Among the many contrasts between Brazilian president Luiz Inácio Lula da Silva and his predecessor Jair Bolsonaro is their differing approach to the environment. Whereas Bolsonaro describes global warming as a ‘Marxist plot’, Lula has pledged to turn the country into a world-class ‘environmental power’. The former loosened regulations on logging companies, authorized oil exploration in areas of rare biodiversity and weakened state environmental agencies. The latter, since returning to office for a third term in January 2023, has enforced tighter restrictions on deforestation, which fell by 68% in the Amazon that year. He has rolled back certain mining activities, used the security services to clamp down on ecologically destructive business practices, funded national parks and conservation sites, and renamed the erstwhile Environment Ministry to foreground climate change.
Yet while other Amazonian countries like Ecuador and Colombia have taken concrete steps to rein in fossil capital, Brazil – the world’s seventh-largest emitter, with an oil and gas sector that accounts for 10% of its GDP – continues to drag its feet. Despite making some progress on green initiatives, Lula still seems determined to use fossil resources to drive development, in the hope of consolidating his support among the subproletariat and keeping Bolsonarismo at bay. On this basis, he is supporting a bid by the state oil company, Petrobras, to undertake oil exploration in the Equatorial Margin, 500 kilometers from the mouth of the Amazon River: an area that could contain up to 5.6 billion barrels of oil and increase Brazil’s reserves by 37%. He has also backed a series of infrastructure megaprojects: a railway line that could accelerate deforestation in indigenous lands, a highway cutting through the pristine rainforest, and a renewed license for a major hydroelectric dam. Challenged on the environmental impact of such measures, Lula has insisted that ‘we are not going to throw away any opportunity to grow’.
How should we understand this gap between the president’s green rhetoric and the reality? Business interests and nationalist politics have long been united in support of the Brazilian fossil fuel industry. In 1939, the discovery of oil in Bahia prompted an influx of foreign companies and an outcry from the domestic population, which saw their activities as an infringement of Brazilian sovereignty. This led to the nationalist campaign O petróleo é nosso! (‘The Oil Is Ours!’), spearheaded by President Getúlio Vargas, which culminated in the establishment of Petrobras in 1953. Over the next two decades, offshore exploration was a key part of the country’s effort to reduce its reliance on foreign fuel, with the government setting a target to produce 500,000 barrels per day by 1985. A series of major deposits were eventually discovered on the continental shelf, first in Sergipe and then in the Campos Basin, turning Brazil into the region’s top producer.
In 1997, Brazil’s state oil monopoly was dismantled and the National Petroleum Agency was created as a federal body to oversee the sector. The state remained the majority shareholder in Petrobras, yet the company now had to compete on equal terms with private firms in bidding processes, in line with president Fernando Henrique Cardoso’s neoliberal programme. It was this framework that Lula’s Workers’ Party (PT) set out to challenge during its fourteen years in office (2003-2016), ramping up investment and developing extensive new reserves. By the end of this period, national oil production had soared to more than 2.6 million barrels per day, 78% of which were produced by Petrobras. Industrial development was consistently prioritized over ecological concerns. The state financed the expansion of the beef industry into the Amazon – a major driver of deforestation – while overseeing the launch of several new dam projects including the Belo Monte, which increased local poverty levels and caused urban encroachment into the forest. Repression was often used to deal with the social fallout, with clampdowns on protests and military deployments to poor areas.
Today, Lula often frames the oil industry as a tool of economic justice, asserting that ‘Those who live in the Amazon are entitled to the material goods that everyone else has’ – although when it comes to the destruction and immiseration that it is liable to inflict on local populations, he is notably less vocal. The sector’s record of accidents in greater Amazonia and elsewhere, including 62 oil spills in 2022 alone, is alarming to say the least. And the scramble for oil in the Equatorial Margin already appears to be causing outward migration from nearby areas, even before the first well has been drilled. The state environmental agency, Ibama, denied Petrobras’s first exploration request on the grounds that it had not made enough guarantees regarding possible oil spills nor considered the impact on indigenous lands. Another application is now under review.
Yet national developmentalism is not the only factor inhibiting more robust climate policies. Brazil’s powerful agribusiness industry has also mobilized against them at every turn, using its influence to undermine environmental protections, indigenous rights and pesticide regulations. The government also faces sustained pressure from Petrobras, which is determined to become world’s third-largest producer by 2030, and from politicians looking to attract more jobs and revenues to their regions. The result is a typical extractivist economy beset by trade deficits and foreign dependency. Although Lula’s first administration was able to generate surpluses thanks to rising commodity prices in the 2000s, this was impossible to sustain once they declined in the 2010s. It is now clear that as long as the country resists a meaningful green transition, it will have to continue producing goods and services for the Global North at the expense of its domestic ecology. This, along with unfavorable trading terms and tariffs imposed by the advanced countries, will trap Brazil in a vicious cycle: relying on its extractive industries to finance its imports and debts.
Despite the need to change course, Petrobras’s latest business plan allocates 72% of its total investment to the oil and gas sectors and only 11% to ‘low-carbon’ initiatives over the next five years. It will spend a mere $7 billion on non-fossil energy sources like wind, solar and biofuels, even though the conditions for transitioning to cleaner energy are relatively favourable. Brazil’s main oil customer, China, plans to peak consumption before 2030 and reduce its reliance on imported fuel amid tensions with the United States. In this context, having a public company like Petrobras, as well as public ownership over natural resources, should allow the state to adapt to this shifting economic landscape: prioritizing long-term strategic investments over short-term market imperatives. But there is no sign of this as yet.
Through his rhetorical attempts to balance ‘sustainability’ and ‘development’, Lula may have bought himself enough time to stave off a public relations disaster when he hosts COP30 in the Amazonian city of Belém do Pará in 2025. But soon he will realize that he cannot square this circle. Last summer saw record-breaking heatwaves in Peru, Paraguay and Bolivia, and temperatures exceeding 40°C in parts of Brazil. A recent study predicts that the country’s midwest, northeast, north and southeast could be uninhabitable within fifty years. Meanwhile, it is estimated that between 10% and 47% of the Amazon rainforest will suffer increased water stress, potentially pushing the ecosystem past a critical tipping point and risking irreversible collapse. Given the government’s inaction, it will fall to Brazil’s social movements to challenge the dominance of fossil capital and agribusiness – pushing for a ban on oil exploration and the regeneration of the rainforest. This is a conflict in which there is no middle ground. Lula will have to choose which side he is on.
Read on: Susanna Hecht, ‘Love and Death in Brazil’, NLR I/204.