Dispatch from Brazil: the energy issue

Brazil takes a lot of pride in the fact that 48% of its energy matrix is renewable, mostly thanks to hydropower, the source of 80% of the electricity consumed in the country, and ethanol, which has been powering vehicles in the country since the late 1970s. In Brazil, energy accounts for only 2.5% of the country’s carbon emissions, unlike deforestation, which accounts for 75% of it and is caused mainly by livestock. But dam building may be one of the threats to the Amazon forest, as the country looks to the region to build new hydropower plants.

During a press meeting last Thursday (22) with the Ministry of Environment, Izabella Teixeira, she confirmed that “the Amazon accounts for 66% of the untapped potential of hydropower” in Brazil. That same day, during a dinner with the Minister of Mines and Energy, Zimmermann, an energy veteran with 30 years’ experience in the sector, defended the construction of the controversial Belo Monte hydroelectric power station in the Amazon region.

“We have carried out careful environmental assessment studies in the region. Besides, we have one of the strictest legislation to implement hydropower”, he said during the press meeting. But environmentalists disagree, including film director James Cameron, who came to country in April to join the chorus of protest. Opponents to the project say 40,000 people are set to be displaced and hundreds of square miles of rainforest will be flooded. Besides, wildlife will be seriously impacted. Since the turmoiled $17bn auction in April, Belo Monte’s future looks uncertain and its very existence the subject of severe criticism, not just from environmentalists but also from experts and the mainstream press.

As I write this article, another hydroelectric project has run into trouble. According to a Reuters report published on Sunday (25), “400 Indians from several different tribes occupied a power plant they say was built on an ancient burial site”. The incident took place at the Dardanelos dam on the Aripuana river, about 250 miles north of the Mato Grosso state capital Cuiaba. The dam was due to come online in January 2011. A representative of the government’s agency of indigenous affairs (Funai) said the company didn’t take into account the situation of the Indians and dynamited part of an archaeological site. Now the Indians want a compensation. The construction company in charge of the place said it has been in touch with Funai to design a community development program for them.

Despite the controversy and risks, the Lula government is bent on pushing hydropower to the Amazon region, with 12 projects in the works. Besides hydropower, Zimmerman also believes that nuclear power has a role to play. “Brazil has the 6th largest uranium reserve in the world. From 2019, nuclear will play a bigger role. It is an irreversible process”, he said. As to oil exploration in the Amazon, the Minister believes it should always follow Urucu’s model, although “our biggest reserves are not in the Amazon”, he added.

In fact, Brazil’s biggest oil reserves are off-shore. The country has just started drilling deepwater, pre-salt layer wells along its coast. Pre-salt oil has become a major marketing staple of Lula’s government program and PR machine. But Zimmerman insists that all this new oil will not alter the country’s renewable energy matrix. “We will meet our domestic demand and export the rest”, he said. “The country currently consumes 2 million barrels per day. In 2015 we’ll have an export balance of 1.5 million barrels per day. In 2019 that figure will jump to 2-2.2 million.”

In the face of the Gulf and China oil spills, shouldn’t Brazil have waited until it started drilling its pre-salt reserves? “There are no expectations to discover on-shore reserves. The future is off-shore and the natural tendency is deep water exploration”, said Zimmerman. “Brazil intends to investigate the causes of the spill. Our legislation is very strict and we will look at the three reports that will be published by the American congress, government and judiciary”, he said. The country has sent a team to the Gulf to follow the clean-up process.

In this scenario of hydropower, ethanol (18% of the country’s energy matrix) and oil exploration (23% of the global total), do solar and wind power have a place? He says the country acknowledges the need to diversify its energy matrix and has introduced an auction system to stimulate the use of renewable energy. The second auction took place recently and contracted 1,805,7 MW in wind power. A new auction is scheduled to take place in August. Most of wind power mills in Brazil are in the northeast of the country.

All those efforts seem to be paying. Brazil’s place in the renewable market is increasingly recognized internationally. Just before last week’s meeting with Mr. Zimmermann in Brasilia, the minister had been invited to Washington for a Major Economies Forum (19-20 July) to talk about the country’s public policies for renewable energy and exchange information with other countries.

It’s an exciting time for the country. The economy is growing, by the end of the first semester of 2011 the whole country will be, for the first time, connected to electricity and coal only provides 2% of the electricity consumed there. As Brazil prepares to become the fifth global economy, energy is one of its biggest challenges – and so is the preservation of its natural resources, especially the Amazon. The world is watching how the growing giant will perform this balancing act, which could provide a model for other economies.

Disclosure: Energy Refuge’s trip to Brazil was sponsored by Apex, a governmental agency that promotes trade and investment in Brazil, with funding provided by Petrobras, Eletrobras and Banco do Brasil.

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