Transcript Rafael Kaliski

Brazil: Policies and Scenarios
Summary: Rafael Kaliski
Critique: Tom Wright
Introduction
 Brazil is the 5th most populous country
 GDP US $3,300 as of 2000.
 Energy use has increased 250% between 1975
and 2000.
 Hydropower accounts for 90% of all electricity /
39% of total energy use.
 Petroleum 2nd-largest energy source 34% of total
energy use.
 Bio-Energy 16% of energy consumed.
 Renewable energy sources 56%.
Objectives
 Similar to U.S.
– Diversify energy sources
– Reduce import dependence
– cut inefficiency
 Ensure Adequate energy supply
– Hydropower
 A Drought resulted in a power shortage (2001)
 Reduce Energy Sector Investments
– Privatize
– For Profit state-owned companies
 Reduce Adverse Environmental Impacts
 Contribute to Social Development
Acronyms
 PROCEL – The National Electricity
Conservation Program.
 ANEEL – The federal Regulatory agency for
the Electricity Sector.
 NTSA – The National Testing and Standards
Agency.
Policy 1: Adopt Minimum Efficiency Standards
for Appliances, Motors and Lighting Products
 If adopted, consumers would automatically
purchase relatively efficient products.
 PROCEL and NTSA have already established
energy efficient test procedures and an efficiency
labeling program.
 Efficiency standards might provide 20 to 30
percent energy savings for new refrigerators /
freezers, AC, and lighting products.
 For motors efficiency standards might provide 2 to
8%, depending on size.
Policy 2: Expand Utility Investments in
End-Use Energy Efficiency
 In 1998, ANEEL began requiring distribution utilities to invest at least
1% of their revenues in energy efficiency programs. But only ¼ of 1%
must be spent on efforts that help consumers use electricity more
efficiently. This later changed to ½ of % to be invested in R&D.
 This policy would expand funding for energy efficiency programs to
about 2% of utility revenues.
 Part of the money would be spent by utilities and part would be
directed to state and federal energy efficiency programs.
 The additional cost of these energy efficiency programs could be
recovered by utility rates.
 A 10-20% Bonus could be given to utilities based on the net societal
benefit, evaluated by ANEEL.
 PROCEL could assist the utilities to design effective programs and
implement coordinated market transformation initiatives regionally or
nationally.
Policy 3: Adopt Energy Codes for New
Commercial Buildings
 No city or state has adopted energy efficiency
requirements for new commercial buildings.
 This policy would convene a group of experts to develop
and publish a national model energy code, including
requirements for different climate zones.
 A key part would be to train builders, architects, building
inspectors, and code enforcement officials from
municipalities. PROCEL could carry out this effort with
experts from educational institutions.
 Energy demand grew nearly 8% per year from 1995 to
2000. The Electricity demand is projected to increase 6%
per year in the future.
 This policy could eliminate 10 to 15% of the future growth
in electricity demand.
Policy 4: Expand Use of Combined Heat and
Power Systems Fueled by Natural Gas
 CHP systems have cost-effective cogeneration potential
estimated to be between 9 and 17 GW.
 The recent increase in Natural Gas supply opens up new
opportunities for CHP systems.
 The below policies should be implemented in support of
CHP.
– Require utilities to purchase surplus power via long term contracts.
– Require utilities to interconnect CHP systems to the power grid.
– Give priority to CHP projects as new gas supplies become
available.
– Provide financial incentives for CHP systems.
– Reduce import duties on CHP equipment.
Policy 5: Adopt Minimum Efficiency Standards
for New Thermal Power Plants
 The increased supply of natural gas has sparked interest in
the construction of natural gas-fired power plants.
 The majority of Thermal Power plants being constructed
are simple cycle plants, 30 to 35% efficiency.
 If minimum efficiency standards were adopted, 55%
efficiency, all new thermal power plants would have to be
combined-cycle plants, 50 to 60% efficiency.
 Also current simple cycle plants, which are used more than
a nominal amount would be required to add extra
generators and operate as a combined-cycle power plant,
so they would meet the minimum efficiency level.
 This requirement would also narrow the difference in
capital cost between electricity only and CHP plants.
Policy 6: Adopt Industrial Energy Intensity
Reduction Targets
 It is feasible to reduce energy use by 30+% in a wide range of energyintensive industries.
 This policy would establish energy intensity reduction targets for major
industries through voluntary agreements between the government and
industry.
 PROCEL and the government could provide technical and financial
assistance in the form of energy audits of industrial facilities, training,
and tax incentives for investments in energy-efficient equipment.
 Companies that enter into these agreements to improve energy
efficiency by 2% per year, could be protected from any raises in fuel
taxes. Also these companies could be given preferential access to
power should electricity shortages recur.
 This policy would yield a 12% reduction in overall industrial energy use
by 2010. 80% of the savings would come from reduced fuel
consumption. 20% from improving the efficiency of electricity use.
Policy 7: Adopt Minimum Fuel Economy
or CO2 Emissions Standards for New
Passenger Vehicles
 There are no fuel efficiency standards for new cars or light trucks.
 Vehicle manufactures receive some tax incentives for producing
engines with 1 liter or less in volumetric capacity. 60-70% of all new
passenger vehicles sold in Brazil have 1-litre engines.
 In 1998 the Fuel Economy was 10 km/l while the fuel economy, in
2000, was about 11km/l.
 Most of the 1-litre engines, are derived from 1.6-litre engines, from
older models.
 The policy would require adopting fuel efficiency standards.
 These standards could be expressed in terms of either an increase
of fuel efficiency or a reduction in CO2 efficiency.
 If a CO2 emissions standard were adopted, manufacturers most
likely would comply through some combination of efficiency
improvement and fuel shifting.
 This policy would require a 40% reduction in CO2 emissions, by
2010, 75% would be from fuel efficiency improvement and 25% from
through increased sales of ethanol vehicles.
 The average fuel economy would be 16km/l, by 2010.
Policy 8: Expand the Production and Use of
Ethanol Fuel
 Increase demand and supply for ethanol fuel
 Low interest loans to stimulate construction of
distilleries.
 Strategic Ethanol Reserve
 New price or tax incentives to stimulate
purchase of neat ethanol cars again.
 Ethanol could be blended with diesel, up to
12%.
Policy 9: Stimulate CHP Systems Using
Bagasse and Other Sugarcane products.
 Potential to generate excess electricity using more
efficient power generation technologies.
 Some Policies would be similar to Policy 4 (CHP
with natural gas).
 Adopting this policy could result in 2,400MW of
bagasse CHP Capacity by 2005 and 6,300 MW by
2010.
 The shift from manual to mechanized harvesting
would be gradual.
Policy 10: Stimulate Grid-Connected Wind
Power
 Substantial potential (i.e. state of Ceara has 25,000 MW
potential).
 ANEEL established buyback rates
– originally 48$/MWh
– increased to $57/MWh(for approved projects by the end of 2001,
$52/MWh(for approved projects by the end of 2002)
 Law enacted requiring 80%, of average retail electricity price,
over a 15-year period (2002).
 Many new wind farms were proposed or under construction
as of mid-2002.
 Possible to implement 7,000+MW of wind power capacity by
2010, if this policy could be extended.
Policy 11: Stimulate Renewable Energy Use
in Off-Grid Applications
 PRODEEM installed approximately 5,700 solar
photovoltaic (PV) systems in off-grid areas, for
no cost.
 Many of these systems were not maintained.
 Develop a private sector PV supply which will
provide micro-financing and subsidies to
households (subsidies would be reduced as
technology improves).
 Could lead to as many as half of rural
households obtaining solar PV systems by 2010.
 Could foster social and economic development
in poorer regions.
Policy 12: Improve the Efficiency of Freight
Transport
 R&D and demonstration programs
 Tax incentives to encourage production and purchase of
higher-efficiency trucks and locomotives.
 This policy could yield fuel economy improvements of 16%
for freight trucks and 12% for rail transport by 2010.
 Shift cargo among modes.
 Possible to increase/decrease fraction of freight shipped
by:
– Rail 21%->29%.
– Water 14%->18%.
– Truck 60%->48%.
From 2000 to 2010.
Energy and Other Impacts
 IMEP – Integrated Model for Energy
Planning
Conclusions
 The Policies proposed may be difficult to
implement by 2010.
 If the some or all of the Policies are
Implemented Social and Economic
Development can occur faster.
Brazil is highly urbanized
 80% Brazilians live in urban areas (Geller, 2000)
 31% urban in low income countries (WB, 2001)
 Geller does not emphasize rural energy issues
Energy in Brazil: Critique
Tom Wright
Brazil: poor country or rich?
 The 9th largest economy in the world
 Per capita income in 2000 was $3300
 73 of 208 countries under $1000 in 2002
Brazil is highly urbanized
 80% Brazilians live in urban areas (Geller, 2000)
 31% urban in low income countries (WB, 2001)
 Geller does not emphasize rural energy issues
Author knows Brazil well
 He worked there extensively as a consultant
 Hesitates in presenting full historical and political
context so as not to offend future clients?
What Brazil shares with other
developing countries…
 High inflation makes the “long term” short
 Economic transition means unemployment too
 Weak institutions mean no stable regulations
 Donations: “Nobody has ever washed a rental car”
“Could, could, could…would, would, would”
 Scenario analysis can isolate the analyst
 Need historical and cultural context or else…
 Policies meant for elsewhere miss the mark
Privatization: cure-all or (!) conspiracy?
 Geller seems to accept privatization as a given
 World Bank and IMF have imposed privatization
as a condition for granting loans…
 But government sector is often the only domestic
employer for the educated elite in poor countries
Role of us engineers
 We need to tell the policy wonks, “No that’ll never
work!” And then show them a better way
 Go work overseas! And not for two weeks!
 Stay long enough to learn the local scene
 Bring their better ideas back to the US