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ENERGY-BRAZIL: Two-Pronged Policy

Fabiana Frayssinet

RIO DE JANEIRO, Apr 29 2009 (IPS) - The Brazilian government announced it is overhauling the country's energy basket with more emphasis on renewable resources, while continuing to plan for future expansion of local production of traditional fossil fuels, like oil and gas.

This new balance of energy sources was presented by Environment Minister Carlos Minc at the Apr. 22-24 ministerial meeting of the Group of Eight (G8) most powerful industrialised countries in Siracusa, Italy, which Brazil attended as a guest.

Brazil's plan reflects the spirit of the fifth Summit of the Americas, held this month in Trinidad and Tobago, which discussed a proposal for the countries of the Americas to generate half of their energy from renewable sources by 2050, thus reducing emissions of greenhouse gases which cause global warming.

Seventy-five percent of Brazil's energy comes from hydroelectric power, and the government wishes to build more such stations, but without causing further deforestation in areas like the Amazon rainforest.

According to Minc, sites will be chosen in river basins that would involve less flooding of forested areas, using underwater river turbines that harness the water flow and generate more energy in smaller areas.

The government expects to produce 50 million megawatts from this kind of hydroelectric plant in the next two years.

The Environment Ministry pointed to other measures, like one recently adopted by the Brazilian Institute for the Environment (IBAMA), which requires new thermoelectric plants fuelled by coal or diesel to compensate for their greenhouse gas emissions by planting trees.

"That way we raise the cost of energy produced by thermoelectric plants, while implementing policies to lower the cost of renewable sources like wind energy," the Ministry says.

But the government of President Luiz Inácio Lula da Silva will invest more heavily in other renewable energy sources, like biodiesel made from oil-bearing plants such as palm trees, sunflowers, castor beans and peanuts, and especially in expanding production of the biofuel most consumed within this country, ethanol, manufactured from sugarcane.

The government counters objections to biodiesel production, which could fuel deforestation in crucial areas like the Amazon, by saying that it will foment the recovery and use of degraded land to plant sugarcane.

According to the Sugarcane Industry Association (UNICA), 46 percent of the Brazilian energy mix is already based on renewable sources, while ethanol accounts for 16 percent.

In Brazil, 90 percent of new vehicles, which currently make up 25 percent of all cars in the country, have flex-fuel motors that can run on gasoline or ethanol or both.

The head of UNICA, Marcos Sawaya Jank, said this has cut Brazil's emissions of carbon dioxide, the main greenhouse gas, by 50 million tonnes since 2003, equivalent to planting 150 million trees in the same period.

UNICA's promotion of ethanol has drawn criticism from those who are concerned about competition between planting crops for energy or food and argue that using food grains for energy production could cause food to become scarce and expensive.

The supposed benefits of biofuels for the environment are also questioned in some quarters. The International Council for Science (ICSU) reported that biofuel production may increase, rather than reduce, global warming.

According to the ICSU, the process of farming crops like sugarcane in Brazil and maize in the United States releases amounts of nitrous oxide, another greenhouse gas, that more than counteract the benefit of lowering emissions of carbon dioxide generated by burning ethanol instead of gasoline.

Energy expert Jean Paul Prates says "the question of direct competition" between biofuels and food is "real" and "should not be hidden."

But Prates, energy secretary for the Brazilian state of Rio Grande do Norte, told IPS that this competition depends on the amount of idle and arable land in each country.

In that respect, his state in the northeast of the country, and the rest of Brazil, have extensive degraded land areas where biofuels can be produced without causing deforestation, he said.

Brazil and the United States contribute 70 percent of the world's ethanol output. The Brazilian government's energy policy aims to produce 23.3 billion litres of ethanol a year, and to export five billion litres. For biodiesel, the goal is to reach an annual production of 3.3 billion litres by 2010.

Even Brazil’s state-run oil giant Petrobras is producing biofuels, and has joined efforts to expand their production and promote scientific research on them.

Petrobras has three new biodiesel plants and plans to produce 640 million litres a year by 2013. Including ethanol, the company has announced that it will spend 2.8 billion dollars on biofuels up to 2013.

In the view of Petrobras president José Sergio Gabrielli, the important thing is 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 labour conditions for sugarcane workers have improved, he 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.

According to the government, only one percent of the land suitable for agriculture in Brazil is used to grow sugarcane.

Petrobras' main focus in this area is to develop technologies for producing second and third generation biofuels on an industrial scale.

Second generation biofuels can be obtained from the cellulose of any plant, using the whole plant and not just the grains, and thus reducing water consumption, for example, Prates said.

For the third generation, algae and other organisms from which biofuels can be extracted can even be grown in extreme environments such as deserts, frozen regions or the sea, he said.

The goal is, in fact, "to try to tone down the debate about direct competition between energy and food crops," Prates said.

"If Brazil can grow biofuels in the present conditions – without compromising land for growing food – and also make progress toward second and third generation biofuels, we have a promising future," he added.

But neither the government nor Petrobras are willing to stop producing oil and natural gas, or even to increase output.

Petrobras currently produces 1.9 million barrels of crude per day. But the discovery of new deep sea reserves, thousands of metres deep and under a salt layer, has raised expectations that it could increase production to 3.1 million barrels per day by 2020. The company is also building five oil refineries to increase its refining capacity to 3.2 million barrels per day 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 by-products," Gabrielli said.

According to Prates, this model 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," he said.