Lula’s push to join OPEC+ and what it means for Brazil

In November, the Organization of Petroleum Exporting Countries (OPEC), which accounts for roughly 40% of the globe's crude oil supply, announced that Latin America's largest oil producer Brazil would "join the OPEC+ Charter of Cooperation starting January 2024," becoming the 24th partner worldwide.

However, Brazil, which is set to become the third regional partner alongside Mexico and Venezuela, has received strong pushback. Environmentalists, including the World Wide Fund for Nature (WWF), quickly criticised the announcement. They say it contradicts the country’s climate goals.

"This move strengthens the bloc of oil producers and goes against the urgent and necessary energy transition needed to combat the climate crisis, both in Brazil and globally," said the WWF in a written statement.

Some analysts have suggested it shows a departure from Brazil's President Luiz Inacio Lula da Silva's most recent environmental pledges.

During his campaign push for re-election in 2022, Lula underscored his commitment to clamp down on deforestation, seeking to position Brazil as an environmental leader.

It came after environmentalists criticised the four-year presidency of Jair Bolsonaro. From 2019-2023, they say the far-right leader rolled back protections, causing ecological destruction to the Amazon.

Land invaders – such as farmers, loggers and miners – decimated vast swathes of the rainforest for mining, crops and livestock. Brazil, home to 60 percent of the Amazon, is one of the world's top exporters of beef and soy, where around a fifth of the rainforest has already been decimated.

Augusto Heras, a researcher at the University of Amsterdam (UvA), says Brazil's decision to join OPEC+, which operates differently from being a full member, is driven by economic and geopolitical factors within the broader context of Brazil's international financial and "strategic" interests.

At the recent UN COP28 climate summit in Dubai, Lula said Brazil is not seeking to become a fully integrated member of OPEC. "What we want is to influence," Lula told reporters.

Some reports describe Lula as having a "complicated" relationship with oil since large reserves were found off Brazil's shores in 2006.

During his initial tenure as Brazil's president in the early 2000s, the country became a prominent oil producer.

Over that decade, oil revenues helped Lula and his successor, President Dilma Rousseff, invest in large-scale social programs.

Brazil’s government lifted tens of millions of Brazilians out of poverty.

Nevertheless, during COP28, Lula spoke of the role Brazil could have in OPEC+ to advocate for the Global South.

He outlined how nations rich in oil revenues could support developing countries with renewables like solar and wind.

"We will convince people that a part of the money made from oil should be invested for us to nullify oil, creating alternatives," said Lula, "There is no contradiction."

At the Amazon Summit in August, Brazil – which shares the Amazon basin alongside eight other South American countries – Lula pushed rich nations to put money into safeguarding the World's tropical forests.

"It's not that Brazil needs money. It's not that Colombia or Venezuela need money. Mother Nature needs money; it needs financing, because industrial development has destroyed it over the past 200 years," Lula said.

'Pragmatism'

Following Lula's remarks, Heras believes there is "a clear right to development argument rooted in justice considerations."

However, amid Brazil's pivot towards OPEC+, he adds, "it is fair to criticise this decision and at the same time recognise that the decision is imbued with pragmatism with which Lula, especially in his previous presidential terms, has never been unfamiliar."

However, some contradictions in Brazil's climate policy may justify the country's entry into OPEC+, says Luis Abel da Silva Filho, a professor of macroeconomics, econometrics, and public sector economics at the Regional University of Cariri.

Filho says debates surrounding oil production in the mouth of the Amazon already indicate "a possible" contradiction concerning Brazil's aims to decarbonise and replace the country's energy system with renewable and sustainable production.

The Amazon, a crucial carbon sink, is home to an estimated 1 percent of the world's biodiversity, 50 million people and billions of trees.

Research suggests its decimation is pushing the world's biggest rainforest towards a dangerous close tipping point. Dying trees would release carbon rather than capture it, leading to dire consequences for the climate.

Nevertheless, Brazil continues to advance with projects in the "pre-salt" deepwater offshore and exploring new areas. It includes its northern equatorial margin on the north and northeastern coast.

Brazil also remains South America's largest oil producer, producing 4.6 million barrels of oil and gas daily. 3.7 million barrels per day are crude.

Such practice leads some analysts to suggest that Lula could be seeking to satisfy some domestic sectors.

"The contradiction between the government's discourse and practice may be linked to declarations of market interests and the desperate attempt to appease internal conflicts within the government to maintain its governability in a scenario of turbulent market uncertainties regarding the nation's future," Filho tells TRT World.

He believes sectoral interests and the push to maintain governability with support from different political and economic forces overlap with the objectives of climate defence.

Heras acknowledges deep ties between federal and state-level structures concerning fossil fuel production, referencing the state oil company Petrobras.

Petrobras dominates the crude industry today, producing 2.35 million daily, largely processed in Brazil's refineries.

Brazil is also not expected to be tied by production restrictions by joining OPEC+.

Petrobras' CEO, Jean Paul Prates, said, "Brazil can't be subject to quotas as it has a publicly traded company."

Filho says the "biggest contradiction" is Brazil's remarks in world forums and the proposal adopted by the state-owned oil producer concerning its bid to increase oil production to 5 million barrels per day by 2030.

He describes such statements as contrary to the interests of OPEC, which maintains prices by restricting supply, but says they contradict the global drive to produce clean energy.

More than half of Petrobras' common stock is reportedly tied to government entities, while private investors hold the rest.

"Even if the country starts to use less fossil fuels and more clean energy, increasing oil production and exports contributes to the increase in carbonisation of the planet. This is, therefore, not an objective of the decarbonisation proposal defended by the Brazilian government," says Filho.

A Global South voice

However, from Brazil's perspective, Heras says, joining OPEC+ would be a rational decision, as it is one of the world's major oil producers and exporters.

He believes it allows Brazil to have a voice in the governance of oil markets regionally and internationally.

Brazil could also strengthen its influence in the global energy market through collaboration with OPEC members.

Reports suggest Brazil's admission to OPEC+ expands the group's production capacity, and managing such a large production in a coordinated manner is considered vital.

Heras describes Brazil's impact on OPEC+ as having a range of consequences.

Domestically, Brazil's participation may stimulate the oil industry. However, he says it could alienate climate movements, including NGOs and policymakers involved in climate policy, younger generations, and people who voted for him due to Bolsonaro's history of “climate denialism”.

Across Latin America, Brazil's alignment with OPEC could influence energy dynamics in the region. Heras says Lula could lose climate leadership regionally and internationally to Colombia, whose leader Gustavo Petro has made calls to phase out fossil fuels.

"Brazil's engagement with OPEC is at odds with Lula's push for climate leadership, rainforest protection, and support for indigenous communities," he says.

However, the researcher sees some consistency, noting how, at international forums like the UN climate change conferences, Brazil typically underscores how it is already a low-carbon economy in terms of its energy generation capacity.

Heras says most of its energy comes from renewables - largely hydropower and higher than many Organisation for Economic Cooperation and Development (OECD) countries.

Brazil's environmental commitments are "more focused on reducing the agricultural sector's emissions, reducing deforestation, or targeting transportation emissions," he says.

Heras doubts the potential to boost renewables through OPEC+ without shifting away from fossil fuels.

He believes it is time to solve the root cause of the issue by achieving the Paris Agreement's temperature targets, which are no longer sufficient to foster renewables. At the same time, he says fossil fuels must remain in the ground.

"This must be done in a just and inclusive way, accounting for capabilities and responsibilities, but it must be done to avoid worse climate change impacts," says Heras.

By some projections, Brazil could become OPEC's fourth largest producer - behind Russia, Saudi Arabia and Iraq.

Filho says Brazil's aims in joining OPEC+ remain unclear amid what he believes is a " contradiction between discourse and practice about Brazilian environmental policy internally discredits the government's 'good intentions.'"