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Reinstating the Amazon Fund 

Lula’s most impactful solution regarding international involvement is that he decided to reinstate the Amazon Fund. During the second term of his first presidency, he created this initiative which became the world’s most significant REDD+ (Reducing Emissions from Deforestation and Forest Degradation) project. In 2008, the Brazilian National Bank of Social and Economic Development (BNDES) established the Fund intending to gain financial support for the Plan of Action for Protection and Control of Deforestation in the Amazon (PPCDAm), which will be discussed in detail later. After three years of inactivity, the Amazon Fund is back as Brazil’s most prominent source for international climate financing, supporting 102 conservation projects. Conservative associations and the Brazilian Central Bank are concerned that Lula’s environmental measures, which aim to increase foreign investment, may lead to potential financial mismanagement and new opportunities for corruption. The measures taken to resolve corrupt practices and ensure ethical foreign investment management will ultimately have a big impact on the effectiveness and integrity of Lula’s climate efforts. 

Initially, the Fund planned to raise US$21 billion over 13 years. The method of financial support takes the form of a rewarding mechanism, one that grants the Brazilian government foreign monies investments in exchange for decreases in the rate of deforestation in the Amazon. The process includes an indicated value at a fixed price of 5 USD per tCO2 as a donation’s carbon dioxide equivalent. Afterwards, a certificate granted to the donor proves their support as tons of averted carbon reductions.

Furthermore, the Amazon Fund runs through a multi-stakeholder Guidance Committee called the COFA, which brings actors like civil society, expert stakeholders and the government to guarantee inclusive and strategic administration of the Fund along with a committee that provides technical guidance. It operates with projects that concentrate on managing forests on public lands, overseeing protected areas, maintaining the schedule of and enforcing environmental laws, making sustainable use of forest resources, zoning and regularising land use, conserving biodiversity, and restoring degraded areas. One of the more significant undertakings is the “Going Green Project,” which worked within the states of Para and Mato Grosso and 12 of their municipal governments to advance institutional capabilities. With The National Conservancy, the project used the Rural Environmental Registry (CAR) to encourage rural properties to adjust environmentally accordingly. 

The investors and program coordinators are considered inclusive of national NGOs, universities, state government institutions, and municipal government institutions, amongst others, to collaborate. The Fund influences national opinion towards positive sentiments as it is community-based with capacity-building activities through community involvement. It contributes to establishing opportunities for marginalised populations by fostering income-generating enterprises through activities that encourage technical and instructing support, which further assists the communities and local producers. The projects that the Fund engages with can decrease inequalities while strengthening livelihoods that influence the general population’s view on conservation. 

Lula intends to promote the reinstatement of the Fund as a method to transform Brazil into greater economic prosperity while reducing socioeconomic inequalities. Lula seeks to find a balance between economic growth and environmental preservation by attracting foreign investment and using his new government to repair his reputation. Although he insisted that Brazil had undisputed sovereignty over the Amazon, he conveyed the impression that his government would welcome outside help in the effort to stop deforestation. This approach propels Brazil into transforming international investment into a greener economy for the nation through income-generating opportunities for rural communities, manipulating the economy to focus on the product value of commodities that support sustainable production and help transition the Brazilian agricultural sector to more sustainable practices. 

However, Brazilians continue their polarisation through the nationalistic deep-rooted general belief that Lula’s approach to engaging in this type of financial climate foreign affairs creates more constraints for Brazil than opportunities. As Brazil relies on international investment, it reinforces the power imbalances in the current competition between developed and developing states causing more instability. 

Lula is a frontrunner in the debate for climate responsibility as the Amazon Fund represents shifting the focus of accountability onto a globally shared issue where the notion of burden must fall on developed and developing nations accordingly. He advertises collaboration between emerging states with shared information and technologies for a network that reduces emissions and fortifies against climate change according to each’s unique concerns. This strategy enables Brazil to take on a position that leads a South-South partnership. 

Combating Deforestation in the Amazon and Cerrado Biome.

Lula has announced his goals for restoring and reforesting 12 Mha of forests by 2030, with the probability of increasing the goal to 17 Mha to achieve its Paris Agreement responsibilities. The global community is concerned about the majority of deforestation, around 38%, in Brazil occurring in the Amazon, which threatens biodiversity as it begins to reach a tipping point. In light of the predicted 39% increase in deforestation rates, Lula’s administration also pays attention to the Cerrado ecosystem, implementing similar policies. The largely exploited biome is a tropical savanna and a significant player in global biodiversity. 

There are multiple steps in place to achieve this goal. First, Lula wants to continue with the Action Plan for Prevention and Control of Deforestation in the Amazon (PPCDAm). Initially implemented in 2004, it intends to reduce illegal activity in the Amazon by creating a “Green Wall”. There are three pillars to the PPCDAm, including adapting more sustainable usages to territorial and land-use planning, controlling and monitoring and stimulating sustainable production. During the first phases of the PPCDAm of Lula’s first presidency, it concluded tasks like creating more protected lands, battling “illegal occupation” of public land, widely called land grabbing, developing transparency in monitoring and governments, and improving existing satellite systems. Through the support of the police and fifteen government ministries’ collaboration, the plan encouraged improvement in documenting and monitoring techniques used in the Amazon. Despite these efforts, catching climate criminals is not an easy task and accelerating technology is a priority to better find and prosecute those who engage in these activities. 

Significant funding for the plan comes from the national budget, but additional resources for international collaboration come from Germany, Norway, the European Commission, and global organisations like the GEF to help support PPCDAm. Degraded forests can regenerate, and natural vegetation will increase in size thanks to financial incentives for conservation and sustainable forest management. The international community will be looking for progress on Lula’s watch because the world’s positive impression will allow Lula to gain more international investment into his climate policy which he can reinvest into jobs in green industries. To illustrate, replanting trees might provide up to 2 million jobs in underdeveloped areas affected by deforestation.

Furthermore, the plan to combat deforestation includes a transformation in the Brazilian tax system that inflicts more expensive levies on polluting sectors to encourage the transition into a green economy. With the higher taxes, reducing taxes for other sectors will be in order if they are considered “green” activities like electric automobiles and sustainable agribusiness.

The agricultural sector would be subject to these taxes, especially considering that the first-quarter GDP of 2023 figures released show the agribusiness sector is 18% larger than in the same period last year. Using a deforested area of roughly 750,000 km2, the gross agricultural product of the Amazon constitutes 14.5% of Brazil’s agriculture sector GDP. The GDP share of the industry, including forestry and fishing, rose from 4% in 2010 to 7% in 2021. The transition will not be an easy one considering  the agribusiness also lobbies 347 out of 594 seats across both houses of Congress. 

Continued industrial activity with assistance from the agricultural industry has expedited development in Brazil’s rural areas, but it is still unsustainable and has low productivity, according to Harvard’s Economic Complexity Atlas. Lula has to decouple economic growth and deforestation and take action to transition to sustainable practices despite fears of loss in profit and GDP. Data proves this through the reduction of deforestation rates between 2005 and 2014, which contradicts the expansion of northern  Brazil’s agriculture’s gross value added (GVA), which about tripled during this duration. A crucial point of this movement is the focus towards moving to products that generate more profit with less negative ecological impact. For example, priority on açai and similar products would create the jobs that the agriculture sector needs, but allow Brazil to move away from hazardous products and gain the export profits needed to invest in socio-economic development. A product like açai makes five times the profit of soybeans, which is ten times greater than cattle raising. 

Other products the Brazilian economy can take advantage of include essential oils from species like copaiba, rosewood, and andiroba, which are suitable for end-to-end processing in the Amazon and can serve as alternatives in the creation of a hub for fluorine-xylo chemical production of cosmetic and pharmaceutical goods. The use of a novel idea to create high-value products, services, and platforms for both existing markets and new ones, such as a high-tech innovation plan that views the Amazon as a global public good with privileged biological assets, can lead to a green economy switch influencing deforestation patterns. 

The plan to work towards these anti-deforestation projects leads to new jobs. Initiatives like reforestation, forest management, and sustainable agriculture practices are a few examples of trades that need specialised labour and may be able to be employed in rural areas. Employment in rural areas encourages Lula’s agenda for closing socioeconomic gaps through job creation and putting in place regulations that protect the rights of the communities impacted by deforestation, motivate sustainable development and offer lucrative conservation-related jobs. In his pursuit of global leadership on climate change, Lula is aware of the necessity for fair development in order to protect the Brazilian people from the adverse repercussions of environmental deterioration.

The final step involves an OPEC for Rainforests. During COP27, Brazil and the other major rainforest countries, Indonesia and the Democratic Republic of Congo, instituted an agreement. This agreement aims to advance the interests of developing nations by encouraging other countries to finance their efforts against deforestation. The union of these states indicates the potential for an increase in international climate funding that can become a greener economy that moves away from the most polluting industries and addresses the unique situations they face. Although this deal holds potential, it is unlikely that these countries will carry through with their promises.

These, and similar, policies and agreements could improve the image of Brazil internationally as a nation that takes responsibility and cares for the environment, boosting investor confidence. As environmental regulations become increasingly stringent in various states and trading blocs, such as the European Union, Lula is pressured to take action against deforestation and implement sustainable practices. By doing so, he can attract investments from foreign businesses prioritising sustainable sourcing criteria, and improving trade relations and market access.

Annuls Mining in Indigenous Territories and Protected Areas by 2030

Other than the Brazilian Amazon, there is no higher concentration of the indigenous population as it is home to about 355 thousand people of more than 150 ethnic groups. The Yanomami area, specifically, has 20,000 illicit mining operations and 27,000 indigenous peoples. This indigenous territory is where illegal mining is most prevalent. Illegal mining endangers their well-being and the wildlife in the region, especially those crucial for seed dispersal and pollination processes. The challenge comes from gold mining accounting for over 64% of the total mining area requested inside indigenous territories, with copper (3.7%), columbite (3%), wolframite (2.4%), and cassiterite (2.2%) following. 

Gold mining, which annually releases up to 1000 tonnes of dangerous contamination into the atmosphere, is the largest single source of airborne mercury pollution in the whole globe. Through mercury moving up into the food chain, all inhabitants, including ecosystems, are harmed during the gold mining process. Mercury that reaches water transforms through waterborne bacteria into a different form, methylmercury, which becomes dangerous to the surrounding environment. In 2020, WWF-Brazil and the Oswaldo Cruz Foundation (Fiocruz) focused on a study about mercury exposure. They found that two hundred members of the Munduruku people suffer from mercury found in their bodies. Other threats from illegal mining include technology like hydraulic excavators. These advancements are so damaging that within 24 hours, it does the work that would have taken three days. The efficiency means more mercury in water systems and other chemicals. 

To better protect these areas, Lula intends to use technologies like satellite images to track criminal activity and use comparative practices from the banking system with rural registration and others. The rural registry will become an asset to monitor forest management and aid the land titles regularisation to increase its service. Also, to ensure the activities halt, Lula will reinforce Brazil’s federal police and borders to regain control of the outlying Amazon regions.

Since the main intention of illegal miners is to create profit, if Lula can fortify the rule of law, the miners would be influenced into not carrying out their activities because the severe fines would be more expensive than carrying out operations. By 2030, Brazilian states might receive between $13 billion and $48 billion from illegal mining fines, providing an unheard-of chance to fund the Amazon’s shift to a carbon-positive, socially inclusive economy. By fortifying the legal layout of Brazil and encouraging sustainable practices, Lula begins to send out the powerful message that Brazil is back and intends to take action on those threatening the well-being of Brazilians and the international community.

Additionally, the anti-deforestation plan comprises instating the Ministry of Indigenous Peoples that satisfies a persistent desire that includes indigenous peoples’ aspirations, opinions, histories, and land-management methods in decision-making processes. By establishing the Ministry and appointing Sônia Guajajara, a well-known national figure, Lula’s administration has shown that it would uphold the rights of Brazil’s indigenous peoples and traditional communities. The ministries involved in environmental conservation, including the Ministry of Indigenous Peoples’, highlight constitutional prerogatives such as the protection of native vegetation, agricultural reform, and the preservation, conservation, and sustainable use of ecosystems, forests, biodiversity, and other natural resources. This approach can potentially revive Lula’s reputation as the successor of socioeconomic equality for all as the policy demonstrates his priority for all Brazilians, rural or urban. 

However, as the agricultural industry marks a significant aspect of Brazil’s economy, Lula potentially threatens output by providing more power to ministries. In an economy centred on agricultural goods that are environmentally dangerous, Lula is supposed to create jobs. However, giving authority to indigenous people and ministries puts him in a difficult situation. Enhanced environmental bodies offer stricter rules and enforcement methods to protect ecosystems and natural resources. The result may be less agricultural land accessible, and some farming methods may also be prohibited, which could affect agricultural output. Tighter prohibitions may restrict some agricultural activities but also encourage long-term productivity increases through sustainable techniques. Agri-production may be maintained or improved over time by including sustainable procedures like soil conservation, water management, and biodiversity preservation. Environmental ministries may support sustainable agriculture techniques, including agroecology, organic farming, and reduced chemical inputs. During this period, farmers may need to make adjustments and expenditures and spend some time adjusting to these new methods, which might influence agricultural productivity.

On the other hand, Lula’s intentions for this diversification in Brazil’s economy possess benefits such as increased access to financial resources and markets for ecosystem services for farmers, increased supply of drinking water to urban centres, reduction of risks associated with natural disasters and extreme weather events like floods and landslides, improved biodiversity conservation, and poverty reduction by direct creation of 112,000 to 191,000 rural jobs.

IExRAIA Summer Research Program:

This article is an excerpt from a report on Lula da Silva produced as part of an RAIA research program on climate leaders. For a full picture of Lula da Silva’s climate leadership read the full report. This project was fully financed by IE University’s School of Politics, Economics and Global Affairs.

Authors: Lana Francella & Maxima Riep

Editor: Francia Morales

Project Lead: Joshua Dario Hasenstab