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Petrobras alone cannot support the Amazon Fund. It needs other donors

Without Norway and Germany, Petrobras stands as the only collaborator, responsible for only 1% of contributions.

Miguel Luis Arias
Miguel Luis Arias
5 August 2020
The morning mist of the Amazon at RPPN Cristalino, Alta Floresta, Mato Grosso
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Fábio Mitsuka Paschoal/Wikimedia Commons/CC BY-SA 4.0

The Amazon Fund was proposed by the Brazilian delegation to the 12th Conference of Parties in the United Nations Framework Convention on Climate Change in 2006, to provide an incentive for Brazil and other tropical-forested developing countries to continue and increase voluntary reductions of greenhouse gas emissions from deforestation and forest degradation. Yet, despite the well-established crucial role of the Amazon in keeping carbon-dioxide levels in the earth in check , the world – not just Brazil – has lost support from the main contributors to the Fund – Norway and Germany. This is a major blow to the Fund and the implementation of the projects it supports.

For the past 11 years, Norway – the main donor to the Fund – has contributed a total of US$ 1.2 billion to the Fund while Germany has contributed a total of US$ 68 million. The Fund supports 103 projects across Brazil and other neighboring Latin American countries. Between 2004 (prior to the establishment of the Fund in 2008) to 2012, deforestation steeply declined by 80 percent. However, since 2012, deforestation started to rise again.

Without the Fund, projects such as Projecto Frutificar which supports production of açai and cacao by small-scale farmers, disseminates agroforestry systems to family farmers and indigenous communities) may simply be cancelled. If the global community of nations wants to sustain the progress that has been made protecting the Amazon, it must find a way to fund projects. It also has to remind itself of the Fund’s tagline: “Brazil protects it. The world supports it. Everybody wins”.

In 2019, Norway and Germany decided to freeze their contributions to the Fund in response to the anti-environmental policies of Brazil under the leadership of President Jair Bolsonaro

In 2019, Norway and Germany decided to freeze their contributions to the Fund in response to the anti-environmental policies of Brazil under the leadership of President Jair Bolsonaro. Norway’s decision came as a direct response to the unilateral actions of Bolsonaro’s government changing the Fund’s governance structure. His government also abolished the steering and technical committees of the Fund that are responsible for selecting the projects to back and developing the annual report on deforestation. Without such bodies, how can donors be assured that their contributions are efficiently used to reduce deforestation in the Amazon?

The Brazilian government also faces repercussions amid a backlash over a new free trade deal between the European Union and the Mercosur (Southern Common Market) bloc. Ireland’s parliament backed a motion that highlighted the concern about the growing number of activities that damage the Amazon and instructed the government to “immediately begin building a coalition across the EU to ensure that this deal is rejected”. If halted, the Brazilian economy can severely suffer given its dependence on the European market for the export of its agricultural products.

Only 1% of the Amazon Fund comes from Petrobras. Without Norway and Germany, Petrobras is left as the sole contributor to the Fund. It will be a very tough task to fill the 99 percent void left by the main contributors to sustain the projects the Fund supports.

Bolsonaro must consider that trade and the environment are two sides of the same coin

Given that the Bolsonaro regime is unlikely to change its stance on deforestation and the Amazon, project implementers must seek alternative ways to Fund their projects. Petrobras should lead the way in encouraging member firms of the United Nations Global Compact – particularly large multinational companies in the energy sector – to provide alternative funding to the existing projects in the Amazon in the absence of a working and overarching funding mechanism. Firms can learn from the experience and initiatives of Petrobras, specifically with its Socio-Environmental Program. This program currently has 15 ongoing projects under the Forest and Climate cluster that focus on productive reconversion, reforestation of degraded areas, and conservation of forests and natural areas that widely operates in the Amazon.

The EU will likely consider halting the trade agreement with Mercosur if the Bolsonaro administration continues its regressive activities in the Amazon. If Brazil cannot find an alternative trade partner that provides a similar prospect as the one the EU gives, Bolsonaro may eventually change his stance in the Amazon. For Brazil, there is no alternative to the EU; this is a source of leverage. Bolsonaro must consider that trade and the environment are two sides of the same coin; it will be difficult for him to pursue his economic and development ambitions for Brazil without a clear regard for the environment.

Current projects must be sustained to prevent, monitor and combat deforestation as well as promote the preservation and sustainable use of the Amazon. Large multinational firms in the energy sector must join Petrobras to sustain the Amazon Fund and explore their corporate social responsibility strategies to include a focus on combatting deforestation of the Amazon.

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