INSIGHT: Brazil’s climate change baptism of fire a harsh warning of new logistics normality

SAO PAULO (ICIS)–Brazil and other Latin American countries have been grappling with severe wildfires in recent weeks, affecting even typically moist areas as they struggle with an intense drought.

Millions are seeing their livelihoods disrupted across the Americas in an early showing of the worse effects of global warming, a signal of what the new normal will mean for the economy with recurrent disruption to logistics potentially the new normal.

While Brazil is now battling wildfires, just three months ago the country suffered its worst floods ever, hitting the southernmost state of Rio Grande do Sul, a key petrochemicals and industrial hub where the economy came to a standstill for more than a month.

Meanwhile, a severe drought is for the second consecutive year hitting the northern state of Amazonia, where the mightily Amazon River is already recording lower water levels than normal.

In 2023, a similar situation brought havoc to petrochemicals logistics as the area is home to the Manaus Free Trade Zone (Zona Franca de Manaus, or ZFM in Portuguese) via which large amounts of imported chemicals make their way onto the rest of the country.

Experts have warned Brazil is ill-prepared for the consequences of global warming, despite its huge progress on renewable energy’s implementation, and have asked policymakers to make climate change preparedness a cornerstone of all regulations approved.

In another example of extreme weather affecting the Latin American chemicals industry, the Mexican petrochemicals hub in Altamira, in the east of the country, was brought to its knees earlier this year by a months-long drought.

The authorities in Altamira prioritized water supplies to households and imposed restrictions to industrial players, making many companies’ operations untenable and leading to several force majeure declarations.

BRAZIL: FIRE EVERYWHERE
The current wildfires crisis in Brazil began in August and worsened due to widespread drought – numerous fires still burning.

Blazes are also raging near the capital, Brasilia, and in the northern coastal state of Bahia, state which is being hit by the same drought than Amazonia.

Active wildfires on the outskirts of Sao Paulo, the Americas’ most populous metropolitan area with 20 million inhabitants, have significantly polluted the air over the past week, casting a grey pall over the city and exacerbating the city’s already congested traffic.

The state’s Civil Defense reported ongoing fires in eight municipalities on 15 September. The state government has mobilized all available aerial resources to combat the blazes, deploying five fixed-wing and eight rotary-wing aircraft.

And, just over the weekend, the waters of Sao Paulo’s major Pinheiros River turned emerald green due to an algae bloom caused by the drought. The state’s environmental agency attributed the river’s color change to low water levels and the smoky air to a hot, dry mass trapping pollutants from ongoing wildfires in nearby forested areas.

Over the weekend, President Luiz Inacio Lula da Silva surveyed the Brasilia National Park by air after a fire erupted there, having already consumed 1,200 hectares.

In Serra do Cipo, in the municipality of Muquem de São Francisco in western Bahia, firefighters have been battling a blaze for 30 days. Persistent challenging weather conditions, including high temperatures, strong winds, and low humidity, are hampering efforts to contain the fire. The situation is further complicated by a prolonged drought, with no rainfall in the region since May.

Brazil’s rich greenery, meanwhile, continues to be threatened by deforestation. The Amazon is the largest rainforest in the world and it acts as a key absorber of emissions, reason why the world’s eyes are on Brazil and its efforts – or lack of on occasion – to preserve the area.

Last week, analysis by green group Amazon Conservation showed that significant portions of the Amazon rainforest remain unprotected. The study, based on satellite imaging and machine-learning models, identified key unprotected areas in Peru, Brazil, French Guiana, and Suriname.

These regions contain large, dense trees and continuous canopy cover, making them vital carbon stores. The analysts reiterated Brazil’s urgent need to expand its conservation efforts to safeguard the Amazon’s critical role in global climate regulation.

While Lula’s first and second terms (2003-2011) registered lower deforestation rates, successive administrations overlooked the issue and partly reversed prior progress.

Lula’s environment minister Marina Silva, widely praised for the initial success in the early 2000s, is back in the cabinet to achieve the same feat in what perhaps is the world’s last chance to save the vital rainforest.

However, as the Amazon quickly deteriorates, experts are embroiled in a scary debate: some studies are already suggesting the area may turn from a net absorber of carbon into a net emitter. Without its key lung taking in emissions, the effects of climate change on Earth could become considerably worse.

OVERWHELMED
Critics have accused the Brazilian government of responding too slowly when the wildfires crisis began in August, potentially exacerbating the situation.

However, the reality is that no Brazilian administration has ever faced such widespread wildfires over such an extended period – the country has traditionally been seen as the archetypal tropical country, where rainfall is common and often torrential.

After thousands of hectares have been lost to the flames, Lula’s administration appeared to fully acknowledge the reality last week, announcing measures to assist residents and municipalities in the areas most affected by the drought.

This week, following Lula’s aerial survey of the devastation in Brasilia National Park, the government announced the creation of a National Climate Agency, tasked with addressing extreme natural phenomena, as the country’s vast geography makes it susceptible to opposing weather events within just a few months.

The agency was one of Lula’s plans after he took office for the third time in January 2023, but it was repeatedly delayed. The multiple climate crises Brazil has endured since May have now made its establishment essential.

LATIN AMERICA IS GETTING DRIER
Elsewhere in Latin America, other countries are also battling record-high numbers of wildfires.

Satellite data from Brazil’s National Institute for Space Research (INPE) recorded 346,112 fire outbreaks across all 13 South American countries as of 11 September. This figure surpasses the previous record of 345,322 cases set in 2007, in a history dating back to 1998.

Recent satellite imagery has revealed a smoke corridor stretching diagonally across the continent from Colombia to Uruguay. Despite efforts by Brazilian and Bolivian authorities, the blazes continue unabated, fueled by extreme temperatures and challenging weather conditions.

Within petrochemicals, it is not only players in Brazil’s Manaus area who are having to learn how to do logistics under a new reality.

In a recent trip to Buenos Aires, a source at a chemicals trader also operating in neighboring Paraguay and Uruguay described how low water levels in the equally mighty Parana River are putting a strain on the company’s logistics.

The Parana River runs through Brazil, Paraguay, and Argentina for some 4,880 kilometers and it is the second largest river in South America, only behind the Amazon River.

As water levels in the Parana have been unstable and reached record lows in the past two years, the Argentinian trading source said the company is slowly shifting the way it moves its cargo.

“With low water levels, barges cannot fully load, so more barges are needed to transport the same amount of material. This obviously increases logistics costs quite a bit,” said the source.

“We have always used the Parana River to bring product from Uruguay’s capital Montevideo, where it is shipped to from across the world, to landlock Asuncion, the capital of Paraguay. This has become a nuisance in recent months, and we are increasingly turning to trucks to transport the materials which can be transported by road.”

Insight by Jonathan Lopez