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Will Gov. Brown Plug the Dangerous Hole in California’s Climate Action?

Climate
The Murphy oil site in West Adams, LA, sits as close as 200 feet from homes and playgrounds. Sarah Craig / Faces of Fracking / CC BY-NC-ND 2.0

By Kelly Trout

California Gov. Jerry Brown is gearing up to host leaders from state, tribal, and local governments, business and citizens from around the world at a Global Climate Action Summit in San Francisco this September. His goal is to "inspire deeper commitments" in support of the Paris agreement goals. He has emphasized that, on climate, "so far the response is not adequate to the challenge" and "no nation or state is doing what they should be doing."


A new report released by Oil Change International in partnership with 14 other environmental justice and climate groups shows that California will fall short of its own commitment to climate leadership unless it embarks on a managed phase-out of its oil and gas production. If Gove. Brown is serious about marshaling a response that is adequate to the challenge, he must take steps to limit fossil fuel production as part of California's suite of climate policies.

Here's what we lay out:

Climate Leadership is Being Redefined

The science tells us that climate safety requires rapid decarbonization within a few decades. Our previous analysis has shown that fossil fuel projects already operating or under construction across the world contain more oil, gas and coal than the world can afford to burn under the Paris goals. It follows that any action that enables new fossil fuel production and infrastructure is incompatible with the Paris goals. Climate leadership requires managing a just and equitable transition off fossil fuel production. As the global Lofoten Declaration underscores, wealthy fossil fuel producers like California have a responsibility to move first.

Carbon Dioxide Emissions from Developed Fossil Fuel Reserves, Compared to Carbon Budgets for Likely Chance of 2°C and Medium Chance of 1.5°C.Rystad Energy, International Energy Agency, World Energy Council, Intergovernmental Panel on Climate Change, Oil Change International analysis.

California Has No Plan for a Just Transition Off Oil Extraction

If you don't live in the heavy extraction zones of California—centered in Kern and LA Counties—you may not know that California is a top oil producer in the U.S., and has been for over a century. Under the Brown administration, the state has issued more than 20,000 new permits for drilling to oil companies, enabling the industry to keep tapping more fossil fuels.

The Kern River oil field in Kern County is one of California's largest. Antandrus / Wikipedia / CC BY-SA 3.0

California currently has no policy in place to manage its own transition off oil extraction. This is not only inconsistent with the Paris goals, but exacerbates environmental injustice. A significant portion of extraction is occurring directly in and around neighborhoods—and disproportionately in communities of color.

California Can Ramp Down its Oil Extraction in a Climate-Safe and Equitable Way

Our new report examines straightforward policy steps California can take to limit new production and begin a managed ramp-down of existing oil and gas wells. If California takes these steps, it would become the first major oil and gas producing jurisdiction to do so, setting a global precedent for climate leadership for others around the world to emulate.

1. Cease issuing permits for new oil and gas extraction wells.

We show that the permitting of new oil and gas extraction wells in California could enable 560 million barrels of new oil production from 2019 through 2030, which would dig the world into a deeper carbon hole at a time when we need to be winding down the fossil fuel industry instead. This new production could lead to more than 360 million metric tons of CO2 equivalent, increasing emissions associated with California oil production by 55 percent over the next 12 years. By ceasing such permits, California would limit new fossil fuel production, as required by the Paris goals.

2. Implement a statewide health and safety buffer zone in which existing wells are phased out as quickly as possible.

In partnership with the FracTracker Alliance, we found that nearly 8,500 active oil and gas wells across California operate within 2,500 feet of homes, schools and hospitals—a proximity linked to the greatest exposure to toxic air pollution. These wells, which are disproportionately located in some of the state's most polluted communities, were responsible for 12 percent of statewide oil production in 2016. STAND-L.A., an alliance of environmental justice groups, is calling for a setback law in the city of LA that would phase out operation of wells within 2,500 feet of sensitive areas. Enacting a similar policy statewide would begin a proactive managed decline of existing extraction in a way that prioritizes the health of historically overburdened communities.

Projected California Oil Production with and without New Wells and a 2,500' Health Buffer Zone, 2019-2030.Oil Change International and FracTracker Alliance analysis, using historical data from the Division of Oil, Gas, and Geothermal Resources and DrillingInfo

3. Develop a plan for the managed decline of California's entire fossil fuel sector as part of the state's climate initiatives.

All in all, the oil production avoided by halting new well permits combined with phasing out wells within 2,500 feet of sensitive areas could total 660 million barrels from 2019 through 2030. To put this amount in context, meeting Gov. Brown's goal to reduce oil use in cars and trucks by 50 percent by 2030 would save about 430 million barrels of oil over the next 12 years, compared to reference-case projections. If California does not limit production, it could add a greater amount of new oil supply to the market, undermining the effectiveness of demand-side measures. Ultimately, California should "cut with both arms of the scissors"—acting aggressively to reduce oil supply, consumption and related infrastructure like refineries and export terminals together—to maximize the effectiveness of its climate policies.

4. Develop a just transition plan that protects people whose livelihoods are affected by the economic shift.

Leadership in managing the decline of fossil fuel production must include a commitment to a just transition. This means providing decent work and social protection to workers and communities affected by the shift to a climate-safe economy, and investing in their vision of a brighter future.

The groundwork for a just transition must be laid through a process of democratic social dialogue and planning between employers, workers, unions, frontline communities and organizations, and local and state agencies. To facilitate this planning process, we recommend that California establish a Just Transition Task Force.

Implementing a just transition plan will also require significant dedicated resources. We propose one solution for raising funds from the oil industry itself: A 5 to 10 percent Just Transition Fee on the value of oil production could generate $3.5 to $6.9 billion in revenue from 2019 through 2030. These funds, to be dedicated exclusively to just transition needs, could cover basic social protection costs for workers like wage replacement and college tuition before phasing out with the decline of extraction.

Californian Leadership is Needed Now

As Gov. Brown has acknowledged, the world currently faces a dangerous gap between the ambition of current pledges and action, and what's required to meet the Paris goals. California would set an urgently needed example of global leadership by becoming the first major oil and gas producer to establish policies to phase out its oil production in line with climate limits. Such policies would also help protect the health of local communities in California being unfairly harmed by extraction now.

Gov. Brown can act: The state has clear regulatory authority both to stop issuing permits for new wells and to institute a health and safety buffer zone. California has the resources and moral responsibility to act. Now, will Gov. Brown and other state leaders show the political resolve to act—to say "no" to oil and gas company plans and show the world how to manage a fair and equitable transition away from oil extraction?

Reposted with permission from our media associate Oil Change International.

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The huge surge this year in Amazon deforestation is leading some European countries to think twice about donations to the Amazon Fund. LeoFFreitas / Moment / Getty Images

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Ola Elvestrun, Norway's environment minister, announced Thursday that it is freezing its contributions to the Amazon Fund, and will no longer be transferring €300 million ($33.2 million) to Brazil. In a press release, the Norwegian embassy in Brazil stated:

Given the present circumstances, Norway does not have either the legal or the technical basis for making its annual contribution to the Amazon Fund.

Brazilian President Jair Bolsonaro reacted with sarcasm to Norway's decision, which had been widely expected. After an official event, he commented: "Isn't Norway the country that kills whales at the North Pole? Doesn't it also produce oil? It has no basis for telling us what to do. It should give the money to Angela Merkel [the German Chancellor] to reforest Germany."

According to its website, the Amazon Fund is a "REDD+ mechanism created to raise donations for non-reimbursable investments in efforts to prevent, monitor and combat deforestation, as well as to promote the preservation and sustainable use in the Brazilian Amazon." The bulk of funding comes from Norway and Germany.

The annual transfer of funds from developed world donors to the Amazon Fund depends on a report from the Fund's technical committee. This committee meets after the National Institute of Space Research, which gathers official Amazon deforestation data, publishes its annual report with the definitive figures for deforestation in the previous year.

But this year the Amazon Fund's technical committee, along with its steering committee, COFA, were abolished by the Bolsonaro government on 11 April as part of a sweeping move to dissolve some 600 bodies, most of which had NGO involvement. The Bolsonaro government views NGO work in Brazil as a conspiracy to undermine Brazil's sovereignty.

The Brazilian government then demanded far-reaching changes in the way the fund is managed, as documented in a previous article. As a result, the Amazon Fund's technical committee has been unable to meet; Norway says it therefore cannot continue making donations without a favorable report from the committee.

Archer Daniels Midland soy silos in Mato Grosso along the BR-163 highway, where Amazon rainforest has largely been replaced by soy destined for the EU, UK, China and other international markets.

Thaís Borges.

An Uncertain Future

The Amazon Fund was announced during the 2007 United Nations Climate Change Conference in Bali, during a period when environmentalists were alarmed at the rocketing rate of deforestation in the Brazilian Amazon. It was created as a way of encouraging Brazil to continue bringing down the rate of forest conversion to pastures and croplands.

Government agencies, such as IBAMA, Brazil's environmental agency, and NGOs shared Amazon Fund donations. IBAMA used the money primarily to enforce deforestation laws, while the NGOs oversaw projects to support sustainable communities and livelihoods in the Amazon.

There has been some controversy as to whether the Fund has actually achieved its goals: in the three years before the deal, the rate of deforestation fell dramatically but, after money from the Fund started pouring into the Amazon, the rate remained fairly stationary until 2014, when it began to rise once again. But, in general, the international donors have been pleased with the Fund's performance, and until the Bolsonaro government came to office, the program was expected to continue indefinitely.

Norway has been the main donor (94 percent) to the Amazon Fund, followed by Germany (5 percent), and Brazil's state-owned oil company, Petrobrás (1 percent). Over the past 11 years, the Norwegians have made, by far, the biggest contribution: R$3.2 billion ($855 million) out of the total of R$3.4 billion ($903 million).

Up till now the Fund has approved 103 projects, with the dispersal of R$1.8 billion ($478 million). These projects will not be affected by Norway's funding freeze because the donors have already provided the funding and the Brazilian Development Bank is contractually obliged to disburse the money until the end of the projects. But there are another 54 projects, currently being analyzed, whose future is far less secure.

One of the projects left stranded by the dissolution of the Fund's committees is Projeto Frutificar, which should be a three-year project, with a budget of R$29 million ($7.3 million), for the production of açai and cacao by 1,000 small-scale farmers in the states of Amapá and Pará. The project was drawn up by the Brazilian NGO IPAM (Institute of Environmental research in Amazonia).

Paulo Moutinho, an IPAM researcher, told Globo newspaper: "Our program was ready to go when the [Brazilian] government asked for changes in the Fund. It's now stuck in the BNDES. Without funding from Norway, we don't know what will happen to it."

Norway is not the only European nation to be reconsidering the way it funds environmental projects in Brazil. Germany has many environmental projects in the Latin American country, apart from its small contribution to the Amazon Fund, and is deeply concerned about the way the rate of deforestation has been soaring this year.

The German environment ministry told Mongabay that its minister, Svenja Schulze, had decided to put financial support for forest and biodiversity projects in Brazil on hold, with €35 million ($39 million) for various projects now frozen.

The ministry explained why: "The Brazilian government's policy in the Amazon raises doubts whether a consistent reduction in deforestation rates is still being pursued. Only when clarity is restored, can project collaboration be continued."

Bauxite mines in Paragominas, Brazil. The Bolsonaro administration is urging new laws that would allow large-scale mining within Brazil's indigenous reserves.

Hydro / Halvor Molland / Flickr

Alternative Amazon Funding

Although there will certainly be disruption in the short-term as a result of the paralysis in the Amazon Fund, the governors of Brazil's Amazon states, which rely on international funding for their environmental projects, are already scrambling to create alternative channels.

In a press release issued yesterday Helder Barbalho, the governor of Pará, the state with the highest number of projects financed by the Fund, said that he will do all he can to maintain and increase his state partnership with Norway.

Barbalho had announced earlier that his state would be receiving €12.5 million ($11.1 million) to run deforestation monitoring centers in five regions of Pará. Barbalho said: "The state governments' monitoring systems are recording a high level of deforestation in Pará, as in the other Amazon states. The money will be made available to those who want to help [the Pará government reduce deforestation] without this being seen as international intervention."

Amazonas state has funding partnerships with Germany and is negotiating deals with France. "I am talking with countries, mainly European, that are interested in investing in projects in the Amazon," said Amazonas governor Wilson Miranda Lima. "It is important to look at Amazônia, not only from the point of view of conservation, but also — and this is even more important — from the point of view of its citizens. It's impossible to preserve Amazônia if its inhabitants are poor."

Signing of the EU-Mercusor Latin American trading agreement earlier this year. The pact still needs to be ratified.

Council of Hemispheric Affairs

Looming International Difficulties

The Bolsonaro government's perceived reluctance to take effective measures to curb deforestation may in the longer-term lead to a far more serious problem than the paralysis of the Amazon Fund.

In June, the European Union and Mercosur, the South American trade bloc, reached an agreement to create the largest trading bloc in the world. If all goes ahead as planned, the pact would account for a quarter of the world's economy, involving 780 million people, and remove import tariffs on 90 percent of the goods traded between the two blocs. The Brazilian government has predicted that the deal will lead to an increase of almost $100 billion in Brazilian exports, particularly agricultural products, by 2035.

But the huge surge this year in Amazon deforestation is leading some European countries to think twice about ratifying the deal. In an interview with Mongabay, the German environment ministry made it very clear that Germany is very worried about events in the Amazon: "We are deeply concerned given the pace of destruction in Brazil … The Amazon Forest is vital for the atmospheric circulation and considered as one of the tipping points of the climate system."

The ministry stated that, for the trade deal to go ahead, Brazil must carry out its commitment under the Paris Climate agreement to reduce its greenhouse gas emissions by 43 percent below the 2005 level by 2030. The German environment ministry said: If the trade deal is to go ahead, "It is necessary that Brazil is effectively implementing its climate change objectives adopted under the [Paris] Agreement. It is precisely this commitment that is expressly confirmed in the text of the EU-Mercosur Free Trade Agreement."

Blairo Maggi, Brazil agriculture minister under the Temer administration, and a major shareholder in Amaggi, the largest Brazilian-owned commodities trading company, has said very little in public since Bolsonaro came to power; he's been "in a voluntary retreat," as he puts it. But Maggi is so concerned about the damage Bolsonaro's off the cuff remarks and policies are doing to international relationships he decided to speak out earlier this week.

Former Brazil Agriculture Minister Blairo Maggi, who has broken a self-imposed silence to criticize the Bolsonaro government, saying that its rhetoric and policies could threaten Brazil's international commodities trade.

Senado Federal / Visualhunt / CC BY

Maggi, a ruralista who strongly supports agribusiness, told the newspaper, Valor Econômico, that, even if the European Union doesn't get to the point of tearing up a deal that has taken 20 years to negotiate, there could be long delays. "These environmental confusions could create a situation in which the EU says that Brazil isn't sticking to the rules." Maggi speculated. "France doesn't want the deal and perhaps it is taking advantage of the situation to tear it up. Or the deal could take much longer to ratify — three, five years."

Such a delay could have severe repercussions for Brazil's struggling economy which relies heavily on its commodities trade with the EU. Analysists say that Bolsonaro's fears over such an outcome could be one reason for his recently announced October meeting with Chinese President Xi Jinping, another key trading partner.

Maggi is worried about another, even more alarming, potential consequence of Bolsonaro's failure to stem illegal deforestation — Brazil could be hit by a boycott by its foreign customers. "I don't buy this idea that the world needs Brazil … We are only a player and, worse still, replaceable." Maggi warns, "As an exporter, I'm telling you: things are getting very difficult. Brazil has been saying for years that it is possible to produce and preserve, but with this [Bolsonaro administration] rhetoric, we are going back to square one … We could find markets closed to us."

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