Is it possible to transform the Brazilian electricity system from low carbon to zero carbon? To discuss the paths, the president of CEBDS, former Finance Minister Joaquim Levy, and the CEO of PSR, Luiz Barroso, participated in the debate promoted by Instituto E+, at the Brazil Climate Action Hub, during COP 25.
The next decade will be the period of implementation of the Paris Agreement, with contributions aimed at containing global warming to 1.5º C. Disruptive solutions will be needed to contain Brazilian emissions, mainly from deforestation. Levy highlights the low impact of society's emissions, given the country's clean energy matrix, with almost 50% of renewable energy.
“When we look to the future, to become a zero-carbon country, we have two issues: to continue expanding the share of clean energy and to improve some processes, such as industrial production and electrification of transport, for example. We have the capacity to expand our percentage of renewables to get closer to zero carbon emissions. We have ways to get there, we just need them to be financially sustainable as well,” he reflects.
The use of renewable sources by companies, mainly through the purchase of energy through Power Purchasing Agreement (PPA) contracts. According to Marina Grossi, these contracts have given companies autonomy and changed the course of the conversation. “The PPA allows companies to not depend solely on the government. A regulated environment would facilitate the participation of more interested parties, but even in the current scenario we see that this is a growing trend”, she argues.
Barroso explains that renewable sources are the cheapest alternatives for the country. “Renewables in Brazil are not only the cleanest source, but they are also the most economical. One way to meet energy security, which is so questioned when we talk about renewables, is to integrate hydroelectric generation with the use of transmission to provide the flexibility needed for renewables to play a more relevant role in the energy matrix. Natural gas is an alternative that is already widely discussed, but the hydroelectric and transmission package is a point that needs to be debated.”
Regarding natural gas, Levy emphasizes that the possibilities of using the fuel should be discussed in more detail. “The priority today, if we had the capacity for sectoral analysis, would be to identify the business sector’s demand for heat and use gas as a heat source for industrial processes.”
Another alternative to enable a transition to zero carbon is carbon pricing, that is, putting a price on emissions and, consequently, on the cost of industrial processes. Barroso highlights that a proposal was born in a consultation held in 1983, foreseeing a carbon market for the electricity sector. The proposal, however, did not move forward.
Today, companies implement internal pricing in the absence of regulatory mechanisms to get ahead of regulation. “We are behind other countries in pricing mechanisms. Companies want regulation. We need to learn how to work in this emerging market. I can’t imagine reaching zero carbon without carbon pricing as a tool.”
