Automakers benefit from the greening of Brazil
Sarah Butzen is marveling at a former 'pollution haven' gone green. So are automakers. Nice job, Brazil.
Posted June 18, 2012
By SARAH BUTZEN, EVERGEEK MEDIA
For a long time, whenever you heard industry representatives talk about environmental advances, or about using more energy-efficient technology, they tended to talk about them in the same way you might talk about roasting marshmallows over a big burning pile of money. Delightful, of course, and if we had that kind of money to throw around on that sort of frivolous pursuit, well then maybe... but come on, let's get real. And the Volt and the smart Car and the trash-powered Mr. Fusion notwithstanding, this attitude is not yet entirely in the past tense. You still hear business leaders saying, in effect, 'You can burn your own money if you want to, and we wouldn't say no to a s'more, but we've got a business to run here.'
So it's refreshing when you see a place think a little more creatively about economic and environmental problems, and decide not to place them on opposite ends of a spectrum, on which you take care of the environment when you're flush with cash and trash it when you're in debt.
Butte, Montana, for example, was one of the first places to demonstrate this kind of thinking. After decades of copper mining, Butte was sitting on 7,000 miles of unstable underground tunnels and a 900-foot lake of acid and arsenic in the middle of town. After being declared a Superfund site in the early 1980s, Butte was nearly left for dead - as dead as the flock of snow geese that landed in the lake one winter and perished almost instantly. But instead of dying, Butte decided to turn itself into a test bed for the development of new pollution remediation technologies. Has it become the Paris of Montana? No (that honorific still goes to Jackson Hole, Wyoming). But it's turning what it has into something to build on. It's looking toward the future, not staggering under the weight of its past.
But that's one city in one State. Could an entire country do it? Turns out: Yes. Brazil is demonstrating what this kind of thinking can do on a large scale.
Brazil's environmental problems have been decades in the making. It has been widely regarded a touchstone for the "pollution haven" theory - the notion that pollution-intensive industries are attracted to countries with weak environmental regulations and that once located there, they often operate in ways that would be considered criminal in most industrialized nations. The city of Cubat??ão, for example, came to be known as the "Valley of Death" and "the most polluted place on Earth." Oil refineries and steel mills, among other heavy industry, operated there for years with no environmental restrictions whatsoever. Air pollution caused several Brazilian cities to be ranked among the top twenty most polluted cities in the world, and water pollution from industrial waste has caused water scarcity problems in the southern regions of Brazil. Much of Brazil's pollution problems are specific to the use of ethanol, which for many years was the source of about 40 percent of the country's fuel - the only place in the world with such a high ethanol usage rate.
At the same time that all this was happening, Brazil was becoming the world's sixth largest economy (it's predicted to be the fifth largest by the end of this year). Its competitiveness has grown faster than that of any other country - and it's made real strides toward reducing economic inequality at a time when inequities have been worsening pretty much everywhere else.
These parallel trends are no coincidence, of course: it's pretty well understood that Brazil's economic progress has been purchased largely at the cost of its environment. And at a time when the world in general was sliding into economic recession, what you'd generally expect is for Brazil's governmental and industry leaders to say: 'yes, the environment is nice and all, but we can't afford that kind of luxury right now. We're not going to jeopardize all this great economic growth just to make our skylines a little less dingy.'
Instead, Brazil appears to have asked itself: where do we want to be in twenty, thirty, fifty years? Do we want to be one of those countries that has a First World economy but a Third World standard of living for its own citizens? It chose to treat its water, air, and other pollution problems not as an economic liability but as a legitimate demand for services - making it a market opportunity.
In 2009, the Brazilian government launched the Programa de Aceleracao de Crescimento (PAC), or Program for Growth Acceleration, a combination of investment funding and new economic and environmental policies that contained the equivalent of about US$25 billion of investment in new water remediation projects (and about $250 billion overall).
In its drive to meet its goals of providing safe drinking water and sanitation services to the entire population while also meeting its newly tightened environmental standards, Brazil has created the fastest-growing market in the world for technologies in water remediation, reuse, and conservation. It's now considered the site of some of the most innovative new water technologies in use anywhere - meaning that Brazil has essentially converted a huge environmental liability into an economic asset.
It's done the same thing with its energy sector. Brazil has one of the fastest-growing populations in the world as well, and its energy demands are growing accordingly - or faster, because of its rapidly expanding economic activity. But at the same time, its new environmental standards are placing tighter controls on how this energy can be produced. The result is that Brazil is attracting innovators in energy production - they're set to be the first country in Latin America with an entirely smart grid, and already 85 percent of their energy comes from hydroelectric power.
Brazil's also the fastest-growing center for LEED (Leadership in Environmental and Energy Design) certification. Its first LEED-certified building was erected in 2004, and currently more than 300 LEED-certified projects are underway - making it either fifth or fourth in the world, depending on recent activity in Canada, which was in fourth place at last reckoning. Brazil's green building sector in general is booming, with 2005 - 2008 growth measured at 27 percent, and projected 2005 - 2012 growth at 57 percent.
It's partly on the strength of this and its other environmental initiatives that Brazil has won the right to host three major events in the next five years: the United Nations Earth Summit that's taking place right now, the FIFA World Cup in 2014, and the Summer Olympics in 2016. Most or all of the structures that will be built for all of these events have already been LEED-certified.
One of the really interesting side effects of these environmentally-friendly economic gains is its impact on Brazil's auto industry - specifically, international automakers located in Brazil. On paper, the effect should have been nil or even negative - the tightened environmental standards that make Brazil into the opposite of a "pollution haven" should have been a deterrent to new auto manufacturing activity - unless the Brazilian government had gone out of its way to welcome and/or invest in auto manufacturing the way it's invested in green technologies.
Yes, about that - the Brazilian government did actually single out the auto industry back in April of this year. Its Trade and Industry Minister announced among a slate of incentives and investments in other industries, that there would be no new incentives for the auto industry, saying in effect that it had plenty already and shouldn't be complaining. But, the Industry Minister added, if the automakers saw fit to bring R&D, engineering, and innovation components over to Brazil, there might be some tax incentives for them then - the same innovation incentives that exist for industry in general.
Ten years ago, most automakers would have flounced straight back home upon hearing that. But today, they're seeing opportunity - not just for the innovation tax incentives, but for the chance to develop sustainable operations in an environment that actively encourages them, and that is well populated with the talent and expertise needed to make these operations succeed. General Motors is about to complete a LEED-certified facility in Joinville, Brazil, with a neighboring one scheduled to be completed in 2014. When that one is done, two of GM's four LEED-certified facilities will be in Brazil (the others are in East Lansing and Shanghai). Ford also has a significant presence in Brazil; it made a $200 million investment there in 2010. The country has also invested in and attracted R&D activity related to alternative fuels, and the presence of this activity has been an additional draw to automakers who are eager to build their green appeal.
So it seems that Brazil is not only having its delicious s'mores, but it's eating them too - and what's more, it toasts those marshmallows over a no-smoke, environmentally friendly fire. We're used to thinking of Latin American economies as needing our benevolent assistance, but we may need to get used to learning something from Brazil about how to get it done - or we might be the ones looking for some benevolence one day.