Brazilian Foundation for Sustainable Development (FBDS)
Brazilian Climate Change Forum (FBMC)

Ambassador Ronaldo Mota Sardenberg
Minister of Science and Technology
São Paulo, August 28, 2001

Ladies and Gentlemen,

It is with great pleasure that I participate in the opening of this Seminar on Climate Change and Opportunities for Brazilian Industry, and share with you some reflections about this theme. The city of São Paulo is the ideal place to host this event, being the home of a large part of the economic activity of Brazil, and therefore of industrial groups with legitimate interests in the environmental question.

When one has an idea of the magnitude of the Climate Change problem and the possible consequences for a wide range of economic sectors, there can be no doubt of the need to define and implement new standards of sustainable development and cooperation, both within Brazil and internationally.

To create awareness and mobilize society around the debate on climate change depends, however, to a great extent on our capacity to clearly communicate its real significance and the reasons for Brazil’s interest in this issue.

Therefore, initiatives like this one by the Brazilian Foundation for Sustainable Development and of the Brazilian Climate Change Forum, aimed at deepening the national dialogue about climate change, are thus of fundamental importance, and couldn’t take place at a better time, after the results of the Climate Conference in Bonn and the progress in negotiations over the Kyoto Protocol.

It is widely expected that the Protocol will be ratified by the necessary number of countries by the Rio+10 Conference in Johannesburg, and will enter into force by the end of next year. Brazil has been working hard towards this end, aware of its responsibilities as one of the principal actors in the negotiations among developing countries.

This was our consistent position in the negotiations during the 6th Conference of the Parties in Bonn last July, despite negative– I’d say almost defeatist – expectations when the conference began. The fundamental role played by Brazil in the back room maneuvering that led to the adoption of the Bonn Agreement is, in my view, one of the principal factors contributing to the positive final outcome.

Complying with the mandate conferred personally by President Fernando Henrique Cardoso in a meeting of the Brazilian Climate Change Forum, held prior to CoP 6 in Bonn, the Brazilian delegation worked persistently towards seeking consensus around issues considered central, especially in allowing Annex I countries to adapt their internal procedures to enable ratification of the Kyoto Protocol.

With the firm goal of working towards ratification of the Kyoto Protocol, and reaffirming the common intention of pursuing a positive outcome at the Bonn Conference, Brazil sought to act as a link between the groups participating, especially between the developing countries and the Europeans, identifying convergences that could serve as the basis for an agreement.

The Bonn Agreement which finally emerged is a package of the possible consensus solutions to the most controversial issues in the negotiations, and as such offers a balance of gains and losses for the different countries and interest groups.

The agreement succeeded in altering the political equation that had characterized climate change negotiations, especially since the Hague Conference. In this context, it has breathed new life into the process of developing regulations for the Kyoto Protocol, as a step towards ratification.

Although negotiations over operationalizing the ministerial directives in the Bonn Agreement are not yet completed, CoP 6 represents a crucial step towards ratification of the Kyoto Protocol. Negotiations over the issues of most immediate interest to developing countries, such as financing, adaptation and vulnerability measures, technology transfer and capacity-building, have been finalized.

With the concern for preserving the integrity of the Bonn Agreement, but keeping in mind that negotiations over the other issues remain partially unfinished, it was decided to refer all decisions to CoP VII in Marrakesh, with the clear identification of points that are already finalized and those that require additional negotiations.

An additional benefit of the agreement is the fact that multilateralism in dealing with global environmental issues emerged victorious in Bonn. This reaffirmation is of crucial significance, as we approach the celebration of the 10th anniversary of the Rio Conference.

Brazil has again established itself as an indispensable actor in the negotiations – as was recognized in the plenary by the Conference Chair. Also, the Bonn Agreement represents a revitalization of the CDM, under which Brazil will be one of the most competitive countries. The negotiations over land use, land use change and forests, which will determine the recognition of reforestation and afforestation, will also reinforce the natural competitiveness of Brazil in this area.

It is expected that regulations will be finalized at CoP 7 in Marrakesh, but there are already clear signs of the directions that particular interested actors will likely follow. And Brazil is working hard within the G-77.

Thus, awareness and capacity-building activities for the Brazilian private sector regarding climate change and the problems and opportunities it presents are important at this moment.

The creation of a Center for Clean Development Projects by FBDS, in partnership with the São Paulo State Federation of Industries, and the formalization of an agreement with FINEP to support activities of the Center, should contribute to development of projects that, at an opportune moment, can be candidates for eligibility under the CDM according to international and national rules that are currently being negotiated.

In this regard, we must be aware of the need to await, without precipitation, the finalization of international rules and regulations. The legal base must be constructed first at the international level, which requires ratification of the Kyoto Protocol and making progress towards its implementation.

It would not be prudent for Brazil to anticipate this process and create regulations in parallel with international rules. It must be clear that regulation of a carbon market has no value in itself, but rather is intrinsically linked to emission reduction objectives in the context of the Climate Convention and Kyoto. When international rules are finally created, Brazil will be ready to establish an appropriate institutional framework for its immediate implementation.

An important role has been, and continues to be, carried out by the Brazilian Climate Change Forum, whose work complements the national effort to build awareness and greater participation of society in the issue, by incorporating into its structure the public and private sectors and non-governmental organizations.

Like Brazilian society, the Government is attentive to the developments – social, environmental, scientific, technological, economic and political – stimulated by climatic changes. Through a direct decision by President Fernando Henrique Cardoso, we have been conducting permanent analyses of the real effects that these changes will have for the various sectors of the country.

Furthermore, the current energy crisis shows that the existing paradigm of economic growth based on polluting technologies is no longer capable of addressing the environmental dimension, and this situation should also stimulate investments in the area of alternative energies. As one of the few countries of the world whose energy matrix can be considered clean, or with low carbon intensity, Brazil should prepare for these new challenges.

The opportunities for industry in the CDM will likely principally involve activities that reduce greenhouse gas emissions, which would not otherwise be carried out due to the high costs of the technologies involved. Also, these activities will likely draw on Brazil’s natural advantages, such as the potential for using alternative energy (solar, wind, biomass) and for implementing forestry projects on extensive areas of Brazilian territory.

The creation of a market for emissions is similar to the establishment of any other market. But special attention should be given to definition of property rights, to monitoring and to the obligation of compliance with the rules. The actors involved should be secure that they are buying or selling certificates that result in effective reductions in greenhouse gas emissions in the stipulated amount.

Under the CDM, therefore, opportunities for industry join economic interests with environmental interests. The projects that seek to promote these reductions through the CDM will assist developing countries in achieving their sustainable development objectives. At the same time, they will contribute to the greater objective of the Convention, which is to achieve global stabilization of greenhouse gases concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference in the climatic system.

Thus, to the extent that developing economies move in the direction of sustainable growth, they will be facilitating implementation of the goals of the Climate Convention.

Given these perceptions, the Interministerial Committee on Global Climate Change, which I chair, will be the focus for bringing together and reconciling different points of view in the Federal Executive, with a view towards public policies that affect greenhouse gas emissions in Brazil.

It is the Committee’s responsibility to establish eligibility criteria for CDM projects supplemental to those considered by bodies of the Climate Convention and compatible with national sustainable development strategies.

Through the establishment of these criteria, the Committee should reflect our concerns regarding the type of development we want for the country. Another important responsibility of the Committee relates to the analysis of proposals for projects which result in emission reductions, their eligibility under the CDM, and finally their approval.

Until the rules and regulations for the Kyoto Protocol are completely finalized, it is impossible to say for certain the size of the market that the CDM will encompass. There is a wide range of scenarios and estimates on this point. A recent study of the United Nations Conference on Trade and Development (UNCTAD) estimates that if the CDM captures 35% of the market for greenhouse gases, there is a potential for US$18 billion per year

Bringing together 24 large companies, the FBDS is an important voice for the pleas and expectations of the private sector in the area of climate change. Also, the Foundation has been making an important contribution to the dissemination of the Clean Development Mechanism among the corporate sector.

Until recently, awareness of the issue of Climate Change was almost exclusively restricted to the scientific sphere. But in recent years, there was a qualitative change in terms of the approach to the problem. Today this issue occupies a prominent position among global political concerns. Ten years after Rio-92, in which I had the privilege to participate as a diplomat, it is with great pleasure that I see the interest stimulated by this issue among Brazilian corporate executives.

Your effective participation is, and will continue to be, a fundamental part of successfully achieveing the objectives of the Climate Convention. By combining financial and environmental gains with long-term strategies, Brazilian industry offers a constructive example of new behavior demanded by the future challenges.

Thank you very much.