Reduction of CO2 emissions: distributing costs and sacrifices

By Ronaldo Bicalho

According to our last article, thinking about the transition between the current economy based on intensive use of fossil fuels and a future economy relying on renewable energy as a defined process with a single trajectory, a single timing and unique content, is a simplification that does not help in understanding the nature of this transition, its possibilities and hindrances.

Indeed, the transition is an undefined and open process with multiple paths, content and possible times.

In other words, there is no a single transition, but various transitions.

In this sense, analyzing nowadays the possible evolution of the energy sector in the world involves the analysis of these various transitions.

Mapping transitions

To identify these different possibilities of transition it is essential to map the different ways of noting the trade-off energy security versus climate change and the various forms of facing it.

Thus, we can consider generally the reduction in the intensity of the climate change process as the main objective and, thereafter, to evaluate the type of negative impact (cost) the reduction of CO2 emissions has on energy security, according to several hypotheses to achieve this reduction.

Energy security and climate change: the hard convergence

By Ronaldo Bicalho

Two main issues dominate the current debate about energy: climate change and energy security.

Initially, these issues belong to different areas of public policy; however, the recent development of events, both in energy and environment levels, made the interdependence between them increases significantly.

According to this, the peculiarity of the current moment is not simply the presence of the environmental issue – climate change – in the energy debate, but the prominence acquired by the subject in the evolution of the current energy situation. As a result, it is not enough to recognize the need to incorporate the environmental variable in the debate, but recognize the need to incorporate it as a relevant issue as energy issue (energy security) is addressed.

The need to balance environmental and energy dimensions in the discussion on energy results from the strong presence of fossil fuels in both climate change and energy security.

For the environment area , fossil fuels are the main cause of climate change as a function of temperature increase generated by the concentration of greenhouse gases in the atmosphere; in particular, the CO2 from burning fuels.

For the energy area, fossil fuels play a key role for ensuring the energy supply necessary for economic development and social welfare, due to a set of attributes – capacity of storage, density, availability and control – which allows the use of these fuels at scale levels and cost extremely advantageous.

Fossil fuels and global warming in the complex energy policy game

By Renato Queiroz

By formulating and re-evaluating energy policies, countries face an issue: future energy matrixes should reflect the actions to decrease at an increasing rate the burning of oil, natural gas and coal, in order to stop the increasing concentration of (CO2) carbon dioxide emissions. This issue is followed by reports made by recognized organizations, such as those by Intergovernmental Panel on Climate Change (IPCC), warning that if such actions do not occur there will be rising of sea level, droughts in some regions, climate changes, etc.

Another example is the document published by the Asian Development Bank, on August 2, 2011, “Asia 2050”, whose findings were published recently by the press.  Established in 1966, such institution, whose objective is to promote economic growth for developing countries in Asia, warns in the document mentioned that the impact of climate change is among the main obstacles to the region to recover the dominant economic position before the Industrial Revolution.

From fossil fuels to renewables: the hard energy transition

By Ronaldo Bicalho

To prepare an energy policy that manages the hard transition from a fossil fuel economy to a low carbon economy is not an easy task.

The massive replacement of fossil fuels by renewable energy sources involves significant technological, economic and institutional changes. These changes go beyond the energy sector and cover subjects related to a set of values associated with the crucial role of energy in economic development and social welfare and relationship with natural resources and environment derived precisely from this centrality.

The compatibility between the imperatives of energy security and climate change, by penalizing fossil fuels and incentives to renewables, has been demonstrated much more complex than previously conceived.

The idea of bringing together the best of both worlds – the self-sufficiency and low emission, increased energy security and combat the factors causing climate change – concerning the expansion of renewable sources in the energy matrix has been facing relevant technological, economic and political-institutional obstacles.

The first obstacle is technological and concerns the requirement of significant advances in renewable technologies so they can actually compete with traditional technologies. These advances are related to overcome the problems associated with low capacity of storage, density and scale characteristics of the current stage of development of renewables.

Energy security and climate change: different views, several policies

By Ronaldo Bicalho

Energy security and climate change are the two main axes currently surrounded by the energy policies in the world.

Then, to ensure the supply of energy and reduce emissions of greenhouse gases have become major strategic objectives of Nation States in the energy field, with significant impact in the desired composition of the future energy matrix and setting the most appropriate strategies to achieve it.

However, the evaluation of the real consequences of these two objectives at the heart of energy policy needs a qualification. Especially, because Nation States perceive, hierarchized and insert into their set of public policies such goals, which, after all, translates into the amount of resources that, in fact, these States are willing to mobilize to achieve them.

The inexorable interdependence of Brazilian energy policies

By Helder Queiroz

The discussion on energy issues has been guided, at international and national level, about the future of the production and use of energy sources, which can not be any longer dissociated from policies that aim to achieve 3 goals simultaneously: security of energy supply, decreasing of energy dependence by Brazilian states and mitigation of impacts of climate changes caused by greenhouse gases, especially from the burning of fossil fuels. There is nothing trivial in reconciling these objectives, and they indicate probably an increasing importance of the binomial Energy-Technology in the process of finding solutions.

In the case of the energy industries, there are negative externalities, in variable degrees, regarding the production and use of all means of energy. For this reason, the State plays a fundamental role in both establishment of energy policy guidelines and application of economic and tax instruments required to mitigate externalities and securing energy supplies.

In Brazil, for decades, the guidance for energy policies, since the first oil crisis, implemented by many governments, was the attempt to achieve self-sufficiency in oil. This is an outstanding aspect of government guidelines for the Brazilian energy sector. The results are widely known. Although Brazil has to import light oil to balance its refining process, the degree of dependence in oil imports is now close to zero. And the possibilities unveiled with the important findings of the Pre-salt, even with major technological and institutional challenges to address and overcome, set the country in a privileged position regarding the allocation of energy resources.

Energy integration in South America: motivations, obstacles and achievements

 

By Renato Queiroz and Thaís Vilela (*)

Motivations and Difficulties

Despite several bilateral agreements executed over the years, the energy integration process in South America develops gradually. The overcoming of certain barriers to be outlined later is the basis for achieving a fully integrated market. It is important to mention that the issue raised is the energy integration among countries of a continent, involving strategic, political and economic issues. Thus, there is no relation with energy interconnection, which is an energy transmission from one country to another one. The first concept corresponds to a complex process, since it is subject to factors related to international relations.

The integration experiences in Europe have shown that the development of regional energy integration is subject to lengthy multidimensional processes and under complexity often unpredictable, because there are several players involved in decision-making that often impact the integration process. Indeed, governments, regional and international energy companies, non-governmental organizations, multilateral lending institutions, regional bodies, among others, with their powers, influence the results of decisions.

However, we consider that energy is a vector suitable for integration between continents and has characteristics that promote agreements for the rational utilization of natural resources. It also creates opportunities to reduce inequality in the countries involved, contributes to the economic and social development in the region and, above all, provides greater energy security because it favors the consumer countries to achieve diversification of energy sources through imports.

Evolution of the institutional framework for energy industries in Brazil

By Edmar de Almeida 

Since the 1990s, the energy sector in Brazil has been a laboratory seeking a new form of industrial organization and a new institutional framework that will enable the introduction of private capital, without compromising security of supply. The relatively high rate of growth relate to energy demand and the large size of the Brazilian economy represent a major challenge to ensure the level of investment necessary for the security of energy supply.

The liberalization of energy sector in the 1990s tried to cut down the State’s role in this activity. This reform had no desired results. Private investment has failed to ensure the expansion of the Brazilian energy sector on the relevant volume and celerity. Moreover, several specific aspects of the Brazilian energy market represent important obstacles to private investments: i) marginal cost of increasing expansion, ii) presence of major energy state-owned companies, iii) significant uncertainties about the trajectory of energy prices, iv) lack of expansion planning for energy supply.