To save the Amazon, Brazil needs China’s commitment

When Brazil’s newly elected President Luiz Inacio Lula da Silva meets President Xi Jinping later this week, there is one issue both leaders need to address: the surging deforestation in the Amazon, which is pushing the rainforest towards its tipping point.

Brazil is the world’s fifth-largest emitter of greenhouse gases, behind only China, the US, India, and Russia. In 2021, due to the anti-environment agenda imposed by former president Jair Bolsonaro, the country recorded its highest rise in emissions in nearly two decades, according to data published by the Brazilian Climate Observatory. 

The main cause, accounting for almost half of the country’s emissions that year, was changes in land use, which includes deforestation. 

Research from this year shows that 17 per cent of the Amazon has already been cleared, and of the remaining forest, 38 per cent is degraded. At this scale and pace, the forest may soon be unable to sustain its own water cycles, transforming large parts of the ecosystem into savannah.

Deforestation and related biodiversity loss are also a threat to the economy. Globally, agribusinesses are expected to lose an average of 7 per cent in value by 2030 due to unpriced nature and climate risks. The UN has called deforestation the “new coal” in investors’ portfolios.

Lula has already taken steps to protect the Amazon, including re-establishing the Action Plan for Preservation and Control of Deforestation of the Legal Amazon (PPCDAm) – responsible for the 83 per cent drop in the Amazon deforestation rate verified between 2004 and 2012 – and restoring the Amazon Fund.

Also, he has committed to increasing protection for Indigenous communities who face serious human rights abuses often linked with deforestation and other land and environmental abuses.

However, Lula faces no small task ahead. He must first undo much of the damage inflicted by the previous government, which oversaw a 59.5 per cent increase in Amazon deforestation rates compared to the previous four years. This rise is also linked to a systematic dismantling of Brazil’s institutional and legal frameworks for forest protection.

Lula must engage in a new development model that sees the climate crisis and Brazilian environmental heritage as opportunities to leverage economic growth and reduce inequalities.

And, if Lula wants to successfully tackle deforestation, it is essential to have China on board. China is currently Brazil’s largest trading partner and is a major destination for commodities with a high impact on forests. Take soybeans and beef, both widely recognised as drivers of deforestation in Brazil: 79 per cent of Brazil’s exported soybeans and 52 per cent of its exported beef go to China.

With such a large stake in the future of the Amazon, there is significant opportunity for China to support Brazil’s efforts to combat deforestation. In particular, there are three areas in which Brazil will urgently need China’s support.

The first involves requiring companies to eliminate deforestation from their supply chains. Brazil’s other key trading partners have already moved in this direction. The European Union agreed on anti-deforestation regulation in December 2022 that prohibits the import of beef, soy, timber, rubber, cocoa, coffee, and palm oil produced on deforested land.

At the end of last year, the United States government issued a request for comments on possible legislation for “limiting or removing specific commodities grown on illegally deforested lands from agricultural supply chains”.

China should also consider requirements that would end the importation of products that contribute to deforestation. In fact, the Chinese Ministry of Environment has already presented a proposal on this. Moving ahead with the proposal would do much to reduce deforestation while sending a powerful message to the world.

Some of China’s major financial institutions are profiting tremendously from deforestation. A 2021 Global Witness report found that Chinese financial institutions reaped an estimated US$554 million from deals in deforestation-risk commodities such as soy, beef, palm oil and pulp and paper supply chains between 2015 and 2020.

We will never end deforestation while financial institutions remain complicit in it. President Xi needs to confront this flow of finance from China-based institutions.

China’s ongoing revision of its rules for commercial banks provides a clear opportunity to act. Lawmakers must set out principles that prevent banks from financing environmentally and socially harmful businesses, especially those linked to deforestation.

Lawmakers should also expand risk assessments on investments to include environmental, social, and governance-related (ESG) risks. China’s green financial policies already provide some guidance on how banks should be assessing ESG risks, and these important elements must be elevated into national law.

China and Brazil are among the more than 100 countries that signed the Glasgow Leaders’ Declaration on Forest and Land Use with a commitment to end deforestation by 2030. The key to meeting this high-level commitment is for leaders of both countries to work together.

A joint task force chaired by China’s and Brazil’s key ministers should be set up to lead both countries’ climate and biodiversity efforts. The task force would be in charge of coordinating and galvanising different government agencies such as those responsible for trade, agriculture, enforcement and development.

China’s support for Brazil’s efforts to end deforestation will be a critical turning point for the world’s remaining climate-critical forests. Tackling deforestation is a challenge that the two presidents must embrace.