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Brazil Sets Up Congressional Commission to Consider Regulations for Renewable Energy26 Jun 08The opening of a special commission in the Chamber of Deputies is a sign of increased interest in the potential for growth in the use of renewables in Brazil.
Deputies Install Renewable Energy Commission The Chamber of Deputies yesterday installed a special commission to analyse several bills on renewable energy, according to a statement released by the lower house. The bills include a proposal to create incentives for the use of renewable energy and require that 15% of total electricity consumption comes from alternative energy sources from 2020. The commission will also investigate the potential of different types of renewable energy such as wind power or biomass. The creation of the commission comes amid signs of a growing engagement by legislators with climate change issues. Earlier this month, a separate commission into climate change presented its findings and recommended that it be converted into a permanent commission (see Brazil: 19 June 2008: Congressional Probe into Climate Change Presents Final Report in Brazil). However, the increased interest of deputies in renewable energy may also reflect an awareness of untapped business opportunities, particularly for ethanol producers, and a desire to diversify fuel supplies. Brazil's electricity sector is still predominantly dependent on hydroelectricity and tight gas supplies in the Southern Cone have led to an increase in supply risks in the event of a drought. New investments in large hydroelectric power plants will expand supplies in the coming years and reduce the risks of rationing. However, concerns about gas supplies have prompted the state oil company Petrobras to contract LNG imports and for the government to show increased support for additional generation capacity from nuclear power plants. Outlook and Implications Renewable energy, including hydroelectricity, wood and charcoal, and sugar cane products accounted for 46.4% of Brazil's National Energy Balance in 2007, compared with 44.9% in 2006, according to figures released by the government's energy research company, the EPE last month. The new report also showed that sugar cane is now the second-largest primary energy fuel, after oil and derivatives and ahead of hydroelectricity. Sugar cane products accounted for 16% of total primary energy in 2007, compared with 36.7% for oil and derivatives and 14.7% for hydroelectricity. The main reason for the expansion in ethanol use has been the rapid growth in flex-fuel vehicles, which currently account for around 85% of new car sales. There has also been an increase in the use of bagasse produced by the ethanol sector in electricity co-generation plants. Nevertheless, despite the use of renewable fuels as a percentage of total fuel consumption being much higher in Brazil than that of many developed countries, the proportion of electricity consumed in Brazil that comes from alternative sources of energy (i.e., not including hydroelectricity) is still relatively small (less than 4% of total consumption) and there is scope for further growth in this area. The government is making some inroads. In June 2007, Brazil held its first ever auction of power to be produced from renewable sources. It plans to hold its first ever auction of power produced exclusively from biomass this year and the Minister of Mines and Energy recently announced that Brazil is considering holding a wind-power auction either this year or next (see Brazil: 13 May 2008: Brazil Delays Biomass Auction). The Proinfa programme launched by the government in 2004 to provide incentives to stimulate the use of alternative sources of energy in electricity generation has also helped to encourage greater investment in renewables in recent years. However, any recommendations by the new commission into how the regulatory framework could be modified in order to promote the increase use of renewable energy would be welcomed by investors. |
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