Pedersen told Reuters he was "optimistic" the quarantine on its Brazil bond holdings would soon be lifted.

The firm, with roughly 237 billion euros ($NZD402 billion) in assets under management, only owned about 100 million euros in Brazilian sovereign bonds when the prohibition took effect.

Robeco, which manages 200 billion euros in assets, including at least 5 billion euros invested in Brazilian equities and debt, also takes a positive view on Brazil "for now" based on Lula's comments on sustainability and other matters, portfolio manager Daniela da Costa-Bulthuis told Reuters.

Environmental advocates also cheered Lula's proposals for the Amazon, but cautioned that his agenda would face enormous political resistance.

Marina Silva, who won a seat in Congress this month, said Lula aims to create a new national climate authority to oversee efforts by all ministries and agencies to combat global warming.

But he will face a more hostile Congress where Bolsonaro's allies are close to a majority in both houses.

"The nightmare is almost over," Marcio Astrini, head of the Climate Observatory lobby group said, while noting Bolsonaro still had two months in which he could sign off on new policies.

"It will be a long journey to rebuild what was destroyed."

- Additional reporting by Gwladys Fouche in Oslo.

- Reuters

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