30 May 2024
Encouraging other countries to transform the world’s energy matrix in order to make it ever cleaner is an important challenge for Brasil at a time when the country presides over the G20 and will be at the forefront of COP 30, to be held in 2025.
Brasil is already leading by example: the Brazilian energy matrix is already one of the cleanest in the world. According to data from the Energy Institute (2023), almost half of the energy consumed in the country (49%) comes from renewable sources. In terms of electricity generation, Brasil’s electricity matrix is dominated by hydroelectricity, solar energy, wind power, biofuels, biomass and geothermal energy. In an exclusive article for the G20 Brasil website, André Leão, a researcher at the Institute for Strategic Studies in Petroleum, Natural Gas and Biofuels (Instituto de Estudos Estratégicos de Petróleo, Gás Natural e Biocombustíveis – INEEP) and PhD in Political Science from the Institute of Social and Political Studies at Rio de Janeiro State University (IESP-UERJ), assesses the opportunities that Brazilian leadership in important global forums can bring so that funding for energy transitions can reach countries in the Global South.
The status of Brasil as the current president of the G20 gives the country the challenge of leading discussions on a series of crucial issues for the future of global society: trade and investment, digital transformations, finance and infrastructure, food and nutritional security and, above all, climate change and the energy transition.
These last two issues have been particularly relevant to the foreign policy of President Lula’s government, which has spared no effort to host COP 30, to be held in 2025 in the city of Belém. Encouraging other countries to transform the world’s energy matrix to make it ever cleaner is an important challenge for Brasil. However, playing this role will allow the country to make a significant contribution to decarbonizing national economies and combating ongoing climate change.
Brazilian capacity to lead energy transition efforts is based on government programs and incentives, legal drafts, engagement in international arrangements involving clean energy production and on data about the country’s energy matrix. The New Growth Acceleration Program (Novo Programa de Aceleração do Crescimento – PAC) – an investment program coordinated by the Brazilian government, with the support of states, municipalities, social movements and the private sector – for example, stipulated an investment of BRL 417.5 billion (around USD 82 billion) in energy transition actions from 2023 to 2026, a period in which BRL 20.9 billion (around USD 4.1 billion) is also expected to be spent on the development of low-carbon fuels.
The Brazilian government has also forwarded to the National Congress a series of measures for the energy sector. “E30”, for example, changes the maximum percentage of ethanol in gasoline from 27% to 30% and also includes regulations on carbon capture and storage. Also noteworthy is the Inova Energia Plan, which consists of an initiative by the Brazilian National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social brasileiro – BNDES) to foster the technological development of renewable energy production chains such as solar and wind power.
Internationally, Brasil, together with India and the United States, has built the Global Biofuels Alliance, with the aim of expanding consumption of this energy source by consolidating a global market. During the United Nations Climate Change Conference in 2023, COP 28, Brasil joined the Global Offshore Wind Alliance — launched by Denmark, by the International Renewable Energy Agency (Irena) and by the Global Wind Energy Council — with the aim of exchanging good practices and policies and expanding installed capacity in the sector.
The Brazilian energy matrix is already one of the cleanest in the world. According to data from the Energy Institute (2023), although oil consumption still exceeds 30% of the total, the country consumes 49% renewable energy, compared to 51% non-renewable. As far as electricity generation is concerned, the figures show Brasil’s leadership in the use of renewable sources. Currently, the electricity matrix is dominated by hydroelectricity, solar, wind, biofuels, biomass, geothermal and others, which account for approximately 87% of the total, as can be seen in Graph 1 below:
The emphasis on biofuels is justified by Brasil’s great expertise in the sector. According to information from the Energy Institute (2023), the country is currently the second largest producer of biofuels in the world, with a share of more than 21% of the total, behind only the United States, which has around 38%. According to the Ten-Year Energy Expansion Plan 2032 (Plano Decenal de Expansão de Energia 2032), an informative document from the Brazilian government, long-term expectations for the sector are positive. Projections indicate a growth of 4.1% in the offer of biofuels and 6.6% in demand over a ten-year period (2022-2032), which could boost the international market and be a benefit to Brasil.
In the run up to its presidency of the G20, Brasil signed the Work Plan for Energy Acceleration with the International Energy Agency (IEA). Within the framework of the group of the world’s largest economies, the country, through the Ministry of Mines and Energy (MME), has the mission of coordinating the Energy Transitions Working Group, which is structured on the basis of three main themes:
- accelerating efforts to finance the energy transition;
- emphasizing the social dimension in order to promote a fair and inclusive transition;
- developing sustainable fuel markets.
These issues represent important challenges for Brazilian diplomacy, particularly the need to allocate a greater volume of resources to finance the transition of countries in the Global South, whose energy matrices are still largely dominated by fossil sources. Although investments in clean energy have increased by 17% in 2023, reaching USD 1.8 trillion — according to data from the Bloomberg NEF Report “Energy Transition Investment Trends 2024” – this amount needs to increase annually to USD 4.8 trillion from 2024 to 2030, in order to adopt a trajectory that guarantees net-zero CO2 emissions by 2050.
In other words, one of the central missions of Brasil will be to come up with solutions on how to deconcentrate investments. After all, a fair and inclusive energy transition must take into account the heterogeneity of the energy systems in the various regions of the world. The transformation of the energy matrixes of developing and less relatively developed countries depends on the support from developed countries and requires a diversification of funding sources.
The Brazilian experience in the biofuels sector can contribute to increasing the use of ethanol globally and lead to its transformation into sustainable hydrogen, which could also be created from wind and solar energy, generating yet another source of clean energy. Finally, through its government, Brasil has the capacity to lead the energy transition, using its great potential in new technological routes and its diplomatic experience to foster multilateral cooperation, promoting sustainable fuel markets and ensuring energy security.
Source – Brasilian G20 Presidency