Copenhagen Consensus Center
Home Menu

Brazil Perspectives: Energy

Energy

Brazil is blessed with a wide range of energy resources. The country has a large hydroelectricity capacity – although longer-term reliance on this has been put into question to some extent by the current extended period of drought – as well as being a large producer of ethanol, has good wind resources and large reserves of oil, gas and coal.

Brazil is the world’s eighth largest energy consumer and tenth largest producer, and is nearly self-sufficient in energy. By 2035, energy production is forecast to rise by 115%, with consumption growing by only 72%.

A primary post-2015 development goal it to ensure universal access to both electricity and modern cooking fuels. Brazil already has a very good record on these issues. The Luz para todos program increased access to electricity from 71% in 2000 to 98% in 2010, and has since been refocused on mini-grids and isolated systems to target the most remote consumers. Consumption of firewood for cooking has declined by 2.9% per annum since 1970 and over 95% of the population now has access to modern cooking fuels.

Another target is to double the rate of energy efficiency improvement. This is more difficult for Brazil than some countries because it already has very low energy intensity and its rate of efficiency improvement has stagnated; it has actually been rising by about 0.2% annually since 2000. The country is ranked 21st in terms of global energy efficiency, but there is still some way to go to reach the level of the most efficient countries such as Colombia, the UK, Spain and Italy.

To reach the top ten and achieve the current efficiency level of the EU will need an efficiency improvement of 1.1% each year. But there are some real challenges. There has been a trend away from hydro towards thermal power generation, and the old, strained electricity network suffers from considerable losses, for technical reasons as well as energy theft. Also, grid capacity will need to be expanded to meet future demand.

The Plano Nacional de Energia 2030 (PNE) and Plano Decenal de Expansão de Energia (PDE) both include energy efficiency targets. Increasing the efficiency of energy use would save money for consumers and businesses and reduce the risk of energy shortages, and some of the measures to be used are directly cost-saving. Overall, investing a Real in improved energy efficiency would pay back around 2.3 Reals in benefits[M1] , mainly avoiding further investment, improving business productivity and lowering consumer bills, and reducing CO2 emissions.

A further global target is to double the share of renewable energy. But Brazil already has a 40% share and doubling this to 80% would not be cost-effective. A more realistic target is to reduce the share of fossil fuels to 40% by 2035 (from the expected 52-57% for business as usual). This allows for a greater contribution of nuclear energy as well as renewables.

Investing more in nuclear and renewable electricity generation would reduce both climate impacts and pollution and increase energy security and improve the balance of payments. With population growth in Brazil being quite low, most increased demand for transport energy comes from greater prosperity. Investing in public transport, electric vehicle infrastructure and ethanol expansion could avoid greater use of fossil fuels.  Investing a Real in this way would be expected to produce over two Reals of benefits[M2] .

A final goal is doubling investment in R&D in energy technologies. Brazil has a well-educated population and experience in high tech industries which should make the country well placed to achieve this. R&D spending per capita is a fifth of that of South Korea, so there is plenty of scope for improvement. Estimating costs and benefits is really difficult, but it seems clear that this effort could be very beneficial to the Brazilian economy.


 [M1]Mean BCR

 [M2]This is the mean of the BCR range