Can Climate Action Save Castillo’s Faltering Peruvian Presidency?

Can Climate Action Save Castillo’s Faltering Peruvian Presidency?

Source: “Peru” by Craig J Bellamy is marked with CC BY-NC-SA 2.0.

On 21 September, President Pedro Castillo announced that Peru would declare a climate emergency and fulfill its environmental commitments. Since then, Castillo has survived congressional efforts to impeach him but the implications of his diminished authority for delivering on climate change, are less clear.

State of the environment

Peru is one of the most biodiverse and, due to water shortages and the fast reduction of mountain glaciers, one of the most climate-vulnerable countries in the world. A changing climate will have impacts for key industries due to large infrastructural deficits in the country’s roads, irrigation systems, water and sewerage.

Whilst not a major polluter (it’s responsible for just 0.3% of global emissions), Peru’s main greenhouse gas emissions come from deforestation (50% of emissions) in the Amazon. The expansion of agriculture, gold mining and illegal activities, such as drug trafficking are the principal drivers for the clearing of Peru’s forests. These have thrived during the Covid-19 pandemic due to a reduced state presence.

This, in tandem with Peru’s extractive economic model, runs counter to its climate change posturing. With a lack of institutional capacity to ensure that climate promises are monitored and fulfilled, it’s perhaps unsurprising that a recent Climate Change Tracker report characterised Peru’s efforts as “insufficient”.

Green government credentials?

During Castillo’s election campaign, he only made vague references to the environment and subsequently decided not to attend the COP 26 UN Climate Change Conference in Glasgow in November 2021. He did however announce to the world at the UN General Assembly that Peru would declare a ‘climate emergency’ and build upon already made commitments.

These include reaching net-zero by 2050, setting a nationally determined contribution (NDC) to reduce CO2 emissions by 40% and  the increase of renewable energy capacity from 5% to 15% – both by 2030.

Whilst it’s easy to be cynical about long-term climate commitments without mechanisms of accountability and a climate action track record, these initiatives feed into Peru’s objective since 2012 to gain access to the OECD. The economic opportunity for Peru to work with regional partners, not just to adapt and protect key sectors but also to expand them, resonates strongly with the political elite. The Inter-American Bank estimated 15 million new jobs were to be created in the region as a result of a green transition by 2030.

Words into actions

In June, the government finalised its National Adaptation Plan, outlining how it will develop resilience to climate change. The Plan ranges from enhancing weather prediction services to improving water supply systems. It will come into effect in April 2022 as part of the government’s efforts to revive the economy after an 11.1% Covid-19 generated drop in GDP in 2020

Peru is making positive noise on the international stage too. By joining the Adaptation Action Coalition, adhering to the High Ambition Coalition for Nature and People that looks to halt the accelerating loss of species, and by supporting the Glasgow Declaration on Forests and Land Use, which aims to reverse global forest loss by 2030. Noticeably absent, however, is a clear overarching strategy to bring these efforts together and make achieving  2030 and 2050 targets possible.

Barriers to progress

Going beyond rhetoric will be a challenge for the government. Peru has been a byword for political instability in the last five years (four presidents in just one term) and this has not stopped under Castillo. He won the Presidency by the smallest of margins and his government, whose Peru Libre party holds 37 of 130 seats in Congress, has had a chaotic start. 

Inexperience in governance, corruption and congressional pressures have ratcheted up to the extent that Castillo has been forced into a ministerial change, on average, every 11 days since his Presidency began. December’s impeachment attempt was an escalation but is unlikely to be the last by a right-wing majority intent on Castillo’s removal.

Other barriers are just as in-built. Peru will need funds to tackle the climate challenge and an informal sector of 13 million people (73% of the population before the pandemic), severely limits the government’s tax base (14.5% of GDP) – one of the lowest in the region.

Furthermore, CONFIEP, an influential business association with strong ties to Congress, has consistently and effectively opposed corporate tax increases. Most recently, Congress blocked government proposals to increase the windfall tax on mining operations to support the economic recovery, despite high commodity prices increasing profits to US$13.5 billion this year.

In this context, external financing will be required more urgently. At COP26 a commitment of US$83 billion for developing countries was made but how and when these funds will be made available remains uncertain.

A bleak outlook

While Castillo survived impeachment attempts with support from centrist members of Congress, his government remains in disarray. Congress will try to impeach Castillo again and replace him with their President, Maria del Carmen Alva, of the centre-right party, Acción Popular. In this scenario, with ten parties, Congress will remain fragmented but climate action might be more aligned with, and better accepted by, the business community. Given the chasm between need and capacity, progress will be slow, partial and insufficient with or without Castillo.

If Castillo is to have a hope of staying in post and delivering on climate change, he must seek to retain Centrist support to stabilise his position in Congress. At the same time, he must harness his own residual, though diminishing, public support and the widespread disapproval of Congress (80%) to cow his opponents.

He must go beyond anti-big business rhetoric and champion companies like the AJE group, the first big Peruvian company to pledge net zero by 2050, to make the case that private investors also benefit from projects that mitigate local environmental impacts, invest in local infrastructure and ensure long-lasting social benefits. Only then might Castillo stem the flow of the ailing support from those who voted for him.

If Castillo is serious about the climate agenda he will need to use his cross-government High Level Commission on Climate Change to empower the Ministry for the Environment to effectively enforce environmental commitments. International agreements also need to translate into national and local operational plans with participation of stakeholders in ways that are binding on all. 

The task is substantial, circumstances inhospitable and his commitment is questionable. But building credibility using expertise and finance through international alliances on global and pressing issues like Covid-19 and local environmental welfare might just give Castillo a chance to see through his presidential term. For him, that would constitute an unlikely success.

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