By Keith R | November 28, 2006
Last Wednesday Brazil’s Energy Research Corporation (EPE) released the National Energy Plan 2030, the government’s blueprint for energy development for the next 24 years. The EPE is a subsidiary of the Ministry of Mines and Energy (MME), charged with energy planning.
The principal theme of the plan can be found in its subtitle: “Strategy for Expanding Supply.” The government proposes a huge increase in supply, arguing that its scenarios forecast a tripling of current consumption by 2030. EPE bases the projection on the assumption that Brazil’s population will increase 53 million by 2030 (more than the entire population of Spain, and equivalent to the current population of Brazil’s entire Northeast region!), the economy will have an annual growth rate of 4.1% and energy demand will grow at an annual average rate of 3.5%.
EPE predicts that only 10% of this new demand will be met through energy savings measures, and another 10% through self-generation (off-grid generation). In order to meet the rest of the projected demand, EPE calls for
- doubling nuclear power‘s contribution by adding five 1000 MW plants — the long-debated Angra III plus two new ones in the Southeast and two in the Northeast;
- more than doubling (adding about 88,000 MW) capacity from large hydroelectric projects — adding about 3,100 MW per year until 2015, 3,400 MW per year 2016-2020, 4,300 MW/yr 2021-2025, and 3,800 MW/yr in the final five years of the Plan;
- a dramatic increase in production from small hydroelectric (pequenas centrais hidrelétricas – PCH) projects (tenfold to about 7,800 MW in 2030) and waste-to-energy (WTE) projects (from 0 MW in 2005 to 1,300 MW in 2030);
- a huge expansion in natural gas (counting on “undiscovered” national reserves and increases in imported gas (a reliable assumption given Brazil’s recent dispute with Bolivia over natural gas and uncertainties about the proposed Venezuelan pipeline?);
- major expansion in biodiesel (up to 28 mil. l/d by 2030), diesel made with vegetable oils (H-Bio) (up to 244 mil. l/d by 2030), and “sugarcane products” (i.e., bioethanol and combusting bagasse for power generation);
- steady growth in the use of wind energy linked to the grid — from 29 MW in 2005 to about 4,700 MW in 2030 (this is a bit odd, considering that MME itself in the past has estimated Brazil’s wind power potential at 14,300 MW);
- a substantial cut in the use of wood and vegetable-based charcoal.
Strangely enough, the EPE plan does not see much of a role for solar, even though a report released earlier this year by the European Photovoltaics Industry Association (EPIA) and Greenpeace suggests that photovoltaic production in Brazil can produce as much as 2,000 MW by 2025.
They Beg to Differ
Environment and consumer nongovernmental organizations (NGOs), as well as many groups involved with energy conservation, energy efficiency and alternative energy sources, are not happy with the EPE blueprint and plan to do what they can to convince President Lula and Congress to choose a substantially different path.
Their tug-of-war with EPE has been going on for months, but came to a head in September-October, when WWF-Brasil, backed by a coalition of NGOs*, released “Agenda Elétrica Sustentável 2020” (“Sustainable Power Agenda 2020”), their own blueprint for a sustainable energy policy for Brazil achievable by 2020. Click on the image of the report’s cover at right in order to download a PDF of the entire report in Portuguese. A PDF of an executive summary in English can be downloaded at this link.
When presented in Brasilia, the report was praised by the Secretary-General of the Environment Ministry (MMA) and a representative of the State Environment Secretariat of São Paulo (SMA). For his part, the MME Minister welcomed the report as a way to open a public debate. However, his colleague, EPE President Maurício Tolmasquim questioned the indices (growth rates, hydroelectric potential, etc.) utilized as the basis for the report. He called the report’s suggestion of growth without building more hydroelectric plants as “a utopia that will take the country to non-development [sic].” “They are dangerous studies for the country. We cannot deceive the Brazilian populace.”
In the weeks that followed WWF issued a public letter attacking Tolmasquim’s stance, and he issued a public refutation and rebuke, along with his arguments as to why the WWF scenario was unrealistic and EPE’s blueprint was pragmatic.
How do the two visions differ (other than the fact that EPE’s time horizon is 2030 and WWF’s is 2020) and why has Tolmasquim been so critical?
A Fundamental Difference about Energy Savings
A fundamental difference is that WWF et al envision substantially lower demand if Brazil pursues an aggressive energy conservation and energy efficiency strategy. WWF says whereas Brazil’s power consumption would reach about 800 gigawatt (GW) by 2020 if Brazil continues a “business as usual” (BAU) pathway, it claims Brazil would limit that to under 500 GW if it fully embraced energy savings/efficiency (click on graphs at right to see a larger version).
Where does WWF think the savings will come?
- adoption by the federal government of a “smart” energy plan, with time-bound targets and specific actions aimed at reducing the projected growth of power demand by 40% by 2020.
- mainstreaming by local governments of energy efficiency in their public procurement programs and to require the installation of solar hot water systems in the building sector.
- requiring power generators to urgently
- refurbish old hydroelectric plants. WWF claims that retrofitting larger hydro plants could improve the supply by 15,000 MW – roughly equal to the capacity of one Itapú hydro-power plant.
- reduce transmission and distribution losses (about 16%, compared to the international average of 6%). WWF says that more efficient power transformers could reduce loses to 8% by 2020 (equal to the US average loss rate), and that efficiency gains achieved through new dispatch criteria and better power line management could result in a 3% power generation increase.
- substantially improved efficiency (primarily through mandatory technical standards and labeling, backed up by appropriate incentives and penalties) of residential and commercial appliances, buildings and industrial motors and processes (click on graphs at right to see a larger version).
- requirement by financial institutions of energy efficiency audits as a prerequisite for the lending activities;
- creation by financial institutions of dedicated funds for energy efficiency systems.
Tolmasquim has strongly contested WWF’s energy savings claims — all the more biting, since he was a founder of the National Institute of Energy Efficiency (INEE, one of the sponsors of the WWF study), and a consultant to Brazil’s national energy savings program, PROCEL. WWF’s claims “exceed even the most optimistic projections.” He particularly attacked claimed savings for switching to solar water heating, for reducing transmission line losses and for refurbishing hydroelectric plants.
Less Traditional, More Alternative
The other fundamental difference between the EPE and WWF visions is the energy mix itself. WWF goes to great lengths to make the case that more coal-fired, natural gas, large hydroelectric and nuclear power plants are not needed and — if aggressively backed and promoted — wind, solar, PCH and biomass (particularly sugar bagasse-fired co-generation) can meet most of the growing demand. WWF envisions some 50 GW from biomass by 2020 (much higher than the 6.4 GW foreseen by EPE in 2030), 30 GW for wind (EPE sees only 4.7 GW), 30 GW for PCH (EPE sees on 7.8 GW) and 2.5 GW for photovoltaics (EPE largely ignores these).
WWF et al argue their vision will result in substantial cost savings (click on bar graph at right to view), reduce the large public debt involved in huge new hydro and nuclear plants, create more jobs (10 million rather than 3.5 million under the BAU scenario), help keep Brazil’s greenhouse gas emissions (CO2 and NOx) stable at 2004 levels (click on line graph at right to view), reduce dependency on “unstable” foreign natural gas suppliers, and reduce new inundation of lands by a factor of seven (with the lower socioeconomic impacts that implies).
Tolmasquim (not surprisingly) disputes all the cost savings, job creation, CO2 and NOx calculations, dismisses a Brazilian energy future without taking advantage of its hydroelectric potential, and accuses WWF and its allies of seeking to condemn Brazil to a low-growth economic path that does nothing to redress Brazil’s skewed income distribution.
[His argument for the latter, however, seem shaky to me, as they are posited on the assumption that “development” and a reasonable standard of living for a majority of Brazilians is directly dependent on Brazil matching current Western European per capita energy intensity levels. Perhaps a reader with a stronger economics background than I can comment on the strengths and weaknesses of this reasoning. Perhaps it’s too simplistic, but it seems wrong to me to assume that the path to good quality of life for most Brazilians must be as energy-intensive as Europe’s.]
Will the WWF energy vision eventually prevail in Brasilia? Probably not — at least not in the scale of energy conservation and portion of generation through renewable sources it envisions, nor in its emphasis on avoiding nuclear, natural gas and large hydro projects. That would mean prevailing over very powerful vested interests and an Energy Minister that does not agree with most of WWF’s arguments and conclusions. Furthermore, Lula — to the consternation of even some members of his own party (PT) — has repeatedly shown interest in pursuing nuclear, natural gas and large hydro options and embraced Venezuelan President Hugo Chavez’s vision of a transcontinental pipeline.
WWF and its allies do present some policy ideas which are worth considering, even if the potential benefits were overstated. In addition to the savings and efficiency measures outlined above, the report suggests:
- adoption of an official national target to increase the share of new renewable energy production to 20% by 2020;
- use in energy planning of energy efficiency auctions, where a specific amount of energy consumption is saved through energy conservation measures;
- adoption by government agencies (public agencies account for roughly 10% of all electricity consumption) of “technological bids” for providing their energy supplies — setting performance standards that reward energy efficient and energy saving technologies.
- requirement that electricity companies meet certain investment targets in their energy efficiency R&D programs, and monitoring and auditing to ensure that the targets are met;
- better management of the Sectoral Energy Fund (CTEnerg);
- auctions of new energies, such as co-generation from bagasse, subject to a public hearing process and transparent valuation criteria and methods;
- implementation of a second phase to the Incentive Program for Alternative Electric Energy Sources (PROINFA) that is more transparent and subject to less red tape than the first phase;
- creation of a National Solar Thermal Energy Program (PROSOLTER) that includes development targets, financing incentives for end consumers, and tax breaks.
- a reduction and eventual phaseout of subsidies to fossil fuels, such as the Fuel Consumption Account’s (CCC in Portuguese) bias in favor of coal and diesel.
- constant dissemination by all parties of up-to-date information on energy technologies and the most efficient ways of using them, especially regarding the use of solar thermal technologies in the home.
While it may be a waste of time for NGOs to lobby directly to change the mind of the Planalto or MME, they might be able to enlist MMA, some key state environment agencies, and enough members of Congress (which is even less beholden to Lula now than in his first term) to champion some of their proposals to see them become official policy and/or law — particularly if they can gather enough business allies (such as sugar producers and other potential biomass suppliers).
— Keith R
* Consumer Defense Institute (IDEC); the Brazilian Association of Energy Conservation Service Firms (ABESCO); Brazilian Center for Wind Power (CBEE); the Brazilian Association of Refrigeration, Air Conditioning, Ventilation and Heating (ABRAVA); the Paulista Association of Energy Cogeneration (COGEN-SP); the São Paulo Sugarcane Agroindustry Union (UNICA); the Brazilian Forum of NGOs and Social Movements for the Environment and Development (FBOMS); National Energy Efficiency Institute (INEE).
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