Archive for December, 2009

Brazilian President Lula Named ‘Man of the Year’ by Le Monde

December 24, 2009

Dec. 24 (Bloomberg) — Brazilian President Luiz Inacio Lula da Silva was named the “Man of the Year” by French newspaper Le Monde, the first time in its history the daily has made such a designation.

The newspaper, which looked at candidates who had affected the world both positively or negatively during the year, considered U.S. President Barack Obama, Russian Prime Minister Vladimir Putin and Iranian President Mahmoud Ahmadinejad for that title.

Le Monde said Lula came ahead because the former unionist has successfully directed a country that is complex, focusing on economic developement, inequality and the protection of the environment.

Last Updated: December 24, 2009 09:03 EST


Brazil Has ‘No Reason’ to Raise Currency Reserves, Freitas Says

December 22, 2009

Dec. 22 (Bloomberg) — Brazil should stop increasing international reserves as the local currency stabilizes and economic growth quickens, former central bank director Carlos Eduardo de Freitas said.

“It’s a totally logical moment for the central bank to stop buying reserves,” Freitas, who was part of the central bank’s monetary policy committee from 1999 to 2003, said in a telephone interview from Brasilia.

Brazil’s real lost 1 percent against the dollar in the fourth quarter, curbing this year’s gain to 30 percent, the best performance among all major currencies tracked by Bloomberg. Freitas said the Brazilian real probably will stabilize around the current level. The real opened little changed at 1.7839 per dollar at 6:02 a.m. in New York, from 1.7846 yesterday.

Foreign currency reserves grew by $32.1 billion this year to $238.9 billion on Dec. 18, according to central bank data. Reserves reached a record $239.45 billion on Dec. 2.

“If they don’t stop buying reserves now they will be paying a high cost for no reason,” Freitas said, referring to the interest rate differential between Brazil and the U.S.

Brazil’s benchmark overnight rate is at a record low of 8.75 percent while the U.S. interest rate is under 0.25 percent. Brazil’s gross domestic product quarterly growth quickened to 1.3 percent in the third quarter from 1.1 percent between March and June, according to the national statistics agency.

Brazil’s policy to increase currency reserves also “lowers investor’s risk artificially,” according to Freitas, now a partner at consulting firm OF Consultoria Economica. “This is very bad for a market economy. Investors take on too much risk and make disastrous decisions.”

To contact the reporter responsible for this story: Camila Fontana in Sao Paulo at

Last Updated: December 22, 2009 06:04 EST

Brazil Wants Limits on Tropical Trees for CO2 Credits

December 2, 2009

Dec. 2 (Bloomberg) — Brazil, whose Amazonia rainforest is the biggest in the world, wants a new climate agreement to limit the use of forests to slow global warming, putting a crimp on investors hoping to create carbon credits from trees.

South America’s largest economy will make the forestry proposal at next week’s climate summit in Copenhagen, where about 190 countries are trying to establish new reductions in greenhouse-gas emissions, Environment Minister Carlos Minc said.

Brazil will support a United Nations plan to save trees provided industrialized nations agree to use a maximum of 10 percent of their emissions targets to invest in forest projects, Minc told reporters. Otherwise, richer countries may overuse the program at the expense of making carbon cuts at their own factories and power plants, he said.

“After five rounds of negotiations with the governors from the Amazon, we decided to incorporate REDD in our national proposal but under certain conditions,” the minister said yesterday in Brasilia, using the initials for the UN’s “reducing emissions from deforestation and degradation” plan.

Brazilian leaders may even wind up keeping Latin America’s most populous nation largely out of the carbon market. Ecuador, Bolivia and Costa Rica — and not Brazil — may generate the most carbon credits for participants, carbon market analyst Aimie Parpia said yesterday in an interview from London.

“Even though Brazil has the highest physical potential, it always looked unlikely that it will see much project activity,” Parpia said. That’s because the nation didn’t want to join a forest-protection market for credits. “Today’s announcement suggests that that they may be softening their stance.”

Amazon Deforestation

Brazil, with one-third of the world’s tropical forest cover, said last month it would offer to reduce its emissions by 38 percent to 42 percent from current projections for 2020. Slowing deforestation in the Amazon would generate about half of that reduction, it said.

Trees absorb carbon dioxide, the main man-made gas scientists blame for global warming. Removing forests to create pasture or room for mining projects or homes adds to the greenhouse effect that helps warm the planet.

Without Brazil, fewer credits will be offered to utilities such as American Electric Power Co. and PacifiCorp, owned by Warren Buffett’sBerkshire Hathaway Inc., under the plan being negotiated at the climate summit in Copenhagen this month.

Credits from preserving forests are going to be an important “transition” for economies including the U.S. that will likely need to meet CO2 targets without the technology ready in the near-term to do so, said Mark Tercek, a former Goldman, Sachs & Co. partner who heads The Nature Conservancy, which established a REDD project in Bolivia.

California to Bolivia

The Nature Conservancy has worked for a decade with American Electric, BP Plc and PacifiCorp, which owns seven hydroelectric dams on the Klamath River in Oregon and California, to create credits from forests in Bolivia.

The group spent about $11 million to buy out logging concessions, pay for monitoring and enforcement of the ban on logging, and help Bolivians to adapt their use of the forest.

“Forestry is going to be a very important tool in reducing carbon emissions because you can get very significant reductions fairly quickly,” said Melissa McHenry, a spokeswoman for AEP. She said the company aims to use the least expensive option for cutting emissions, including credits from forest protection.

Nations with tropical forests will need $10 billion to $40 billion in annual incentives not to turn their forests over to timber and agriculture industries, New Zealand said in a proposal to the UN Framework Convention on Climate Change, the Bonn-based supervisor of climate-protection treaties.

Preserving Trees

Under the Brazilian plan, only one-tenth of the gas reductions assigned to a developed country under any new climate accord could be covered by preserving trees,.

“If the target is a 30 percent emissions reduction, we propose a limit of 3 percent for the purchase of compensatory REDD credits,” Minc said.

Another condition Brazil will propose is the contribution by developed countries of 0.5 percent to 1 percent of their gross domestic product each year into a global fund to help poorer nations mitigate the effects of climate change.

The UN-sponsored REDD plan, which would reward investors in forest preservation with either aid or tradable carbon credits, will be debated by envoys from about 190 nations in the Danish capital at the negotiations starting Dec. 7.

To contact the reporters on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.netAdriana Brasileiro in Rio de Janeiro at

Last Updated: December 2, 2009 06:37 EST