The role of the Brazilian government initiatives in the boost of innovation

in its energy sector.

Carlo Montoya Castañeda

15-11-2018
 Innovation for Sustainable Development
Midterm paper
INDEX

ABSTRACT 2

INTRODUCTION 2

REVIEW OF LITERATURE 2

GOVERNMENT INITIATIVES 2
INNOVATIONS IN THE ENERGY SECTOR 3

METHODOLOGY 3

FINDINGS 4

GOVERNMENT INVESTMENT 4
PROINFA 4
PROGRAM FOR RESEARCH AND DEVELOPMENT (P&D) 5

DISCUSSION 6

CONCLUSIONS 7

REFERENCES 8

APPENDIXES 9

APPENDIX 1: BRAZILIAN GOVERNMENT INITIATIVES SINCE 2000 9

APPENDIX 2: BRAZILIAN ENERGY MIX 10

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Abstract
The energy sector is very important and, at the same time, complex issue. Various
factors contribute to the improvement of it within a country. This paper aimed to
analyze the role of the Brazilian government, through its main national initiatives, in the
boost of innovations that have helped the country to achieve the scenario it currently
portrays. Data showed that indeed, since 2000 the appearance of multiple initiatives has
contributed to the rise of technology ventures that bring non-conventional renewable
energy sources into a wider participation in the country’s energy matrix. However, it
has also been discussed the difficulty it takes to accurately segregate the contribution of
each individual initiative to the final results, as most of them coexist nation-wide
promoted by different institutions.

Introduction
The energy sector in Latin America presents a wide variety in terms of efforts and
results achieved. On one hand, there are the regional leaders that have been able to
improve their energy matrix, moving it towards more renewable sources. On the other
hand, there are those other countries that remain still dependent on conventional sources
and that soon will start feeling the pressure of this challenge, as these sources result
more polluting and scarce. In order for the later to follow the former model, it is
necessary to understand the factors that helped them to achieve those results. This
document seeks to analyze the role of the government, as one of those factors, in the
boosting of innovations within the energy sector, since renewable energy is still a field
in exploration.

Review of Literature
Government initiatives
Merriam-Webster dictionary defines an initiative as “an introductory step” or “energy or
aptitude displayed in the initiation of action” 1. Under this definition, government
initiatives can be understood as actions within its capabilities (e.g. policies
implementation) taken under certain contexts that do not represent final projects, but
initial approaches to, for example, solve a problem. In this way, even when most of the
initiatives undertaken by Brazil analyzed in this document have been implemented

1
“initiative.” Merriam-Webster.com. Merriam-Webster, 2018. Web. 14 Nov 2018.

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various years ago, it will not be taken for granted its long-term validity, but instead, its
effectiveness as government reactions will be questioned.

Innovations in the energy sector

Global challenges, like rising temperatures, have propelled a series of changes in the
approach to the energy sector. Countries are working on improving their energy mix,
moving towards non-conventional renewable energy sources (NCRES). The OAS
include within this category the following technologies: hydroenergy, biomass, solar
and wind2. Innovation capability of government in this sector will be aligned to the
framework used by the World Intellectual Property Organization (WIPO), in its Global
Innovation Index report, as “the ability to exploit new technological combinations
[which] embraces the notion of incremental innovation and ‘innovation without
research’”.

Methodology
For this document, Brazil has been chosen as it has played a model role in the energy
sector in Latin America, specifically in non-renewable sources. In order to evaluate the
impact of its policies and other government initiatives, data from open sources have
been evaluated (e.g. WIPO Database, UNESCO R&D and Innovation Database, among
others). The scope of this analysis has considered data from the year 2000 until. This
due to the energy crisis at the beginning of the 21st century, which increased the pressure
on the country to move forward new technologies to diversify its energy matrix,
bringing a vast amount of government efforts.

In order to measure the impact of these initiatives it has been considered the following
factors:

 Number of patents in energy-related fields

 Energy mix variation (increased/reduced dependence on renewable energy
sources)

By analyzing their trends, it is possible to establish a cause-effect relationship between

them and the government policies, initiatives or programs.

2
Organization of American States, Chapter 15 – Renewable and non-conventional energy sources, OAS,
http://www.oas.org/dsd/publications/unit/oea37e/ch18.htm#chapter%2015%20%20%20renewable
%20and%20non%20conventional%20energy%20sources

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Findings
Since 2000, a wide number of initiatives have been undertaken by the Brazilian
government in the energy sector. The focus of this document will be only on those of
national reach, which results can be analyzed because the data is publicly published
within the timeframe above mentioned. A full expanded list of all of them in
chronological order can be found in Appendix 1.

Government investment
Over the last years, the Brazilian government has constantly increased its Gross
Domestic Expenditure on R&D (GERD). Within its many categories, the Engineering
and Technology, which includes renewable energies, also shows an increasing trend.
The following figure shows, however, that the number of patent solicitudes has been
stagnated until recent years.

Figure 1. P&D efforts vs patent solicitudes in the energy sector34

90000 000 2 500

80000 000
70000 000 2 000

60000 000
1 500
50000 000
40000 000
1 000
30000 000
20000 000 500
10000 000
0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

GERD Patents

PROINFA
Not having the results expected from the implementation of the PROEOLICA Program
from 2001, the Brazilian government implemented the PROINFA Program in 2003,
with a focus on the boost of the energy from wind, biomass, and small hydroplants. The
following figure shows how only in the past few years there is an increase in the wind
and solar contribution to the energy mix.
3
“World Intellectual Property Organization.” WIPO Intellectual Property Statistics Data Center,
www3.wipo.int/ipstats/index.htm
4
“Science,Technology and Innovation.” Research and Experimental Development,
data.uis.unesco.org/Index.aspx?DataSetCode=SCN_DS&lang=en#.

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Figure 2. Variation in renewables energy mix generation5
450000 90
400000 80
350000 70
300000 60
250000 50
200000 40
150000 30
100000 20
50000 10
0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Hydro Wind Solar

However, it does not necessarily mean that this program took more years to get the
expected results. Joined efforts actually helped to boost innovations that, still in
development, do not contribute yet to the country energy output, but represent a
potential for its diversification.

Program for Research and Development (P&D)

The P&D program, implemented in 2001, consists of a minimal annual percentage
application on the net operating revenues of Brazilian companies that work on the
energy sector6. This money is invested in projects for the development of technology
using NCRES.

5
“World Bank Open Data.” World Bank Open Data, World Bank, data.worldbank.org/.
6
“P&D ANEEL.” CSEM Brasil, csembrasil.com.br/aneel/.

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Figure 3. Variation on-going/ventures in different energy technologies7

2500

2000

1500

1000

500

0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Hydroenergy Wind Termal PV

Ever since a determined amount of projects per year have been financed with these
funds. In the graph it is shown the variation of the number of ventures operated under
this program each year. Considering that both the hydroenergy and thermal (biomass
combustion) have been largely dominant in research interest before 2000, it is relevant
to highlight the increasing number of projects working with wind and solar energy
(photovoltaic technology), particularly since 2009. Appendix 2 shows the total
distribution in the country energy matrix where one can see that this improvement in the
interest in these technologies is being reflected in an increase in its contribution to the
country energy output.

Discussion
Considering the three government initiatives above mentioned, it can be seen that there
is a relationship between these efforts and the positive changes in the energy sector. It
can be seen that the results show generally later after the program revised is launched.
This might be due to the difficulty it carries to do the research, test and implement new
technologies in this sector.

It cannot, however, be stated that there is a cause-relationship for one single initiative
and, for example, the increasing rate of on-going projects working with wind sources.
The coexistence of multiple programs targeted to, for example, increase the contribution
of NCRES to the energy matrix, reduce barriers to innovation production (e.g.
subsidized credits from the Brazilian Development Bank) or discourage of conventional
7
“Geração - ANEEL.” Go to ANEEL, www.aneel.gov.br/dados/geracao.

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energy sources exploitation makes it difficult to measure the contribution proportion
that one single initiative has over the final results in a year. Short-term projects can be
implemented isolated in order to provide a better sense of impact over the expect
results. However, current global challenges are pressing institutions to think of more
long-term initiatives. Due to its nature, it becomes even harder to determine within the
first years if the final results are to be successful. This, however, is a risk that must be
assumed. Government institutions cannot take the luxury of test their proposals
individually. There are in fact other factors (e.g. market forces or final implementation
feasibility) that influence the outcomes. Including them in their national plans should be
a required component, as well as the collateral plans to mitigate their impact.

Not only these institutions care about the results of their initiatives. So do too
international agencies and the scientific community, and that is why it becomes
important that they publish and constantly update their quantitative results. As
mentioned before, it will not be easy to segregate these results between all the initiatives
implemented in the evaluated period of time, so a conglomeration of them in certain
cases will have to be published (e.g. a total number of journals published). For now,
analyses made over the energy situation in the country and how policies contribute to its
betterment end on correlations, just like the ones portrayed in the Findings section.
From them, it is encouraging to see that the overall results are positive. Brazil is indeed
moving forward to a more diverse energy matrix where NCRES are playing a more
important role. Which of the initiatives has had the most important role of all in the
current scenario remains still unclear. But it is known that these aggregated ‘strategies’
are playing well. Benchmarking with other developed countries with similar
government initiatives can give some hints over which of those locally implemented are
positively contributing to the long-term plan.

Conclusions
The general mix of government institutions are playing a positive role in the promotion
of NCRES technologies and the increase in the participation of alternative sources in the
country’s energy matrix. Even when the positive role of these initiatives as a set cannot
be questioned, it still remains unclear the extent to which each component of this set is
having a positive impact on the final outcome. This, as discussed above, has to do with
the complexity of the sector in which all the initiatives coexist and an isolated analysis
of its results is difficult. However, this should not prevent the government to implement

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more initiatives, making the situation more difficult to analyze, targeted to better its
current energy scenario. Brazil, with its privileged position, has still potential to exploit
its natural resources through less polluting technologies. It is true that more effective
initiatives can be proposed knowing beforehand those which did not work as expected.
This uncertainty, however, could be reduced only with further research based on
quantitative data, with the help of statistical models. Therefore, it becomes necessary for
the government to correctly measure and periodically publish results, not as several-
pages reports with a general description of the current situation, but as actual data that
can be analyzed, as well as detailed information on the actions undertaken. Only in that
way, a more accurate approach can be achieved.

References
 “World Intellectual Property Organization.” WIPO Intellectual Property Statistics
Data Center, www3.wipo.int/ipstats/index.htm
 “Science,Technology and Innovation.” Research and Experimental Development,
data.uis.unesco.org/Index.aspx?DataSetCode=SCN_DS&lang=en#.
 Policies & Measures Databases, International Energy Agency,
www.iea.org/policiesandmeasures/.
 Dutta, Soumitra, et al., editors. GLOBAL INNOVATION INDEX 2018 Energizing
the World with Innovation. World Intellectual Property Organization, GLOBAL
INNOVATION INDEX 2018 Energizing the World with Innovation,
www.globalinnovationindex.org/gii-2018-report.
 Emodi, N., Bayaraa, Z., Yusuf, S. (2015). Energy Technology Innovation in Brazil.
International Journal of Energy Economics and Policy Vol. 5, No. 1, 2015, pp.263-
287.
 “World Bank Open Data.” World Bank Open Data, World Bank,
data.worldbank.org/.
 “Geração - ANEEL.” Go to ANEEL, www.aneel.gov.br/dados/geracao.
 Bradshaw, A., Regulatory change and innovation in Latin America: The case of
renewable energy in Brazil, Utilities Policy (2017),
http://dx.doi.org/10.1016/j.jup.2017.01.006
 Melo, Conrado Augustus De, et al. “Nonconventional Renewable Energy
Governance in Brazil: Lessons to Learn from the German Experience.” Renewable

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and Sustainable Energy Reviews, vol. 61, 2016, pp. 222–234.,
doi:10.1016/j.rser.2016.03.054.
 Energy Policy in Brazil Perspectives for the Medium and Long Term. Swedish
Agency For Growth Policy Analysis, 2013, Energy Policy in Brazil Perspectives for
the Medium and Long Term,
www.tillvaxtanalys.se/download/18.201965214d8715afd113b87/1432548740127/
Energisystem bortom 2020 Brasilien.pdf.
 Santos, Silvana Sidney Costa, et al.
“Http://Www.revistarene.ufc.br/Revista/Index.php/Revista/Article/View/2350/Pdf.”
Revista Da Rede De Enfermagem Do Nordeste, vol. 17, no. 4, Aug. 2016, pp. 475–
482., doi:10.15253/2175-6783.2016000400006.

Appendixes
Appendix 1: Brazilian government initiatives since 20008
Initiative Year Description
P&D 2001 Program for Research and Development
PEE 2001 Program for Energy Efficiency
PROEÓLICA 2001 Emergency Program of Wind Energy
Program of Incentives for Alternative
PROINFA 2002
Electricity Sources
Light for All 2003 Electrification Program
Energy Research Enterprise.
Collaborates with the Ministry of Mines
EPE 2004
and Energy in long-term plans
elaboration
Legal Framework to use energy auctions
Auctions system 2004
for development of specific technologies
Mandatory Biodiesel Policy that mandates enterprises to use a
2005
requirement diesel with at least 5% blended biodiesel
10-year government proposed plan in
National Energy Plan 2007
order to increase the rely on NCRES
Inova Energia 2013 Projects funding in four categories:
smart grids, energy transmission,
solar/wind energy generation and energy

8
Policies & Measures Databases, International Energy Agency, www.iea.org/policiesandmeasures/.

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efficiency
Tax recovery for companies that export
REINTEGRA 2014
energy
Wind Turbine Component Tax
Executive Decree 656 2014
Exemption
National Program for Distributed
ProGD 2015
Generation

Appendix 2: Brazilian energy mix

Figure 4. Energy mix variation9

140000 4500
4000
120000
3500
100000
3000
80000 2500

60000 2000
1500
40000
1000
20000
500
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Coal Natural gas Hydro

Biofuels and waste Primary and secondary oil Nuclear
Geothermal, solar, etc.

9
“World Bank Open Data.” World Bank Open Data, World Bank, data.worldbank.org/.

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