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Inert and Pathetic Federal Government Incapable of Transitioning to Renewable Economy

Insights + Opinion

My Columbia University colleagues Bill Eimicke and Alison Miller recently joined me in authoring a new book entitled Sustainability Policy: Hastening the Transition to A Cleaner Economy. If all goes well, Jossey-Bass publishers will release the book in early 2015. Our work focuses on how American government at the federal, state and local levels can work with the private sector to speed up what I see as the inevitable transition to a renewable economy. While there is a lot of action at the state and local level to promote sustainability, the federal government remains inert and pathetic. At the federal level, we see an ossified executive branch that cannot build a website or manage health care for veterans, a legislative branch that has forgotten how to compromise and legislate, and a Supreme Court willing to equate money with political speech.

Photo courtesy of Shutterstock

There are several trends in American politics that lead away from democracy, moderate demands for change and inhibit building a federal government capable of working with the private sector to bring about a sustainable economy. These include unlimited money in politics, gerrymandered congressional districts and the replacement of fact-checked media with the fact-challenged media environment we now experience.

We are starting to see the long-term impact of the Supreme Court's decision to consider political cash donations a protected form of speech. This has magnified the impact of money in politics. In turn, this puts emerging high-tech, but capital-needy, companies at a disadvantage in the competition with old, capital-rich firms attempting to influence rules governing production, finance and taxation. The increased role of money in politics tilts the economy away from creative and sustainability-oriented companies toward old-line and extractive industries such as the fossil fuel business. While the old businesses will eventually give way to the new, the enhanced impact of money in politics will slow down the process.

The need for money also stimulates more moderate politicians on both the left and the right to move away from the political center—where deal making is possible—to the extremes. They need to do this to "activate the base" and win primary challenges. Money is only one of the issues here. National political groups gain media attention and attract money when they articulate extreme positions. And, as now former Rep. Eric Cantor can tell you, turnout in primaries is quite low and unpredictable, and so money is only one part of the equation. The other part is the fact-free media. Political communication has always had a strong dose of propaganda—it goes with the territory—but the weird, endless onslaught of misleading political ads and partisan commentary we see today is relentless and unavoidable. Character assassination, misrepresentation of positions and deception is now the norm as political consultants urge their candidates to "define the opposition before they define you." Normal, rational people are avoiding electoral politics as never before.

It is true that, overall, Democrats win more votes in congressional elections than Republicans, but that Republicans these days are winning more seats. Gerrymandering is part of the problem, but as Sean Trende wrote in his incisive analysis in Real Clear Politics:

One of the most striking aspects of the 2012 elections is that Republicans won their third-largest House majority since the late 1920s while losing the popular vote. Pundits have largely coalesced around a single explanation for this: GOP control of redistricting. There's no doubt that the party maximized its advantage by controlling redistricting in a majority of House districts, but that wasn't really the culprit. The Democrats' minority status has more to do with their "new coalition," which might be good for winning presidential elections but is ill-suited for controlling the House.

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As Trende observed, the Democratic political coalition "has become geographically narrow in the past decade, heavily concentrated among urban liberals and minorities who live in densely populated cities or are placed into minority-majority districts under interpretations of the Voting Rights Act that many minority groups pressed for in the 1980s and 1990s." This concentration helps win some state-wide races and national electoral votes, but means that Democrats lose a lot of close races for the House. When Democrats do manage to win in the House, they often win by larger margins than Republicans do, which helps account for their national popular vote majority. Gerrymandering is part of the problem faced by the Democrats, but the other part is that, like the Republicans, they too are less inclined to appeal to those outside of their coalition. Democrats may not be as extreme as Republicans, but they are also less interested in compromise and consensus building than they used to be.

When we look at American politics we need to understand that our legislative branches represent places (districts and states) as well as people. The U.S. is a representative democracy yet by design is far from a pure democracy. Our constitution is designed to facilitate continuity and the translation of economic power to political power, but it is also designed to permit change when absolutely needed. In the past, dramatic change has taken place when the stability of the political system was threatened by the absence of change. These changes took place when the political center accepted them: the reforms of the progressive era, the economic policies of the New Deal, the changes brought about by LBJ's Great Society. Typically, agents of change convince moderates to accept some part of their view. The exception that proved the rule was our Civil War.

In the past, the geographic orientation of our political system has led to moderate politics. In the U.S. system, an extreme party receiving 20 percent of the votes in every congressional district would send no one to Congress. Therefore, the political dynamic pushed candidates to the center where they build the largest coalitions generating pluralities or majorities. The growing presence of moderate independent voters continues that trend in general elections. But the growing importance of low-turnout primary elections has driven candidates further to the extremes. It is hard to believe that Eric Cantor was too moderate for the Republican base—but he was. The Tea Party has less than 20 percent of the national vote, but they have managed to skillfully work the seams of the political and media system to dominate the Republican-controlled House of Representatives. If the Occupy movement had been less politically pure they might have done the same thing on the left.

In our new book, my co-authors and I provide examples of regulations, subsidies, tax policies and government programs that could modernize the economy and stimulate the private behaviors that will be needed if we are to move away from a throw-away economy. The climate problem and the need to decarbonize our energy system is the most visible problem we now face, but it is far from our only challenge. As the people boiling their water yesterday in Ohio could tell you, we need to detoxify the production and consumption of goods and services. We need to protect the web of life in the ecosystems that feeds us. We need to learn how to manage the economic production that enables our life styles without destroying the planet from which we derive all of our material resources.

This transition is well underway in Europe and has begun at the state and local level here in the U.S. At the federal level we have an executive branch that is pursuing a meaningless "all of the above energy strategy," and a legislative branch that does nothing. Perhaps it would be best if they acknowledge the reality of the situation and extend their August recess into the fall.

We need a federal government willing to invest in infrastructure like smart grids and mass transit, and provide predictable tax incentives for renewable energy. We need to modernize our environmental laws to deal with contemporary technology. There have been no major federal environmental laws enacted in the U.S. since 1990. We need to fund the basic science that will lead to the breakthrough technologies that can maintain economic growth without destroying our crowded planet.

To do all of this we need a functional federal government. We need a political process capable of rewarding rather than punishing compromise and moderation. The extremists on the right are happy with gridlock, because their goal is an inactive government. Extremists on both sides make their living off of demonizing people who do not share their views; it's just good for business. The vast and generally apolitical moderate center simply wants to nurture their family, friends, community and planet. They are poorly served by a shrill, dysfunctional national government that is incapable of enacting the policies and programs we need to make the transition to a sustainable, renewable economy.

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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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