Brazil announces 'two-pronged' energy policy

The Brazilian government plans to overhaul the country's energy basket with more emphasis on renewable resources, even as it continues with oil and natural gas development plans.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 1 -- The Brazilian government plans to overhaul the country's energy basket with more emphasis on renewable resources, even as it continues with oil and natural gas development plans.

Brazil's Environment Minister Carlos Minc presented his country's new balance of energy sources at the ministerial meeting of the Group of Eight countries in Siracusa, Italy, which Brazil attended as a guest.

Brazil's plan reflects "the spirit of the fifth Summit of the Americas," according to a report by the Inter Press Service, which said that earlier meeting discussed a proposal for North and South American countries to generate 50% of their energy from renewable sources by 2050.

Neither the Brazilian government nor state-run Petroleo Brasileiro SA (Petrobras) is willing to stop producing oil and natural gas or to decrease output.

Petrobras produces 1.9 million b/d of oil, but that figure is scheduled to rise to 3.1 million b/d by 2020 due to the discovery of offshore pre-salt reserves. Downstream, Petrobras is building five refineries, aiming to increase Brazil's refining capacity to 3.2 million b/d by 2020.

"We want to increase our refining capacity in order to become a large producer of refined products. We aim to make Petrobras not only a major exporter of crude, but also of oil byproducts," said Petrobras CEO José Sergio Gabrielli.

Jean Paul Prates, energy secretary for the Brazilian state of Rio Grande do Norte, said Brazil's model for the development and marketing of traditional hydrocarbons will be "completely different from that of traditional oil exporters, like the Arab countries or Venezuela."

"It will be a model oriented toward domestic consumption, to satisfy our energy needs first, and then export the surplus. And it will still generate wealth for the country," Prates told IPS.

Renewable energy
In addition to traditional hydrocarbons, the government of President Luiz Inácio Lula da Silva will invest more heavily in other renewable energy sources including biodiesel and ethanol made from sugarcane.

The Sugarcane Industry Association (UNICA) reports 46% of the Brazilian energy mix already is based on renewable sources. Ethanol accounts for 16%.

In Brazil, 90% of new vehicles have flex-fuel engines that can run on gasoline and ethanol. New vehicles account for 25% of all cars in the country.

UNICA reports this has cut Brazil's emissions of carbon dioxide, the main greenhouse gas, by 50 million tonnes since 2003.

Ethanol production
UNICA's promotion of ethanol, however, has drawn criticism from those concerned about competition between planting crops for energy or food.

Others question the benefits of biofuels for the environment. The International Council for Science (ICSU) reported that biofuel production may even increase, rather than decrease, global warming.

ICSU said the process of farming crops like sugarcane in Brazil and corn in the US releases amounts of nitrous oxide, another greenhouse gas, that more than counteract the benefit of lowering emissions of CO2 generated by burning ethanol instead of gasoline.

'Degraded land'
The Brazilian government said only 1% of the land suitable for agriculture in Brazil is used to grow sugarcane. As a result, the government plans to step up the recovery and use of degraded land to plant sugarcane.

Brazil and the US contribute 70% of the world's ethanol output. The Brazilian government's energy policy aims to produce 23.3 billion l./year of ethanol and to export five billion l. For biodiesel, the goal is to reach production of 3.3 billion l./year by 2010.

Petrobras has three new biodiesel plants and plans to produce 640 million l./year by 2013. Including ethanol, the company plans to spend $2.8 billion on biofuels up to 2013.

Gabrielli said it's important to increase exports to make Brazil one of the top players in the world ethanol market.

"Forty years of experience with ethanol in this country shows that this biofuel is not a threat to food security; on the contrary, food production has increased," Gabrielli told IPS.

Production capacity on land "appropriate for ethanol cultivation" has increased, and labor conditions for sugarcane workers have improved, Gabrielli said. "We believe it is possible to increase production of crops for biofuels in degraded areas, on land that is not being used for food production," he added.
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