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Management Side
'Catastrophic' Loss of Amazon Forest Looms, Suzano CEO Warns

BRAZIL (From news reports) -- There are few corporate chiefs in Brazil more outspoken on the environment than Walter Schalka, the head of the world's largest producer of wood pulp. And he has a dire prediction for the Brazilian Amazon: Deforestation will accelerate this year.

"It's going to be catastrophic," Schalka, chief executive officer of Suzano SA, said in an interview in New York. "It's going to be even worse than last year."

The full scale of a recent log-and-burn push is not yet known as clearing an area is a process that takes a few years to be completed, he said, criticizing President Jair Bolsonaro for failing in 2019 to enforce laws against widespread logging and burning that sparked an international outcry.

The far-right Bolsonaro favors allowing farming and mining in the Amazon, including in protected indigenous areas, though he recently set up a new council, led by Vice President Hamilton Mourao, to centralize efforts to protect the region and ensure its sustainable development.

Schalka said the government should be more aggressive. "I don't think they're forcing more deforestation, but they are not creating conditions to avoid it."

Deforestation alerts in the Brazilian Amazon almost doubled to a record in January, according to data released by country's National Institute of Space Research, signaling further destruction. The annual rate of deforestation jumped the most in over a decade in the 12-month period ended in July, according to the latest official data available.

Just under 10,000 square kilometers (6,200 square miles) of forest was cut down in that period -- 30% more than in the previous 12 months.

The 2 million-square-mile rain forest is a major repository of carbon dioxide, playing an essential role in the fight against climate change. It's also home to 10% of all known plant and animal species. And over the past four decades, the jungle has lost about 18% of its territory, according to Greenpeace.

Schalka, who has been outspoken about both climate change and inequality in Brazil, said what the country should do is monetize the preservation of the forest through the sale of carbon credits. If Brazil were to stop the rampant Amazon destruction, Latin America's largest economy would be able to "capture" greenhouse gases and sell allowances that carbon-negative countries and companies could buy to offset their emissions.

While this is viewed in some quarters as an impractical plan, he said he has "no doubts" that a cap-and-trade system will be implemented sooner or later as part of international efforts to fight climate change, creating a "huge opportunity" for Brazil. And for Sao Paulo-based Suzano, which touts its green credentials to investors across the globe.

The company plants about 80,000 more fast-growing eucalyptus trees every day to supply its pulp and paper factories than it cuts down. One eucalyptus can capture about 167 kilograms of carbon until it's ready for harvest in seven years, helping make Suzano a carbon-negative enterprise, according to Schalka.

While Suzano typically grows trees in areas previously used as pastures, it doesn't monitor the indirect impact its expansion may have on deforestation as cattle raising is displaced and potentially forced into new frontiers.

Still, Suzano may boost carbon sequestration by a third over the next decade to 40 million tons a year -- the equivalent of taking 2.5 million cars off the road -- mostly through planting trees to support the company's growth.

"We want to monetize this for the future," Schalka said.


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