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Brazil's Dual Path: Between its OPEC+ Alliance and its Renewable Energy Leadership.

Writer: Hannan Alghamdi*

As an emerging global power, Brazil has historically strived for a leadership role, occasionally entangling itself in tensions with the United States and delicately managing relations with other regional powers. The nation's foreign policy revolves around advancing development and fostering regional stability through active participation in multilateral institutions and economic integration. As a founding member and substantial contributor to the Organization of American States (OAS) and the Southern Common Market (MERCOSUR), Brazil plays a pivotal role in shaping the region's geopolitical landscape.

President Luiz Inácio Lula da Silva's recent speech delivered on November 29, 2023, during the Saudi-Brazilian Roundtable Meeting in Riyadh echoes Brazil's ambition to wield influence in international relations, champion renewable energy, and uphold environmental sustainability. By actively cultivating partnerships, engaging in diplomatic dialogue, and aligning with the OPEC+ alliance as of 2024, Brazil aspires to forge a prosperous and sustainable future for both its citizens and the global community. Emphasizing the importance of fostering new relationships among countries, business entities, and governments, President Lula da Silva highlighted Brazil's upcoming hosting of the G20, BRICS, and COP30 events, showcasing the nation's dedication to shaping discussions on crucial global issues. While Brazil's decision to join the OPEC+ alliance raised eyebrows among green energy investors, it aligns with the country's broader energy strategy. As the largest oil producer in Latin America, Brazil aims to balance its oil production with investments in renewable energy, influencing oil-producing nations to transition to sustainable alternatives.

This strategy aligns with Saudi Arabia’s motivations. In fact, President Lula da Silva urged Saudi Arabia and Brazil to join forces in sectors such as renewable energy, setting the ambitious goal of transforming Brazil into the "Saudi Arabia of green energy" by 2030.

While advocating for a transition toward sustainable alternatives and dialogue with OPEC+ nations to prepare for the end of fossil fuels, Brazil’s stance faced a lot of skepticism from the environmentalists, signaling that the country appears to have “mistaken oil production for climate leadership.” In fact, Brazil won the Fossil of the Day Award, an unofficial, symbolic prize by the Climate Action Network which singles out its ‘winners’ for being “the best at being the worst and doing the most to do the least”. This reflects the general concern over Brazil's decision to join the OPEC+ alliance and its potential impact on the nation's environmental commitments.

This skepticism aligns with the broader criticism faced by several nations during the final days of COP 28, including Brazil and Saudi Arabia. As the discussions on the urgency of a fossil fuel phase-out gained momentum, Brazil found itself at odds with environmental activists, echoing sentiments expressed towards Saudi Arabia. Both nations, despite being significant players in the energy sector, have faced scrutiny for exercising caution in committing to a rapid transition away from fossil fuels. During COP 28, Brazil's position on the fossil fuel phase-out debate became a focal point. Brazil, similar to Saudi Arabia, stressed the importance of striking a nuanced balance between confronting climate change and promoting economic growth. Brazil argued for a pragmatic approach, acknowledging the need to reduce reliance on fossil fuels but cautioned against abrupt measures that could adversely impact its economy, particularly as the largest oil producer in Latin America.

The common cause shared by Saudi Arabia and Brazil in navigating the tension between climate goals and economic development showcases the complexity of international efforts to address environmental challenges. It highlights the ongoing struggle to find a balance that accommodates the requirements of addressing climate change while acknowledging the socio-economic needs of nations heavily dependent on fossil fuel.

In terms of economic development, Brazil, as a key driving force behind the MERCOSUR trade bloc, seeks to integrate its economy with Argentina, Paraguay, and Uruguay. With a population of 295 million and a nominal GDP of around 5.7 trillion US dollars in 2023, the bloc solidifies its position as the world's 5th largest economy, highlighting the value of MERCOSUR's collaborative approach to regional economic cooperation. Considering this, opportunities arise for potential free trade talks between the Gulf Cooperation Council (GCC) and Latin America. The substantial GDP and population of MERCOSUR make it a significant player on the global economic stage, serving as an incentive for the GCC and Latin America to engage in free trade talks. This collaboration could lead to significant economic gains in a GCC-Latin America free trade agreement. However, understanding the historical context, including Brazil's past opposition to a “US proposal for a hemisphere-wide trade bloc", emphasizes the importance of navigating diverse economic interests within each region for successful negotiations. The recent failure to agree on the EU-MERCOSUR trade deal presents a notable setback for Brazilian President Luiz Inacio Lula da Silva. Hoping to conclude the free trade agreement before Brazil's temporary presidency of MERCOSUR, further negotiations were attempted during intergovernmental consultations between Brazil and Germany, to no avail. Despite the disappointment, President Lula da Silva remains optimistic about the agreement, emphasizing the irrationality of not signing it after over two decades of negotiations and pledging to persist until he consults with each President involved.

In terms of Brazil's climate change commitments, critics argue that Brazil’s decision to join OPEC+ contradicts its efforts to increase investments in renewable energy, particularly in the environmentally sensitive Equatorial Margin off the coast of the Amazon Rainforest. President Lula da Silva recognized the pressing need to confront climate change and stressed Brazil's dedication to diminishing deforestation in the Amazon. He proposed innovative solutions, such as utilizing oil revenues to finance clean energy development and the creation of the Tropical Forest Forever fund to protect and restore tropical forests. During his visit to Dubai, the Brazilian delegation sought financial support for the Amazon fund, with contributions already coming in from countries like the UK.

Brazil positions itself as a staunch defender of multilateralism, cultivating strong ties with major global players such as China, the United States, and the European Union. Brazil's international engagements continue to be driven by President Lula da Silva, and these engagements showcase the nation's determination to play a significant role in international relations and promote renewable energy. Whether hosting significant events, pursuing partnerships, or navigating trade challenges, Brazil continues its aim to shape global discussions and contribute to a prosperous and sustainable future. While challenges and criticisms persist, Brazil's commitment to dialogue, collaboration, and renewable energy highlight its efforts to lead by example and inspire positive change on a global scale.

*Hannan Alghamdi is a Researcher at the Gulf Research Center

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