A Polluter's Easy Path to the Zero Emissions Club

(Bloomberg Opinion) -- Suddenly, it seems all the world is heading to zero. 

Just a month after Chinese President Xi Jinping promised to reduce carbon emissions to net zero by 2060, the leaders of Japan and South Korea pledged to hit the same target 10 years sooner. The European Union and U.K. have already put their 2050 pledges into law. In total, countries accounting for about 56% of the world’s emissions have now announced or are investigating targets to eliminate their emissions by mid-century. 

Who’s next?

Looking down the list of the world’s major emitters, you might think  we’ve hit a roadblock. Most of those remaining are major exporters of fossil fuels, which you’d expect to be late to the zero-emissions party. Of the main exceptions, India has for decades vocally resisted efforts to cap its ability to pollute until it’s wealthier, and the status of the U.S. is likely to be uncertain until the dust settles on the presidential election.

One major economy is in a different place, though: Brazil. Although the country has never promised to zero out its emissions — and is unlikely to do so under its populist president, Jair Bolsonaro — it would find that path far easier than most. 

Brazil’s first advantage is that its electricity system was largely decarbonized long ago. Thanks to its vast river systems, the country is the most hydro-powered major economy on the planet, with about 64% of electricity generation coming from its dams. Wind, solar and nuclear account for another 21% of the total, leaving fossil fuels with a scant 15%. 

Even that small slice should be easier to eliminate than in many other countries. Brazil’s ample hydro endowment means it’s unusually well-placed to manage peaks and troughs in electricity demand in a 100% renewable system, and the costs of building new wind farms from scratch are already lower than those of fueling and maintaining existing gas and coal power stations. Dams, like fossil-fired generators (but unlike wind, solar and nuclear), can be switched on and off depending on when they’re needed. Where excess solar generation is available in the middle of the day, they can even pump water uphill to be released again during the evening peak.

Industry will also be simpler to zero out. One of the challenges emerging economies face is that development in this sector is uniquely carbon-intensive. On-site emissions from China’s industrial companies alone — not including those associated with electricity consumed by factories and building sites — accounts for about 8% of global fossil pollution. For Brazil, that process has long since played out: Its most intensive industrialization and construction happened in the middle of the 20th century, and as a share of gross domestic product it’s among the lowest in the world, in line with the U.S. and western Europe. 

Transport, the third big slice of emissions in most countries, is also less of a lift. Unlike emerging economies in Asia which will see millions of people move to cities over the coming decades, Brazil is already one of the most urbanized places on the planet, with a higher share of the population in cities than the U.K., U.S. or South Korea. 

Public transport is more developed than in most other countries in the Americas, and since the oil crises of the 1970s, the country has been trying to use biofuel from sugarcane to reduce its dependence on petroleum. Such bioethanol currently provides about a third of all road fuel.

That’s not a carbon-free option, to be sure — and it’s also failing to provide promised self-sufficiency. In recent years, Brazil has often been a net importer of ethanol, largely from the U.S. Using the country’s huge renewable potential to electrify its passenger vehicle fleet would free up biofuel for export to other countries — and other uses, such as trucking, jet fuel and shipping — that will find substitution away from petroleum harder.

It’s in the area of agricultural and quasi-agricultural exports that Brazil has most to gain. The largest slices of its emissions come from just two activities: deforestation and cattle farming.

Each of those, though, has significant improvement potential. Brazilian beef is some of the most carbon-intensive on the planet. Each kilogram of Brazilian cattle raised on newly deforested land adds as much as 726 kilograms (1,600 pounds) of carbon-equivalent emissions to the atmosphere, according to one 2011 study. In more established parts of the country, it requires only around 22 kilograms of CO2, and farms in other countries require half of that, with some figures running as low as 3 kilograms.

That’s largely a result of Brazilian ranching’s low productivity. Often lacking the intensive feeding systems that get cattle in other parts of the world to prime weight in one or two years, your average Brazilian cow has burped up a lot more methane by the time it reaches the slaughterhouse. Grass-fed beef also requires a lot more land than grain-fed intensive cattle, especially when the latter are used for dairy production, too.

Encouraging the ongoing trend toward intensification of cattle farming would also have a dramatic impact on deforestation. Brazil’s emissions shrank by a remarkable 39% in just five years between 2005 and 2010, almost entirely as a result of an 80% reduction in deforestation under the administration of President Luiz Inacio Lula da Silva. That had already started to reverse under new forest laws introduced well before Bolsonaro’s election in 2018, but it’s an example of what’s possible with the right incentives for land preservation. 

Just allowing formerly logged Brazilian forests to continue naturally regenerating could fix around 22 billion metric tons of CO2, according to one 2016 study — roughly enough to absorb the country’s own emissions for half a century. A better idea, though, would be to turn Brazil's ample forest land endowment into a new export industry. A growing group of countries making pledges to hit “net zero" aren't yet clear about where the gross emissions in excess of the net figure are going to be offset. Brazilian trees could offer just the solution. At a $50 per metric ton carbon price, restoring just 1% of the country’s 126 million hectares of cultivated pasture each year could fix 150 million metric tons of CO2 and represent a more valuable export industry than beef.

Such a change isn’t going to happen under the slash-and-burn policies of Bolsonaro. Brazil’s opposition is currently bitterly divided ahead of 2022 presidential elections, and poor forest management is often a bipartisan issue — da Silva’s left-wing successor Dilma Rousseff bears as much responsibility for the return to deforestation as Bolsonaro. 

Still, as my colleague Clara Ferreira Marques has written, self-interested reasons are still the best way to get Brazil to join the group of net-zero countries. Its failure to protect its forests has put the free trade agreement between the European Union and South America’s Mercosur bloc on ice. Bolsonaro ultimately hasn't followed through on a campaign threat to pull Brazil out of the Paris Agreement, and the powerful agribusiness bloc in congress can be surprisingly pragmatic on such issues. Momentum on climate could be the catalyst to move forward on trade, while an early seat at the table would give Brasilia the chance to help craft global climate agreements to maximize its own economic benefit from decarbonization.

Brazil could be a major winner from the world going to zero on carbon. It’s high time it seized that opportunity.

Hydropower dams can emit significant amounts of greenhouse gases as plant matter decomposes, but these are concentrated in the early years after construction and the bulk of Brazil's hydro plants were built in the 1970s and 1980s. With a crop of new dams built in the 2000s and 2010s now in operation, the pipeline of new projects represents only a few percent of the existing installed base.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

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