Elsevier

Energy Policy

Volume 49, October 2012, Pages 430-441
Energy Policy

Energy-related climate change mitigation in Brazil: Potential, abatement costs and associated policies

https://doi.org/10.1016/j.enpol.2012.06.040Get rights and content

Abstract

This paper estimates the potential for energy-related greenhouse gas emission (GHG) reductions in Brazil, their abatement costs and proposes a number of policies to achieve these reductions. The Brazilian energy system is very peculiar as renewable energy accounts for some 45% of total primary energy and 85% of electricity production. The following sectors are covered in this paper: industry, transports and petroleum sector. Compared to a business-as-usual reference scenario, results show a potential to reduce future energy-related GHG emissions by 27% in 2030. However, in spite of that, the mitigation potential identified here is not large enough, in absolute terms, to reduce energy-related GHG emissions below the current level in Brazil by 2030.

Highlights

► We estimate the potential for energy-related GHG emission reductions in Brazil. ► We cover industry, transports and petroleum sector. ► The potential to reduce energy-related GHG emissions is around 27% in 2030. ► The low carbon scenario in 2030 is above the current level emission in Brazil.

Introduction

The most recent assessment report of the Intergovernmental Panel on Climate Change (IPCC) contains the latest scientific evidence on climate change and highlights the urgency of adopting mitigation measures (IPCC, 2007a). Faced with the challenge of global climate change, many research teams have developed computer-based economic models and have calculated abatement costs of greenhouse gas (GHG) emissions that are consistent with long-term climate policy targets in terms of maximum GHG concentrations or temperature increases (Den Elzen et al., 2005, Cai et al., 2007, Enkvist et al., 2007, Holmgren and Sternhufvud, 2008, Ribbenhed et al., 2008; Henriques et al., 2010; Mckinsey, 2009b, Castelo Branco et al., 2010, De Gouvello, 2010, Hasanbeigi et al., 2010, Ko et al., 2010, Castelo Branco et al., 2011). It is possible to interpret the abatement costs as the carbon prices that would enable, from an economic standpoint, implementing the emission reduction measures considered.

Although Brazil is not currently listed as an Annex I country under the Kyoto Protocol, pressure is mounting for it to assume binding commitments to reduce its GHG emissions in a possible post-Kyoto agreement. As a matter of fact, today Brazil is already the world's fourth-largest GHG emitter (Frischtak, 2009). Although an agreed outcome was not reached at COP 15 in Copenhagen, the Government of Brazil indicated voluntary mitigation actions leading to an expected reduction of 36% to 39% regarding projected GHG emissions of Brazil by 2020, an objective that was further stressed at COP 16 in Cancun, and then more recently again at COP 17 in Durban.

This paper estimates the potential for energy-related GHG emission reductions and their average abatement costs in Brazil and proposes some policy measures to reduce those emissions. In doing so, this study updates, improves and summarizes the list of mitigation measures proposed by the authors in Gomes et al. (2009), Castelo Branco et al. (2010), Henriques et al. (2010) and Schaeffer et al. (2009a).

The Brazilian energy system is very peculiar because the major potential for carbon emission reductions does not lie within its power sector. In 2008, renewable energy accounted for 45% of the primary energy supply and 85% of the electricity supply (MME, 2009). Most of Brazil's GHG emissions (around 58%) come from deforestation (MCTI, 2009).

In terms of final energy use, the industrial and transport sectors are responsible for 70% of Brazil's energy-related GHG emissions (see Fig. 1). In the transport sector, over 90% of emissions come from road vehicles, while in industry the largest share comes from the iron and steel sector (42%).

Therefore, our analysis of mitigation options and their costs is focused on the following sectors: industry, transports and petroleum industry.

This paper is organized into six sections including this introduction. Section 2 presents the theoretical formulation adopted; Section 3 describes the reference scenario; Section 4 presents the measures considered along with the respective abatement costs and policies necessary for a low-carbon scenario in the Brazilian energy sector; Section 5 sets out the results in aggregate form; Section 6 discusses barriers and policy implications of abatement measures implementation; and Section 7 concludes.

Section snippets

Methodology

In this paper, several carbon emission mitigation measures are formulated and estimated, along with their respective costs and potentials for abatement. The measures presented here expand, update and summarize previous estimates produced by the authors in other studies, such as Gomes et al. (2009), Castelo Branco et al. (2010), Schaeffer et al. (2009a) and Henriques et al. (2010). These updates include the revision of all mitigation options (costs and potentials) of these previous works

Reference scenario

In this work we used Scenario B1 from PNE2030 (EPE, 2007) as a baseline/reference scenario. However, we updated it to better reflect the growth of the petroleum sector activities in Brazil, as mentioned before. Crude oil prices from PNE2030 were also altered to reflect the oil price threshold scenario adopted by Petrobras, the Brazilian oil company. As explained in Castelo Branco et al. (2010), the crude oil price threshold is a reference price used by oil companies to analyze the feasibility

Power sector

The majority of Brazil's electricity comes from hydro-generation (Fig. 2), with nationwide interconnections that allow the integration of regions with different demands and hydrological regimes. Thermal power generation (mostly natural gas) acts as a complementary source to hydropower, helping to optimize the system's operation by increasing the amount of energy that can be obtained from hydraulic sources.5

Summary of results

From the revisions and updates of the CO2e emission projections made by PNE2030 (EPE, 2007), we estimate that, in the reference scenario, Brazilian emissions from energy consumption in 2030 should amount to slightly over 827 million tCO2e19

Policy considerations and barriers of abatement measures implementation

The total abatement potential, considering all analyzed sectors and a social discount rate of 8%, reaches 1.85 billion tCO2e in the 2010–2030 period. For a discount rate of 15% per year, the abatement potential totals 1.68 billion tCO2e in the same period. The difference between scenarios derives from not including the transport sector in the 15% discount rate scenario, since the measures for this sector were only obtained for an 8% discount rate.

Much of the abatement alternatives analyzed

Conclusions

Although Brazil has what can be considered as a “clean” energy matrix, based heavily on hydropower and biofuels, there are still good opportunities for the abatement of GHG emissions related to energy use in different economic sectors.

In this article we sought to identify the potential for reducing emissions from energy use and the costs involved for the transport, industrial and petroleum sectors in Brazil. We analyzed different measures, their potentials for abatement, their costs and the

Acknowledgments

We wish to thank the World Bank, FBDS, CNPq, FAPERJ and CAPES for providing funding for this study.

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