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Lagniappe
Brazil's
energy policy
Scarcity
in the midst of surplus
Corbis
Thanks
partly to ethanol from sugar cane, Brazil aims to be an energy
superpower.
But can it keep its own lights on?
By
The Economist
THE president, Luiz Inácio Lula da Silva, has just
returned from a five-country tour taking in Mexico and
Central America,
where he touted Brazil's claims to be an energy superpower.
Blessed with sunshine, watered by huge rivers and close to
self-sufficiency in oil, Brazil's energy potential is indeed
enormous. But for various reasons, ranging from government
lethargy to environmental lobbies, it runs a serious risk
of energy shortages at home.
Acende Brasil, an electricity-industry body, predicts a 28-32%
chance of blackouts by 2012 if the economy grows at 4.8% a
year (the government's forecast is 5%). Officials dismiss this
as alarmist. But Lula is worried enough to have attended a
recent meeting of his National Energy Policy Council for the
first time.
Even if economic growth disappoints, power could still run
short. At present, four-fifths of Brazil's electricity comes
from hydroelectric dams. But at times of high demand or low
rainfall, hydropower needs topping up with thermal supplies,
mostly natural gas. About half of the natural gas consumed
in Brazil comes from Bolivia. Relations between the two countries
have been tense since Bolivia declared the nationalisation
of the Bolivian operations of Petrobras, Brazil's state-owned
oil and gas company, last year.
Petrobras has also had problems in ensuring consistent production
from its gasfields at home. This month the company admitted
that there would be a shortfall in promised deliveries, earning
a fine of $90m from the electricity regulator. Uncertainty
over future gas supplies meant that at a government auction
for new electricity-generation plants held last month only
oil-fired projects were proposed.
The government's
hopes are pinned on two big projects, both of which have
their critics. It recently gave the go-ahead
for a third nuclear reactor at Angra dos Reis. Even more controversially,
Ibama, the environmental agency, has given approval for two
new dams on the Madeira river in the state of Rondônia.
Supporters point out that the two dams will flood an area
only one-sixth as large as that inundated by the giant Itaipu
dam. But because of their modern turbines, and the strength
of the Madeira's flow, they will generate electricity equal
to 8% of Brazil's current output.
Opponents
predict that the turbines will silt up and that the dams
will produce only half the energy advertised. Wesley
Ferreira Lopes, of the Movement for Dam Victims, claims that
5,000 families, rather than the official estimate of 900, will
be displaced by the dam. His group promises an “uprising” to
block the scheme.
If all goes to plan, the Madeira dams should be completed
by 2012. But Roberto Smeraldi, of Friends of the Earth, says
that every dam project in Amazonia has run between 60% and
120% over its planned construction time. The backup plan is
to add thermal energy until the dams can be finished. But from
where?
Bolivian
gas might have been an option. But, because of the nationalisation,
Bolivia may struggle to expand output, despite
a deal this month under which Venezuela will invest $600m.
Bolivia is committed to expanding exports to Argentina, rather
than Brazil. And Bolivian officials are furious about the Madeira
dams. They claim these will raise water levels in their country,
perhaps encouraging malaria and displacing families and wildlife.
After a meeting on August 3rd in São Paulo, Bolivia's
deputy environment minister threatened “all necessary
measures, legal and international” if the dams go ahead.
That could include reducing gas exports.
Brazil
insists it has a sovereign right to go ahead with the dams.
Evo Morales, Bolivia's president, should stop “sticking
his beak” into Brazil's affairs, says Ivo Cassol, the
governor of Rondônia.
Another possibility is to generate electricity from sugar
cane, in conjunction with ethanol production, though the technology
for this is still fairly new. Using sugar cane, Brazil produces
far more ethanol per hectare, with fewer emissions, than the
United States does with its corn-based equivalent. McKinsey,
a consultancy, reckons that if the area under sugar cane were
doubled, fertiliser applied and farming mechanised, Brazil's
ethanol output would increase from 17 billion litres (4.5 billion
American gallons) a year today to 160 billion litres by 2020.
But ramping up ethanol production has drawbacks. Although
very little of Brazil's sugar cane is grown in the Amazon region,
expanding the crop could put pressure on the rainforest nonetheless,
by pushing ranching and soyabean farming farther into the interior.
Environmentalists
argue that Brazil could do much more to conserve energy.
But that is a long-term effort. The country
faces difficult trade-offs between development and the environment.
As Jerson Kelman, the electricity regulator, notes, it would
be ironic if green opposition to dams means that Brazil ends
up using more oil to keep the lights on.
Matthew
Malinowski is
a contributor to The Christian Science Monitor and wrote
this story in Santiago, Chile. Petroleumworld
not necessarily share these views.
Editor's
Note: This commentary was originally published by The Christian
Science Monitor, on the August 8, 2007 edition.
Petroleumworld reprint this article in the interest of our
readers.
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