Balancing economic growth and the
environment: lessons from Brazil
https://www.weforum.org/agenda/2021/03/balancing-economic-growth-with-sustainability-lessons-from-brazil/
09 Mar 2021
Stephanie Jamison
Senior Managing Director, Accenture
Roberto Bocca
Head of Shaping the Future of Energy and
Materials; Member of the Executive Committee, World Economic Forum
*With over 46% of its energy mixcoming from
renewable resources, Brazil is among the leaders in the global energy
transition.
*As Brazil continues its clean energy
transition progress, how can it balance environmental sustainability with
economic growth and development?
In many ways, Brazil is a global leader in the
energy transition. Coupled with a strong domestic oil and gas sector that makes
up almost 11% of its economy, more than 46% of Brazil’s energy mix is powered
by renewable energy sources and Brazil also has the third- largest renewable electricity
generation capacity globally. Last year, the World Economic Forum’s Energy
Transition Index ranked Brazil at 45th out of 115 countries,
driven by its strong performance in in areas such as near-universal energy
access and access to clean cooking fuels, a high degree of energy security and
the relatively low carbon-intensity of its energy mix.
Building on this success, three key
opportunities have been identified for the next stage of Brazil’s energy
transition roadmap:
*Accelerate the expansion of non-hydro
renewables through initiatives such as use of innovative power purchase
agreements (PPA), market modernisation, and fossil thermal plant substitution.
*Digitalization of transmission and
distribution to address resilience and reliability challenges through
foundational distribution network and smart grid investments. Brazil should
also consider transmission and distribution grid infrastructure modernization
to support further renewable penetration and DER (Distributed Energy Resources)
adoption.
*Invest in smart and efficient cities via
the development of a digital energy network, enabling energy efficiency,
distributed generation and electric mobility, as well as public services such
as public lighting, traffic control, security and vegetation management.
At the recently held Brazil Energy Roundtable
– a collaborative effort by the World Economic Forum and Empresa de Pesquisa
Energetica – policy-makers, business leaders and key stakeholders in Brazil
came together to look at how the country can foster an effective energy
transition that balances the priorities of energy security, economic growth and
environmental sustainability. Three key themes emerged from the discussion:
1. Energy market modernization
Modernising and deregulating its energy market will ensure that Brazil can better leverage market mechanisms to accelerate the energy transition. Past policies that were highlighted as successes include the development of a competitive and dynamic natural gas market in Brazil and RenovaBio, Brazil’s federal biofuel policy that aims to reduce carbon emissions through the use of tradeable carbon credits.Brazil’s Energy Plan 2050, released for public consultation in December 2020, will build on these experiences to further promote market forces whilst enabling inclusive growth and sustainable development.
Brazil's renewable energy capacity is growing
rapidly
Image: Our World in Data
2. Technology and digitalization
Technology and digitalization will be critical
in enabling Brazil to take the next big step on its energy transition journey.
Modernising the transmission and distribution network, and adopting
ultrahigh-voltage direct current (UHVDC) transmission lines as well as smart
grids, will be critical in enabling the integration of an increasing share of
variable renewables and distributed resources such as wind and solar into the
electricity grid, while at the same time minimising the cost of grid investment
and operations and providing a resilient and reliable electricity supply.
Research and development in areas such as
carbon capture, utilization and storage (CCUS) and methane leakage detection
will be key for lowering the carbon intensity of oil and gas operations. While
product innovations and research and development in areas from biofuel and
biodiesel to bio-jet fuels were highlighted as important developments that will
help the sector thrive in a low-carbon economy. This will be critical for
Brazil’s transformation into a low cost, low carbon, leading energy supplier of
the future. Lastly, digital technologies that enable better energy demand
management as well as better matching of energy supply and demand will become
increasingly important as Brazil starts to decarbonize its key energy demand
centres, such as cities and electrified transport networks.
3. Innovation in financing
Financing is a key enabler in all dimensions
of the transition – and Brazil is emerging as one of the most dynamic
destinations for sustainable infrastructure investment, having attracted over $56
billion of clean energy asset investment between 2009-2018. Examples such as
innovative PPAs and green bond issuance, both domestic and international, are
evidence that innovation and diversity are growing in the financing of clean
energy investment in Brazil. As the Brazilian market continues to mature,
opportunities for improvement remain. Private sector infrastructure financing,
co-financing and syndication are relatively immature in the Brazilian market
today and will be key in increasing overall capital inflow as well as enhancing
knowledge and technical expertise sharing.
Pursuing a balanced approach to the energy
transition is one of the defining challenges of our times, not least when faced
with the compounding health and economic challenges brought on by the global
pandemic. Realising Brazil’s potential and ambition in the energy transition
requires embracing continuous innovation, mobilizing large amounts of public
and private investments and active participation from all key stakeholders.
With the upcoming public consultation of Brazil’s 2050 Energy Plan, there are
opportunities to set Brazil on a path to sustainable and inclusive growth and
to be an energy transition leader in a low-carbon future.