Brazil to Use Oil Profits to Fund Energy Transition, Lula Says
(Bloomberg) -- Brazil is planning to create a mechanism to use oil revenues to finance the nation’s energy transition, President Luiz Inácio Lula da Silva said, as the country juggles its green ambitions against its expanding production of fossil fuels.
“Directing part of the profits from oil exploration toward the energy transition remains a valid path for developing countries,” Lula said at a climate summit in Belém on Friday. Brazil will establish a fund “to finance efforts to tackle climate change and promote climate justice.”
The Brazilian government didn’t provide any details on how the fund would work. Azerbaijan, the host of last year’s United Nations climate summit, proposed and then shelved a planned levy on fossil fuel production.
Brazil still needs to work on a framework to execute on Lula’s plan, Environment Minister Marina Silva said on the sidelines of the summit. “The president raised two highly relevant issues: creating a roadmap for the world to end fossil fuels and deforestation,” she said. “To make this feasible, resources are needed and he suggested that part of the profits from oil should be used for that purpose.”
Lula, she said, “is not only proposing this to the world, he wants to lead by example”.
The move comes only weeks after Brazil’s state-controlled oil company, Petroleo Brasileiro SA, received approval to explore for oil near the mouth of the Amazon River, underscoring Lula’s competing priorities of growing the nation’s economy while also championing the environment.
Brazil’s challenge will be “to give substance to what the president has announced,” Silva said. “These are complex processes, especially when we consider the learning curve we’ve had with other funds.”
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