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Goldemberg - How Adequate Policies Can Push Renewables
Goldemberg - How Adequate Policies Can Push Renewables
Abstract
The growing interest in the establishment of a minimum share of renewable sources in the world energy matrix, after the
Johannesburg’s World Summit for Sustainable Development (WSSD), has raised the question about the means for such new
technologies to compete with the traditional ones. The Brazilian experience in the last 25 years with ethanol as a replacement for
gasoline can illustrate this possibility. Moreover, recent policies introduced by the Federal government for a minimum share of new
renewable sources—wind, modern biomass and small hydro—in the Brazilian electricity matrix reinforces the country’s commitment
to utilize adequate policies for achieving sustainable development.
r 2003 Elsevier Science Ltd. All rights reserved.
0301-4215/03/$ - see front matter r 2003 Elsevier Science Ltd. All rights reserved.
doi:10.1016/S0301-4215(03)00077-6
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1142 J. Goldemberg et al. / Energy Policy 32 (2004) 1141–1146
Fig. 1. Brazilian total primary energy supply (shares of 172 ktoe TPES) in 2000 (MME, 2002; Patusco, 2002).
and enables the use of educational media and commu- country shares in 2000. Traditional biomass (mostly
nication in school and reduces deforestation, through fuelwood) was split into two categories: renewable
replacing traditional biomass burning. (sustainably used) and non-renewable (from e.g. defor-
However, renewable energy technologies face difficul- estation practices). New renewable sources account for
ties in competing with the consolidated market of 13.5%.
conventional sources, especially fossil fuels. A large The country is well endowed with hydroelectric
market is necessary to reduce the gap in the costs resources, supplying 93% of internal electricity demand
between such options. To collaborate with this discus- in the year 2000. The total installed capacity is
sion, this paper analyses the Brazilian experience in 79 000 MW. As a large tropical country, Brazil has a
implementing a successful program on renewable energy high potential for the use of biomass. Besides traditional
based upon sugarcane ethanol as an automotive fuel. It woodfuel burning, now declining, the main modern
presents also a discussion on new policies for the sources are sugarcane products (ethanol fuel and
introduction of a minimum share of modern renewables bagasse for energy cogeneration) and wood from
(wind, small hydro and biomass thermal plants) in the reforestation.
electricity matrix. Sugarcane products are today the most economically
important biomass source, accounting for 19.5 Mtep in
2001. With the alcohol program, started in 1975 with 0.9
billion liters, the participation of sustainable biomass in
2. The Brazilian energy matrix
the Brazilian Energy Matrix has reached 19% in 2000,
corresponding to 14 billions liters per year of ethanol
In 1999 Brazil’s total primary energy supply1 was
produced from sugarcane. The use of bagasse for
similar to South Korea and corresponded to 9% of that
electricity production in sugar mills yields a considerable
from the US. The latter presents an average per capita
energy surplus potential of up to 4000 MW, around 5%
energy consumption approximately 8 times higher than
of current installed power capacity (Cenbio, 2002).
the Brazilian (IEA 2002a, b). The country has a low
Traditional woodfuel use, basically residential, has
electricity consumption per capita together with an
declined significantly over the last decades, substituted
energy-intensive economy.
by more efficient fuels and end-use technologies.
Although having a considerable amount of renew-
Governmental subsidies to reforesting has accounted
ables in the energy matrix, Brazil is still quite dependent
to 5.5 millions hectares in 2001 (compared to 3.3 million
on fossil fuels, mostly oil products for transportation.
hectares in the 1965–1980 period), to produce charcoal,
Applying the IEA criteria to another official source, the
woodfuel, pulp, and paper. Charcoal and bagasse wood
National Energy Balance (MME, 2002), Fig. 1 presents
were the predominant fuels in Brazil until 1954; since
1
TPES (indigenous production plus imports minus exports and then their use has remained approximately constant,
international marine bunkers, adjusted by internal stocks changes) is although this means that in relative terms, its contribu-
basically the internal energy consumption. tion has decreased rapidly. About 40% of Brazil’s steel
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J. Goldemberg et al. / Energy Policy 32 (2004) 1141–1146 1143
production makes use of charcoal (now from sustainable was possible because of the high price of gasoline and
forests) instead of imported coke (Cenbio, 2002). the special policies established to favour the program. In
The country has developed strong policies to imple- the period 1975–1989 a total of US$ 4.92 thousand
ment renewable energy, as be presented below. million was invested in the program (Goldemberg and
Moreira, 1999). However, savings with oil imports were
much higher, reaching US 43.5 thousand million (2001
3. Policies for transport: the Brazilian alcohol program US$) from 1975 to 2000 (Moreira, 2003).
The large amounts of ethanol produced allowed a
The Brazilian Alcohol Program (PROALCOOL)—to substantial decrease in alcohol production costs, as
produce ethanol from sugarcane—was established dur- shown in the learning curve of Fig. 2. Ethanol price paid
ing the 70s, as a consequence of the oil crisis, aiming to to producers fell quickly after 1985, due to technological
reduce oil imports, as well as to solve the problem of progress and economics of scale. The progress ratio of
fluctuating sugar prices in the international market. The the technology has shifted from 92% in the period 1980–
program has strong positive environmental, economic 1985 to 75% in 1985–2002. The lower the progress ratio,
and social aspects, and has become the most important the more the prices have dropped. Thus, an efficient
biomass energy program in the world. technology penetration is the one that has achieved low
In Brazil, ethanol is used in one of the two ways: (a) as PRs. In October 2002 US dollars, ethanol progress
octane enhancer in gasoline in the form of 20–26% ratios were 93% (1980–1985) and 71% (1985–2002).
anhydrous ethanol and gasoline, in a mixture called Another interesting comparison is in Fig. 3, with the
gasohol or (b) in neat-ethanol engines in the form of price paid to alcohol producers in Brazil versus
hydrated ethanol. Rotterdam gasoline prices. Prices were converted into
The decision to use sugarcane to produce ethanol in US$ per GJ of each fuel, assuming the corresponding
addition to sugar was a political and economic one that low heating values. These results illustrate the economic
involved government investments. Such a decision was competitiveness of ethanol when compared to gasoline.
taken in Brazil in 1975, when the Federal Government Trend lines demonstrate the decrease in ethanol costs
decided to encourage the production of alcohol to and the stable maturity of the one-century old gasoline
replace gasoline, with the idea of reducing petroleum technology.
imports, which were putting great constraints on the It is well known that the strongest argument against
external trade balance. Besides, the program presented renewables, in general, is their high cost and, therefore,
strong positive environmental, economic and social their lack of competitivity with conventional fuels, a
aspects, and has become the most important biomass common characteristic of new products and infant
energy program in the world. industries. This was indeed the case in the beginning
Ethanol consumption has been growing overall by its of the commercial use of such renewable sources but, as
addition to gasoline as a carburant. The increase in the consumption of renewable energy increases, its cost
production and use of ethanol as a fuel was made falls, as demonstrated by the Brazilian ethanol program.
possible by three governmental actions during the Social considerations are today strong determinants
launching of the ethanol program: (a) the decision that of the Program. Presently, ethanol production generates
the state-owned oil company, Petrobra! s, must purchase some 700,000 jobs in Brazil, with a relatively low index
a guaranteed amount of ethanol, (b) the provision of of seasonal work. Job generation in most other
economic incentives for agro-industrial enterprises will- industries is less intensive (Fig. 4) and requires higher
ing to produce ethanol, offering loans with low interest investments (Fig. 5).
rates from 1980 to 1985, (c) steps to make ethanol The environmental standpoint is another to mention.
attractive to consumers, by selling it at the pump for All gasoline used in Brazil is blended with anhydrous
59% of the price of gasoline. This was possible because ethanol. In addition to the alcohol–gasoline (gasohol)
the government at that time set gasoline price. Nowa- vehicles, there is a 3.5 million fleet running with pure
days, there are no subsidies for ethanol production and hydrated ethanol in the country, 2.2 million of which are
it is sold in general for 60–70% of the price of gasoline in the S*ao Paulo Metropolitan Region. Initially, lead
at the pump station in a free market, due to significant additives were reduced as the amount of alcohol in the
reduction on production costs. These results show the gasoline was increased and they were completely
economic competitiveness of ethanol when compared to eliminated by 1991. Aromatic hydrocarbons were
gasoline. Considering the higher consumption rates for eliminated, sulphur and carbon monoxide significantly
net-ethanol cars, ethanol prices at the station could be as reduced. Alcohol hydrocarbons exhaust emissions are
much as 80% of gasoline prices (Coelho and Gold- less toxic than gasoline’s, with lower atmospheric re-
emberg, 2002). activity. Acetaldehydes from alcohol use are less aggres-
In fact, policies have led to a significant and successful sive to human health than aldehydes from gasoline and
change in the economy. The Alcohol Program in Brazil diesel (Cetesb, 2002). With almost null greenhouse
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1144 J. Goldemberg et al. / Energy Policy 32 (2004) 1141–1146
E
Fig. 2. Ethanol learning curve (Nastari, 2003a). Progress ratio PR=2 , where E is the inclination of the logarithmic curve of prices (y axis) by
cumulative sales (x axis).
Fig. 3. Ethanol prices in southeast Brazil compared to international gasoline prices in Rotterdam (Nastari, 2003b).
emission balance, in the 1975–2000 period ethanol has 4. Policies for electricity
saved gasoline emissions of about 110 million tonnes of
carbon (MCT, 2002). In 2000, 9.2 million tonnes of Besides the ethanol program for transport, also in the
carbon dioxide were avoided due only to the gasoline electricity sector policies for renewable energy were
replacement by ethanol (Cenbio, 2002). recently introduced. The Federal Government has
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J. Goldemberg et al. / Energy Policy 32 (2004) 1141–1146 1145
5. Conclusions
especially those from the EU and Latin American and IEA—The International Energy Agency, 2002a. Energy Balances of
Caribbean countries. Non-OECD Countries 2001. IEA, Paris.
IEA—The International Energy Agency, 2002b. Energy Balances of
OECD Countries 2001. IEA, Paris.
MCT—The Ministry of Science and Technology, 2002. Primeira
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Unidas sobre Mudan@a do Clima—Relatorio ! de refer#encia (First
Cenbio—The Brazilian National Reference Center on Biomass, 2002. National Communication to the UNFCCC—Reference report).
Personal communication. MCT, Bras!ılia.
Cetesb—The Brazilian S*ao Paulo State Environment Agency, 2002. MME—The Brazilian Ministry of Mines and Energy, 2002. Brazilian
!
Relatorio da qualidade do Ar 2001 (S*ao Paulo Air Quality Report Energy Balance 2001.
2001). Cetesb, S*ao Paulo. Moreira, J.R., 2003. Private communication.
Coelho, S.T., Goldemberg, J., 2002. Alternative Transportation Fuels.. Nastari, P.M., 2003a. Poupan@a de divisas com o uso do a! lcool
University of S*ao Paulo, S*ao Paulo. combust!ıvel no Brasil (Savings by the use of ethanol fuel in Brazil).
Goldemberg, J., 2002. The Brazilian energy initiative—support report. Informativo Datagro January 2003. Datagro, S*ao Paulo.
Paper Presented at the Johannesburg 2002 World Summit for Nastari, P.M., 2003b. Private communication.
Sustainable Development. Secretaria de Meio Ambiente, S*ao Paulo Patusco, J.A.M., 2002. A lenha na matriz energ!etica brasileira
(The Brazilian S*ao Paulo State Environmental Secretariat). (Woodfuel in the Brazilian energy matrix). Departamento Nacional
Goldemberg, J., Moreira, J.R., 1999. The alcohol program. Energy de Pol!ıtica Energ!etica, Bras!ılia (National Department for Energy
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