By: Elissa Mitsuko Tokusato
The highly regarded World Energy Outlook (WEO 2020) report was recently published with the theme “The impacts of Covid-19 and the prospects for acceleration in the energy transition”. The annual study, produced by the International Energy Agency (IEA), is one of the main references for the international energy sector and in this edition presents a new ambitious scenario: net zero emissions by 2050. In Brazil, its launch event took place on December 14th with the collaboration of the Energy Research Company (EPE) and the Ministry of Mines and Energy. However, going against the much-talked-about green economic recovery, the Brazilian energy sector indicates a path towards reducing climate ambition.
WEO 2020 reveals the immediate effects of the pandemic on the energy system: 5% decline in global demand, 7% in CO emissions2 and 18% in investments for the sector. The global decline in greenhouse gas (GHG) emissions was mainly due to the decrease in oil and coal consumption of 8% and 7%, respectively. It is always important to highlight that this reduction occurred for the wrong reasons. Despite having a smaller share of the energy sector in GHG emissions this year, our country has gone in the opposite direction: we increased our national emissions from 10 to 20% in 2020, driven by deforestation[1].
At the launch event, IEA representatives expressed optimism about the recovery of the energy sector in 2021, referring to this period as a “golden era” due to advances in modernization policies in the gas and electricity sector, developments in energy efficiency, the dissemination of innovation in different areas of the sector, and were particularly hopeful about the advancement of biofuels. In addition, the report concluded that renewable energies are less affected by the pandemic and its consequences compared to other sources, and significant growth is expected from these.
Still, the report shows major challenges to be faced: around 660 million people will not have access to electricity and 2.4 billion will not have access to clean cooking sources in 2021. Even with the prospect of economic recovery in the medium term, uncertainty about the sector's recovery remains high, and four scenarios have been presented, which vary especially depending on large-scale policies. They are:
- Stated Policy Scenario (STEPS, from the English Stated Policies Scenario): Covid-19 is gradually brought under control in 2021 and the global economy returns to pre-crisis levels in the same year. It reflects all the intentions and policy targets announced today.
- Delayed Recovery Scenario (DRS, from the English Delayed Recovery Scenario): has the same policy assumptions as STEPS, but considers lasting damage to the economic outlook. The global economy returns to its pre-crisis size only in 2023, and the pandemic ushers in a decade with the lowest rate of growth in energy demand since 1930.
- At the Sustainable Development Scenario (SDS, from the English Sustainable Development Scenario): considers a wave of policies and investments of clean energy putting the energy system on track to achieve the sustainable energy goals in their entirety, including the Paris Agreement, energy access and air quality targets. A growing number of countries and companies are aiming for net zero emissions, typically by mid-century, on track to achieve global net-zero emissions by 2070. The public health and economic assumptions are the same as those in STEPS.
- The new case Net zero emissions by 2050 (NZE2050, from English Net Zero Emissions by 2050) extends the SDS analysis and includes the IEA's first detailed modelling of what it would take over the next ten years to put global CO2 emissions on a path to net zero emissions by 2050. It is considered very ambitious and would require an unprecedented effort to make this scenario a reality.
Figure 1: Estimated GHG emissions over the decades by scenario for the recovery of the international energy sector. If the current emissions reduction policies are implemented, many ambitious initiatives from other parties (represented by the gray area) will still be needed to achieve the sustainable development scenario (SDS). (Source: IEA, 2020)
The Brazilian energy sector, represented by EPE, showed little ambition regarding Brazil’s contribution to achieving net zero emissions by 2050. EPE presented comments on Brazil’s perspective on the global scenario at the publication’s launch event, which included:
- Expectations of increase in oil exports due to the appreciation of Brazilian oil on the international market, with China as the main buyer (which, in turn, announced a target of net zero emissions by 2060);
- Increase in imports of diesel and petroleum derivatives;
- Recognition of biofuels and low carbon hydrogen as solutions for the decarbonization of the mining and transport sectors, green technologies of which Brazil has great potential to become an exporter;
- Source leadership solar and wind in the expansion of installed capacity, which should be increasingly valued, requiring greater investments to sophisticate models transmission and distribution;
- Positioning in favor of a carbon market in the country, which will bring great benefits to the sector.
The 2030 Ten-Year Energy Expansion Plan (PDE 2030), recently made available for public consultation (contributions can be made until 13/01/2021, access here), predicts a decrease in the representation of hydroelectric plants in the energy matrix, with prospects only for the expansion of existing plants and growth in the supply of natural gas. Thus, despite the trend towards reducing emissions in the sector for the coming years[1], the PDE 2030 foresees continuous increase in emissions, indicating a total amount of 484 million tons of CO2nd, based on the justification of economic growth. In addition, the draft document proposes mitigation efforts in other sectors, claiming that the energy matrix contributes little to emissions.
Contrary to expectations, CEBDS companies have recognized great opportunities in decarbonization and have invested increasingly in renewable energy sources, such as Schneider Electric, The NotreDame Intermédica, O Bank of Brazil, The braskem and the Ambev. To learn more about corporate renewable energy contracts, visit Guide to Corporate Renewable Energy Power Purchase Agreements (PPAs) in Brazil .
The 2030 PDE also foresees non-compliance with the 10% in energy efficiency gains, proposed in Brazil's Nationally Determined Contribution (NDC) to the Paris Agreement. It is interesting to note that we are the only G20 country where energy consumption growth is greater than economic growth.[2], as recognized by PDE 2030 itself, which reveals significant bottlenecks in energy efficiency.
In an effort to expand energy efficiency actions and projects in the industry, the CEBDS Thematic Chamber for Energy and Climate Change has been working on the subject through the Energy Efficiency Front (FEE) project, in partnership with the Inter-American Development Bank (IDB). In 2021, FEE will hold two training sessions on energy efficiency: “Training and promotion of ISO 50,001” and “Financing for Energy Efficiency: challenges and opportunities for PEE”. More information will be released soon.
Faced with the challenge of green recovery, the IEA recommends that Brazil take advantage of its favorable position regarding the participation of renewables in the energy matrix, but that it remain vigilant in maintaining its leadership through its energy policies. As already recognized by many, we must join forces to increase climate ambitions for the sector, embracing the opportunities available to make Brazil a protagonist in the green recovery of the international energy sector.
References:
[1] Greenhouse Gas Emissions Estimation System (SEEG) and Climate Observatory. Impact of the Covid-19 Pandemic on Greenhouse Gas Emissions in Brazil. May 2020. Available at: http://www.observatoriodoclima.eco.br/wp-content/uploads/2020/05/SEEG-OC_Nota_Tecnica_Covid19_Final.pdf>. Accessed on December 17, 2020.
[2] Greenhouse Gas Emissions Estimation System (SEEG) and Climate Observatory. Impact of the Covid-19 Pandemic on Greenhouse Gas Emissions in Brazil. May 2020. Available at: http://www.observatoriodoclima.eco.br/wp-content/uploads/2020/05/SEEG-OC_Nota_Tecnica_Covid19_Final.pdf>. Accessed on December 17, 2020.
[3]BORGES, Kamyla. Available at:https://www1.folha.uol.com.br/opiniao/2020/12/a-hora-e-a-vez-da-eficiencia-energetica.shtml?utm_source=akna&utm_medium=email&utm_campaign=17122020-ClimaInfo-Newsletter&origin=folha>. Accessed on December 17, 2020.
