Peru's ´forest laws´ and their agro-energy driver

The push for the development of the agrofuel market is one of the drivers behind the protests that have taken place in the Peruvian Amazon in the last weeks. It began with the Peruvian government introducing a set of controversial decrees aimed at facilitating the implementation of the US-Peru Free Trade Agreement (FTA). The new laws mean opening the rainforest and natural resources to transnational companies (TNCs) looking to invest in the extractive sector and, more recently, willing to expand profitable possibilities in an emergent ‘renewable’ energy market.

The story of the agrofuels business in Peru starts some years back. The approval of the Biofuel Market Law in 2003 already put special emphasis on making new land available for agrofuel production. Consequently, PROBIOCOM, a new programme for the promotion of agrofuels, was created to help promote investment in the production and commercialisation of agrofuels. It has set targets - albeit non-mandatory - for petroleum companies to use a blend of 7,8 per cent of ethanol with gasoline and 5 per cent biodiesel. These targets have been extended to a number of regions where industrialisation of sugar cane is to be promoted, including the Amazon. Not only that, sugar cane production also benefits from tax exemptions.

The Technical Commission for Biofuels, another body established in the name of agrofuels and their promotion, is meant to “ensure that expansion in the Amazon region [is pursued] and is pursued responsibly”. (Rothkopf, 2007) The Biofuel Market Law stipulates that agrofuel projects should comply with national environmental laws and reinforce anti-narcotics initiatives.

Thus, through the development of a national policy aimed at replacing drugs crops with agrofuel crops and the promotion of agrofuels in general, investors have received clear signals about the creation of a biofuels market in Peru. The national policy has been given a final nod in the form of the controversial decrees that sparked the protests.

A report commissioned by the Inter-American Development Bank (IADB) in 2007 evaluated the steps the government had to take in order to create conditions for the development of a renewable energy sector and market that would be satisfactory to investors:

“The elements for the development of a sustainable biofuels sector in Peru appear to be in place. A basic legal framework has been approved. Fuel blending targets have been established, environmental concerns are being addressed, and the country already has a high-yield sugar cane industry the expansion of which could feed ethanol production. Peru has also concluded two cooperation agreements with Brazil and has negotiated preferred access to the US (…) Importantly, several private-sector firms have made initial investments in biofuels production. Questions remain, however, about the feasibility of government plans to expand sugar cane production in the Amazon region (…)” (Rothkopf, 2007)

Moreover, the IADB has been directly supporting the Peruvian government in relation to agrofuels development through the Sustainable Energy and Climate Change Initiative (SECCI) programme.

A solution for Fitzcarraldo’s dilemma

In this context, mega-project initiatives fit in the so-called 'new regionalism era', developed and promoted by the Inter-American Development Bank (IADB). The Integration of Regional Infrastructure in South America (IIRSA) is one such initiative, aimed at constructing a new infrastructure network on the continent. The Madera River Complex, one of IIRSA's projects carried out across Peru, Bolivia and Brazil, includes the construction of a large hydroelectric complex for the supply of cheap energy, an increase in the region's transportation capacities and, thereby, the consolidation of agrofuel industry (Vargas, 2009). Another dubious project planned is ´Carretera Interoceánica´, a road that would cross the Amazon and link South America's Pacific and Atlantic coasts, providing the necessary infrastructure to access Amazonian natural resources easily and at a lower cost.

Contested decrees

Going back to the contested US-Peru free trade agreement, at least three of its decrees (1090, 1064 and 994) open the doors to large-scale agriculture – especially monocultures for energy crops and re-forestation.

Decree 994 aims to expand the agricultural frontier by parcelling up communal properties. This is justified by the need for better mechanisms to provide credit, competitiveness and modernisation of local agricultural activities. In fact, it will only weaken, if not destroy, communal food production systems, service provision and subsistence activities.

Moreover, this decree “creates a special fast-track regime for awarding titles to 'idle and unproductive lands' with agricultural potential to private developers (…) The definition of 'idle and unproductive lands', officially in the hands of the state, is expanded in Decree 1064. It further erodes indigenous peoples’ claim to traditional lands and resources. It also eliminates the requirement that extractive industry companies must gain informed consent from local communities before entering their territories” (Americas Quarterly, 13 June 2009).

The myth of idle, unproductive and marginal lands has been useful to advocates of a global agrofuels market, especially when attempting to answer questions in relation to competition for land and water between food and agro-energy production sectors. Based on the assumption that developing countries have vast areas of wastelands, policy makers insist that agrofuels can be produced sustainably on these lands without being a factor contributing to the food crisis.

Meanwhile, environmental sustainability debates consider the practice of deforestation for agrofuels as “something to be avoided, the conversion of pasture lands and non-intensively farmed lands in the south is regarded as essential and desirable if bioenergy is to replace a significant amount of fossil fuels in industrial societies. The [manipulation of the] ‘marginal lands’ concept appears to be just another popular term for this wider strategy of rural displacement and the industrialisation of global agriculture” (Gaia Foundation and others, 2008) .

The term 'marginal' has, therefore, been widely adopted in scientific language in ´bio-energy feasibility studies´, which play a crucial role in attracting investment but also in the political legitimation of promotional polices. This is clearly the case with President García’s argument, which implies that nothing is produced in these lands, therefore, they are available for economic exploitation; suggesting that indigenous peoples act like ‘el perro del hortelano´ a dog that does not eat but does not allow others to eat’ (1) .

The Forestry Law, or Decree 1090, removes deforested areas from the patrimony of the state, enabling their sale to private actors. The Multi-party Commission of the Peruvian Congress carried out an evaluation in December 2008, which concluded that the alienation of forest resources from the state would facilitate the expansion of the agricultural frontier and threaten indigenous land tenure and use. Agrofuels seem to be one of the main driving forces of this expansion.

Foro Ecológico, one of the best known Peruvian environmental NGOs, calculated that 45 million hectares of forest (60 per cent of the country's primary forests) would no longer be classified as ‘forests’ and would be sold, therefore, as land for agriculture or as idle land for agrofuels. Illegal deforestation to pave the way for the sale of lands in indigenous territories has been already reported. This policy is underpinned by Decree 1089, which states that lands with agricultural potential are of national interest, and this should be given priority over indigenous or communal titling.

The conditions for the plundering of Amazonian natural resources by TNCs have been laid out and institutionally rooted in Peru. They already threaten the livelihoods of indigenous and rural communities. The necessary tools have been created, such as the pilot implementation of REDD, which has given the green light to the carbon market in re-forestation and energy crop cultivation; the financing of large-scale infrastructure; and the recent decrees to facilitate implementation of the FTAs. But, as the recent protests by the indigenous communities have shown, the future of the agrofuel business in Peru seems far from guaranteed.

Footnotes

(1) García, A. (2007) Article: ”El síndrome del perro del hortelano”, El Comercio, 28th October.

References

Americas Quarterly (2009), Peruvian indigenous land conflict explained, 13th June,

BIC website.

Boletín de la Red por una América Latina Libre de Transgénicos N° 257, Planes sobre agrocombustibles en Perú. Nuevas formas de colonialismo interno

El Mundo website

García, A. (2007) Article: ”El síndrome del perro del hortelano”, El Comercio, 28th October.

Masacre en la Amazonia: La guerra por los bienes comunes, biodiversidadla.org

Piccinini, T. (2007) The Biofuels Industry in Peru: Natural Advantages versus Legal Uncertainties,

Rothkopf, G. (2007) A Blueprint for Green Energy in the Americas Strategic Analysis of Opportunities for Brazil and the Hemisphere Featuring: The Global Biofuels Outlook 2007, Prepared for the Inter-American Development Bank.

van Gelder, J.W. (2009) German and multilateral financial institutions in the bioenergy sector. A research paper prepared for the German NGO Platform on Sustainable Biomass. DRAFT: , Profundo

Vargas, M. (2009) (Coord.) Agrocombustibles ¿Otro negocio es posible?, Icaria-Antrazyt, Barcelona.