Perspectives for a Green Deal Framework in Latin America ^†

Abstract

The COVID-19 pandemic spurred global discussions around a sustainable recovery that could build back better economies by mitigating emissions while bringing to light the Green Deal frameworks led by the U.S. and the E.U. from 2019. This article presents the main points embedded in the existing Green Deals and offers proposals to serve as templates for Latin America and the Caribbean: the Big Push for Sustainability and the Social-Ecological Transformation. By contrasting the American and European Green Deals with more recent proposals, this article explores the main political, economic and social constraints in LAC to recommend a way forward.

1. Introduction

The term “New Deal” was first used by Franklin D. Roosevelt to describe a framework for labor, economic and infrastructure spending reforms that saved the United States from the Great Depression of 1929. More recently, the term “Green New Deal” was used by Thomas Friedman to refer to the end of fossil fuel subsidies, carbon taxation and renewable energy incentives. Today, this term serves as a symbol of resistance to the climate crisis, calling for a framework of sustainable policies to reduce emissions and achieve social justice in a low carbon economy.

As a response to the COVID-19 pandemic, Green Deals are arising with the narrative of alignment to the global strategy of a sustainable recovery, to promote economic growth through green jobs and resilient infrastructure. With the U.S. and European frameworks leading the way, other countries and regions of the world are starting discussions on a Green Deal roadmap to guide socio-economic development. These initiatives are part of a global joint effort to reduce greenhouse gas emissions and adapt to current and future climate events.

Since the second industrial revolution, the Earth’s temperature has increased 1 °C, of which two-thirds occurred since 1975 [1]. According to the Intergovernmental Panel on Climate Change (IPCC), global warming is likely to reach 1.5 °C between 2030 and 2052 if it continues to increase at the current rate [2]. With the ambition to keep temperature levels under 1.5 °C, the Paris Agreement was adopted by 196 countries to commit to climate neutrality by 2050. International cooperation is a crucial piece of the puzzle to solve the climate crisis. In one way, countries may support this endeavor by setting up bold environmental policies domestically, and in another, using diplomatic and financial influence to encourage others to follow by example.

The Green Deal is a realization of the Paris Agreement. It is bringing the climate narrative to parliaments and underlining targets that will serve as an incentive for new legislation. This approach has been gaining significant traction in the Global North, whereas the Global South still struggles to tackle other structural problems. Latin America and the Caribbean (LAC) host some of the most vulnerable countries to climate change in the world, while the region is also rife with social inequality. In order to implement the Paris Agreement, LAC will need a differentiated approach to social, economic and political challenges that may simultaneously address climate change, as well. Bringing the Green Deal narrative to LAC’s parliaments is imperative to catalyze sustainable development policies.

2. The American Green New Deal

The Green New Deal (GND) was introduced by Congresswoman Alexandria Ocasio-Cortez (AOC) in the form of a simple resolution originating in the House of Representatives (H. RES. 109) [3] in July 2019. It resulted from the combination of youth’s persistence, as members of the Sunrise Movement physically demonstrated their support for the movement at House speaker Nancy Pelosi’s office in 2018, and AOC’s fierce commitment to climate justice. Joining efforts with Senator Edward Markey, AOC called for a new method to respond to the climate crisis.

This recent approach proposes extensive government spending to protect minority communities disproportionately vulnerable to climate change while decarbonizing the energy sector and delivering on sustainable infrastructure. It also prioritizes labor policies, green jobs and a just transition for those working in the oil and gas sector. In April 2021, prior to Biden’s Climate Summit, AOC and Markey reintroduced the GND simple resolution in the House of Representatives (H. RES. 332) [4] and in the Senate (S. RES. 166), though the content remained nearly identical to the previous versions.

Overall, this framework aims to structurally alter the U.S. economy by 2050 through a self-sustaining plan that pledges to refinance itself in fifteen years. It contains a strong appeal to equity and justice while demanding polluting industries to pay the price. For the purpose of this research, the main points of this framework are divided into brief sections to summarize the Green New Deal resolution and help readers understand the main differences between this proposal and others arising worldwide.

• Energy: Renewable electricity generation and providing affordable access, meeting power demand with 100 percent renewables, investing in smart power grids, new clean technologies, R&D and upgrading buildings for energy efficiency.
• Infrastructure: Decarbonizing the transportation sector with zero-emission vehicles, clean and affordable public transit and high-speed rail. Reducing pollution from manufacturing industries, removing hazardous waste in abandoned sites and ensuring all infrastructure bills in congress address climate change.
• Land use and Ecosystems: Collaborating with farmers and ranchers to reduce emissions in the agricultural sector by supporting family farming and investing in sustainable land use. Restoring natural ecosystems, land preservation, afforestation, enhancing biodiversity and protecting waters, public lands and oceans.
• Social rights: Providing access to clean water, sustainable and healthy food systems, quality health care, safe housing, economic security, clean air and education, providing resources and training to all people with a special focus on vulnerable communities envisioning equal participation for the Green New Deal mobilization.
• Labor: Creating millions of jobs and ensuring economic security to achieve net-zero emissions through a fair transition for all communities and workers with high-quality union jobs offering training and advancement opportunities. Jobs offered will include family-sustaining wages, medical leave, paid vacations and retirement security for all, in addition to protecting the rights of all workers to organize and unionize free of coercion.
• Justice and Equity: Providing transparent and inclusive consultation for the GND, partnering with vulnerable communities, labor unions, worker cooperatives, civil society groups, academia and businesses. Repairing historic oppression of minorities including indigenous peoples, communities of color, women and youth. Obtaining indigenous peoples’ consent for decisions that affect their territories, honoring treaties and enforcing the sovereignty and land rights.
• Finance: Leveraging funding for climate resilience against extreme weather events and investing in community-defined projects and strategies. Providing ownership stakes and returns on investment, adequate capital (including through community grants, public banks and other public financing), technical expertise and other forms of assistance.
• Commerce: Ensuring a commercial environment where every businessperson is free from unfair competition and domination by domestic or international monopolies and enforcing trade rules, procurement standards and border adjustments with labor and environmental protections.

Although these commitments indicate a strong narrative of keeping the rise of global temperature levels below 1.5 degrees Celsius, it lacks clear deadlines and requires more public investment needs and baselines for defining more accurate targets. Nonetheless, this framework is a non-binding blueprint, as simple resolutions do not have the force of law nor require the approval of the other house and signature of the president. This also means the stakes are lower in comparison to other forms of congressional action.

Despite its shortcomings, the GND has been a powerful instrument for U.S. climate policy. Multiple elements of the framework have been incorporated into President Biden’s climate plans and served as a backbone for pushing additional bills. Financial commitments that were not included in the text are being proposed separately, including a bill to authorize $1 trillion for cities, tribes and territories to fund local GNDs and another allowing $172 billion on public housing over 10 years [5]. Over a dozen new pieces of legislation have close ties to the framework text and others are likely to emerge, inspiring similar congressional interventions and congruent environmental plans globally.

3. The European Green Deal

Unlike the American GND, the European strategy is a legally binding set of policy initiatives with the underlying goal of reaching zero net emissions by 2050. It is designed to spark legislative action in the European Commission, serving as the foundation of the European Climate Law (ECL) [6]—a legal proposal to consolidate the Green Deal proposed targets, requiring all EU Institutions and Member States to comply. In addition to meeting carbon neutrality, the ECL will create a system for monitoring progress, providing predictability for investors and ensuring the climate transition is irreversible.

While the European Green Deal (EGD) was enacted in December 2019, the ECL only reached a provisional agreement status in April 2021, and is currently being prepared for formal adoption. Meanwhile, on 14 July 2021, the European Commission published the “Fit for 55” package, a set of legislative proposals centered on the EGD targets put forth to reduce greenhouse gas emissions by 55 percent by 2030 compared to 1990 levels. This wave of climate commitments seeks to enact structural changes towards a more competitive economy that prioritizes justice and inclusion to safeguard the environment.

By decarbonizing the energy, industry and transportation sectors through a circular economy approach and adoption of new technologies, the EGD lays out an investment plan worth €1 trillion, with annual investments of €260 billion—approximately 1.5 percent of the block’s GDP in 2018. Thereby, it foresees a greater participation of the private sector and a new mechanism to support sustainable projects and technical assistance to boost new investments. In total, €40 billion are expected to fund a just transition, repurposing jobs and enabling the phase out of fossil fuels.

In this framework, where circular economy holds an esteemed role to spur sustainability in domestic supply chains and global economic cycles, there are similar trends as indicated in the U.S. GND and new relevant topics such as food security and technology:

• Energy: Promotion of energy efficiency and public buildings renovation, elimination of coal, decarbonization of the gas sector and increased renewable production. Implementation of smart and hydrogen networks, carbon capture and storage (CCS) and energy storage. Interconnection and digitization of the European energy market at the lowest possible cost to combat energy poverty.
• Transportation: Enhancement of multimodal transport efficiency to reduce emissions, foster intelligent traffic management systems through digitization and prioritization of rail and maritime transport for road freight transport.
• Land Use and Ecosystems: Compensation for farmers achieving better environmental performance to encourage use of low carbon farming techniques. Significantly reduce the use of chemical fertilizers, antibiotics and pesticides to incentivize sustainable food consumption and promote healthy foods at affordable prices for all. The biodiversity strategy comprises forest policies, protection of marine zones and elimination of illegal fishing. Reforestation, preservation and restoration of forests in Europe while promoting the bioeconomy.
• Food security: Reduce the environmental impact of food processing and trade sectors through the “farm to fork” strategy, to target changes in transport, storage, packaging and food waste sectors. Food imports are subject to environmental standards on EU markets.
• Circular Economy: Value its technological potential to generate jobs, especially for energy-intensive industrial sectors such as steel, chemical and cement industries as the center of the transition to a circular economy, as well as resource-intensive sectors such as textiles, civil construction, electronics and plastics. By 2030, all packaging used on the EU market will be reusable or recyclable following the establishment of a regulatory framework for bio-based and biodegradable plastics, and will apply measures on single-use plastics.
• Technology: Use artificial intelligence systems, 5G technology, proximity and cloud computing and the Internet of Things to maximize the impact of policies to address climate change, to offer opportunities to monitor air and water pollution from a distance, optimize the use of energy and natural resources. Partnerships will be undertaken with industry for innovation in the transport sector, including batteries, clean hydrogen and zero emission steel production.
• Justice and Equity: Protect vulnerable citizens and provide access to requalification programs and employment in new economic sectors through cooperation with Member States. Environmental education and training programs will also be exchanged across EU networks for better practices.
• Finance: Encourage change in behavior of businesses and consumers via carbon pricing, to attract more sustainable investments, revise the tax system, eliminate fossil fuel subsidies, create an energy taxation directive, review tax breaks for aviation fuels and shipping and shift the tax burden from labor to pollution.

One of the overarching values of the EGD is to foster international cooperation and establish the EU as a global leader in these core components of the strategy. While the American GND alludes to cooperation while maintaining its essence on the domestic context to become an international leader on climate action, the EGD underscores the ecological transition as a central goal of foreign and security policy. Moreover, beneath the EU’s rhetoric lies the intent to influence environmental standards in trade and exports, forming green alliances and using economic weight in climate diplomacy [7] to be recognized as supreme leader of this agenda globally.

The political mobilization towards climate resilience demonstrated the EU’s aspiration to set the rules of the game by defining carbon prices, a border adjustment mechanism for imported carbon (The CBAM is a trade mechanism in compliance with the World Trade Organization (WTO) to reduce the risk of carbon leakage. EU importers may buy carbon certificates corresponding to the carbon price that would have been paid, had the goods been produced under the EU's carbon pricing rules. If a non-EU producer has paid a price for the carbon used in the production of the imported goods in a third country, the corresponding cost can be fully deducted for the EU importer) and an enhanced Emissions Trading System (ETS). Likewise, EU aid and other investments are expected to shift from fossil fuel projects and require environmental, social and governance criteria. Such achievements are seen with great optimism by environmentalists everywhere, but this strategy could backfire diplomatically since it may jeopardize economic relations with other parties.

4. The Latin American Context

Global carbon emissions in 2018 reached 47,515.3 MtCO₂, from which 41.5% came from China (26.1%), the United States (12.67%) and the European Union (7.52%), followed by India (7.08%), Russia (5.36%), Japan (2.5%) and Brazil (2.19%) [8]. In total, Latin America and the Caribbean (LAC), led primarily by Brazil and Mexico stand for less than 10% of global CO2 emissions [9]. However, emissions from LAC have different characteristics than the top six emitters—instead of stemming from the energy sector, CO2 is a result of land use and agricultural practices since the region’s electricity matrix is cleaner than the global average. In order to identify the foundations of a regional green deal, it is important to highlight key aspects of historical events that explain the current environmental and socio-economic context.

The LAC region is the most unequal society in the world in terms of income and wealth inequality, classified as middle income on the global scale [10]. According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) (2019), disparate income levels led the region to a double inequity trend, where lower classes have a meaner contribution to emissions while being more vulnerable to climate events with people living in outskirt locations and having less resources to adapt. This condition was underscored by recent economic gains in the region that changed consumerism patterns and increased dependence on private non-essential goods—the antithesis of sustainable economic development.

Colonialism shaped the region’s governance and social division of labor. Most countries became independent in the 19th century, perpetuating a system that consisted in the concentration of property, income and social inequality. Economic growth has failed to overcome the region’s historical pattern of dependence on the exploitation of natural resources, which negatively impacted ecosystems and biodiversity [10] (p.31). As stated in “Enough! The Urgent Need for Social-Ecological Transformation in Latin America”, progressive governments arose in the first part of the 21st century with redistributive policies and pledges of diversifying economies that depended on commodities and natural resources to survive.

This reliance on environmental exploitation in exchange for GDP growth leads to economic and climate vulnerabilities that harm subaltern populations the most. The market fluctuations on raw materials that led to the early 2000s commodity boom (According to the International Monetary Fund (IMF), soaring commodity prices were a hallmark of the global economic boom from 2003 to mid-2008. After the global financial crisis, prices crashed and the end of the commodity boom seemed imminent. Instead, commodity prices rebounded in the early stages of the recovery, and by the end of 2010, prices of many commodities were close to or above precrisis peaks) also severely hampered Latin American economies post-2014 due to plummeting prices. Leftist governments who benefitted from exports and revenue increases to fund assistentialist (government programs that aim to reduce structural social inequality by offering basic public goods for impoverished populations. It often has a negative conotation because it may lead to a level of dependence between citizens and the government) policies found themselves with empty pockets and a population demanding public services. Economic dissatisfaction downturn was aggravated by corruption and loss of faith in the government.

Latin American democracies are young in comparison to many global countries, as they faced dictatorial regimes until the 1980s and are still in the process of strengthening institutions. Political fragility, coupled with rising unemployment rates and poverty levels, fueled the recent rise in right-wing governments. Evidence shows climate skepticism is intertwined with rightist politics. In European countries where right wing populism thrived, as in Poland and Hungary, there has been an effort to scale back climate policies, similar to former U.S. President Donald Trump’s effort to withdraw from the Paris Agreement [11]. Brazilian President Jair Bolsonaro, an open climate denier, has backed policies to drive deforestation, supported fossil fuels and rejected international funding for nature-based solutions.

The U.S. and the European Green Deal frameworks both have strong democratic values and a social justice approach that requires substantial government funding and strong institutions. As for LAC, these pillars are major political challenges in countries with unstable democracies, where the COVID-19 pandemic prompted higher debt levels and jeopardized sustainable rebuilding with equality [12]. In light of reigning colonial structures and public debts, a green narrative must seek to solve structural socioeconomic struggles while delivering on climate resilient solutions that are financially reasonable.

5. Shaping the LAC Green Deal

Finding a pathway to a Green Deal in LAC will involve redefining economic growth, reconducting public investments towards egalitarian policies and eradicating poverty. This transformation will be accompanied by political and economic democratic values that produce equitable conditions of life, leaving none behind while building local capacity. Environmental progress cannot be achieved without those living in urban peripheries and rural areas where poverty rates are highest. Developing climate awareness and skills in the poorest zones of LAC is a stepping stone to achieve a new sustainable economy.

ECLAC created an economic model to eradicate poverty in the region based on redistributive policies in which the government transfers 1.5% of the GDP in the first year (2021) to the poorest and increases the total amount in 0.5% every year until it reaches 3.0% of the GDP in 2024—enough to reduce poverty by 2030 [13]. This strategy is built on the premise that technology transferred from developed countries may compromise local development and employment generation, while potentially increasing political barriers and inequality. Boosting local capacity as a national strategy is a critical incentive for sustainable job creation that also promotes community empowerment and a sense of collectiveness.

Understanding the economic growth rate necessary to reach social equality will demand a coordinated framework of public policies that has been named by ECLAC as the “Big Push for Sustainability”. Egalitarian public investments must accelerate local capacity to solve environmental issues while enhancing productivity across all sectors. The Big Push is a joint effort between the public and private sectors to design national strategies and priorities that include environmental resource management, the development of technological and productive skills, economic efficiency and commitment to international treaties such as the Paris Agreement [14].

Furthermore, the COVID-19 pandemic contributed to the largest recession in LAC in at least a century. The World Bank estimated a 7.2% decline in regional economic activities in 2020, the deepest fall in the world [15], which could aggravate old problems and intensify the ongoing environmental crisis. For this reason, the Big Push calls for a self-sustaining growth model that realigns socioeconomic policies with climate demands. The Friedrich Ebert Foundation (FES) also proposed a similar approach that envisions a “Social-ecological Transformation” focused on community self-sufficiency, justice and sustainable levels of well-being coalescing with the public sector’s ability to use democratic frameworks to reduce socioeconomic discrepancies [10].

This model reinforces previously stated criteria for the U.S. and E.U. Green Deals, comprised of inclusive institutions, plural participation in decision-making, respecting diversity and improved access of public goods to offer equal opportunities to all social groups. The Social-ecological Transformation aims to address structural inequality and environmental degradation by enforcing democracy and the rule of law to move towards a low carbon economy with equitable distribution of wealth.

The convergence point of these frameworks and the existing Green Deals is the consolidation of a Welfare State (Merriam-Webster defines Welfare State as “a social system based on the assumption by a political state of primary responsibility for the individual and social welfare of its citizens”. It is a system where the government provides social services (healthcare, education, etc.) to promote economic and social well-being of the citizens through the equitable distribution of wealth) centered in an emissions free economic model. While European countries already have redistributive policies, progressive tax systems and generous social programs in place that favor the inclusion of environmental aspects in the existing legislation, the U.S. formation as a federation state challenges this model [16]. The American constitution was designed to protect private property, and American voters do not favor polices to redistribute their income to the nation’s poor, who are vastly represented by racial and ethnical minorities. In “Why Doesn’t The US Have A European-Style Welfare State?”, the authors argue that race is the single most important predictor of support for welfare, thus America’s troubled race relations are clearly a major reason for the absence of an American welfare state [16] (p. 4).

The LAC region resembles the U.S. in the sense that federalism constrains the prosperity of a welfare state. Since the redistribution of resources is often facilitated by government centralization, as demonstrated by the EU model, federalism hampers the state’s ability to equally allocate public goods and tends to prioritize territorial social policies. These issues have led to political unrest in LAC and the inability to combat social inequality, which may indicate that federal institutions limit the welfare state through lower centralized taxation and politicized interregional transfers that sustain or even increase existing interregional inequalities [17] (p. 167).

As the Green New Deal seeks to redeem the essence of Roosevelt’s original New Deal to reshape political and economic policies based on the Welfare State, it may fail to address structural issues of justice and redistribution due to federalist government structures, both in the U.S. and LAC. For the latter, the lack of financial resources and rising public debts deepens the unlikelihood of achieving a Green Deal based on Welfare State principles in either the U.S. or LAC. In this sense, by inviting the private sector into this process (similar to the Socio-Ecological Transformations proposal to strengthen governments’ planning capacity with the help of economic actors), the Big Push narrative is more appropriate for both the U.S. and LAC.

6. Conclusions

Just because the Green Deal frameworks analyzed in this article have a forceful Welfare State premise does not mean this narrative, as it is, would not work in LAC. On the contrary, the objective of this research is to outline the main points defended in the U.S. and European proposals to assess their applicability to the LAC political, economic and environmental context. As mentioned before, the starting point of the existing Green Deals is the energy transition, which still needs to be enforced in LAC, but is not the main driver of greenhouse gas emissions. Thus, creating a Green Deal framework would require prioritizing low carbon land use techniques, building sustainable infrastructure to improve livelihoods, strengthening democratic institutions and promoting social equality by eradicating poverty.

There is innumerous notable research supporting these action areas, including baselines and economic models suggesting a pathway for policymakers. Notwithstanding, these efforts have not been translated into politics. What I argue is the importance of bringing such findings to government through the executive and legislative branches. The most important thing to learn from the U.S. and European Green Deals is that both were introduced as pieces of legislation in their political system. Fortunately, ECLAC’s Big Push for Sustainability is being discussed with Brazilian politicians in the national level, and similarly, this should happen to all LAC countries and repercuss in local governments.

The Paris Agreement became a historical milestone for climate action because for the first time, 197 countries signed an international treaty that demanded local ratification—which should have served as a catalyzer of Green Deals in parliaments. It is of utmost importance that these agreements are adapted to the local context and implemented in developing countries with the support of developed nations. In this sense, the principle of common but differentiated responsibilities foreseen in the Paris Agreement must be acknowledged, as it recognizes that developed countries should lead emission reduction and support developing countries in their targets by providing financial assistance and understanding different capacities to engage in the framework.

With that in mind, the role of international cooperation through trade and financial mechanisms is key not only to implement the Paris Agreement but also to support the development of Green Deal frameworks domestically. An interesting component of the European Green Deal is the will to make use of their international influence to mobilize financial resources towards this cause, involving the United Nations, the G7, G20, World Trade Organization and other governments. Nonetheless, we must be cautious of this climate leadership being established by developed countries not to fall under the imperialistic trap that ignores the real needs of the Global South.

Having binding agreements internationally and domestically is important, but what they achieve with ambition they lose with the lack of penalty for noncompliance. Without going into detail, those sectors most responsible for emitting greenhouse gases should be financially penalized to encourage structural change in businesses. Once again, caution is needed when Green Deal frameworks allude to defunding fossil fuels and other industries in developing countries that heavily depend on these markets to maintain their fragile economies. The role of developed countries should not be to impose new trade and finance rules but use their soft power to drive new business models and governance based on better practices that enable a global green transition within the reach of developing countries.

Since these governments have scarce resources and need to prioritize other agendas such as health and education, they will not be able to solve the climate crisis alone. In addition to formulating national Green Deal frameworks, I defend a wider participation of the private sector, businesses and industries to achieve this goal while offering new channels of participation for civil society and especially consulting with minorities and vulnerable communities. Instead of trying to replicate the Welfare State in LAC and other regions of the world, the international community should be focused on leading by example and providing support for technical assistance and capacity building.

With enhanced skills on the ground, the LAC Green Deal will arise from the bottom-up without needing to copy other frameworks but building on local knowledge to diversify economies, increase productivity without compromising environmental resources, grow new sustainable businesses and progressively reduce inequalities. All of this must be achieved bearing in mind the need for more equal distribution of public goods and prioritization of local climate needs in federated societies. Sustainable development should be the cornerstone of government action to improve climate governance and provide guidance to bolster the coordination of policies related to infrastructure, social welfare and public expenditure.