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Brazil: Policies and Scenarios

Brazil: Policies and Scenarios. Summary: Rafael Kaliski Critique: Tom Wright. Introduction. Brazil is the 5 th most populous country GDP US $3,300 as of 2000. Energy use has increased 250% between 1975 and 2000. Hydropower accounts for 90% of all electricity / 39% of total energy use.

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Brazil: Policies and Scenarios

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  1. Brazil: Policies and Scenarios Summary: Rafael Kaliski Critique: Tom Wright

  2. Introduction • Brazil is the 5th most populous country • GDP US $3,300 as of 2000. • Energy use has increased 250% between 1975 and 2000. • Hydropower accounts for 90% of all electricity / 39% of total energy use. • Petroleum 2nd-largest energy source 34% of total energy use. • Bio-Energy 16% of energy consumed. • Renewable energy sources 56%.

  3. Objectives • Similar to U.S. • Diversify energy sources • Reduce import dependence • cut inefficiency • Ensure Adequate energy supply • Hydropower • A Drought resulted in a power shortage (2001) • Reduce Energy Sector Investments • Privatize • For Profit state-owned companies • Reduce Adverse Environmental Impacts • Contribute to Social Development

  4. Acronyms • PROCEL – The National Electricity Conservation Program. • ANEEL – The federal Regulatory agency for the Electricity Sector. • NTSA – The National Testing and Standards Agency.

  5. Policy 1: Adopt Minimum Efficiency Standards for Appliances, Motors and Lighting Products • If adopted, consumers would automatically purchase relatively efficient products. • PROCEL and NTSA have already established energy efficient test procedures and an efficiency labeling program. • Efficiency standards might provide 20 to 30 percent energy savings for new refrigerators / freezers, AC, and lighting products. • For motors efficiency standards might provide 2 to 8%, depending on size.

  6. Policy 2: Expand Utility Investments in End-Use Energy Efficiency • In 1998, ANEEL began requiring distribution utilities to invest at least 1% of their revenues in energy efficiency programs. But only ¼ of 1% must be spent on efforts that help consumers use electricity more efficiently. This later changed to ½ of % to be invested in R&D. • This policy would expand funding for energy efficiency programs to about 2% of utility revenues. • Part of the money would be spent by utilities and part would be directed to state and federal energy efficiency programs. • The additional cost of these energy efficiency programs could be recovered by utility rates. • A 10-20% Bonus could be given to utilities based on the net societal benefit, evaluated by ANEEL. • PROCEL could assist the utilities to design effective programs and implement coordinated market transformation initiatives regionally or nationally.

  7. Policy 3: Adopt Energy Codes for New Commercial Buildings • No city or state has adopted energy efficiency requirements for new commercial buildings. • This policy would convene a group of experts to develop and publish a national model energy code, including requirements for different climate zones. • A key part would be to train builders, architects, building inspectors, and code enforcement officials from municipalities. PROCEL could carry out this effort with experts from educational institutions. • Energy demand grew nearly 8% per year from 1995 to 2000. The Electricity demand is projected to increase 6% per year in the future. • This policy could eliminate 10 to 15% of the future growth in electricity demand.

  8. Policy 4: Expand Use of Combined Heat and Power Systems Fueled by Natural Gas • CHP systems have cost-effective cogeneration potential estimated to be between 9 and 17 GW. • The recent increase in Natural Gas supply opens up new opportunities for CHP systems. • The below policies should be implemented in support of CHP. • Require utilities to purchase surplus power via long term contracts. • Require utilities to interconnect CHP systems to the power grid. • Give priority to CHP projects as new gas supplies become available. • Provide financial incentives for CHP systems. • Reduce import duties on CHP equipment.

  9. Policy 5: Adopt Minimum Efficiency Standards for New Thermal Power Plants • The increased supply of natural gas has sparked interest in the construction of natural gas-fired power plants. • The majority of Thermal Power plants being constructed are simple cycle plants, 30 to 35% efficiency. • If minimum efficiency standards were adopted, 55% efficiency, all new thermal power plants would have to be combined-cycle plants, 50 to 60% efficiency. • Also current simple cycle plants, which are used more than a nominal amount would be required to add extra generators and operate as a combined-cycle power plant, so they would meet the minimum efficiency level. • This requirement would also narrow the difference in capital cost between electricity only and CHP plants.

  10. Policy 6: Adopt Industrial Energy Intensity Reduction Targets • It is feasible to reduce energy use by 30+% in a wide range of energy-intensive industries. • This policy would establish energy intensity reduction targets for major industries through voluntary agreements between the government and industry. • PROCEL and the government could provide technical and financial assistance in the form of energy audits of industrial facilities, training, and tax incentives for investments in energy-efficient equipment. • Companies that enter into these agreements to improve energy efficiency by 2% per year, could be protected from any raises in fuel taxes. Also these companies could be given preferential access to power should electricity shortages recur. • This policy would yield a 12% reduction in overall industrial energy use by 2010. 80% of the savings would come from reduced fuel consumption. 20% from improving the efficiency of electricity use.

  11. Policy 7: Adopt Minimum Fuel Economy or CO2 Emissions Standards for New Passenger Vehicles • There are no fuel efficiency standards for new cars or light trucks. • Vehicle manufactures receive some tax incentives for producing engines with 1 liter or less in volumetric capacity. 60-70% of all new passenger vehicles sold in Brazil have 1-litre engines. • In 1998 the Fuel Economy was 10 km/l while the fuel economy, in 2000, was about 11km/l. • Most of the 1-litre engines, are derived from 1.6-litre engines, from older models. • The policy would require adopting fuel efficiency standards. • These standards could be expressed in terms of either an increase of fuel efficiency or a reduction in CO2 efficiency. • If a CO2 emissions standard were adopted, manufacturers most likely would comply through some combination of efficiency improvement and fuel shifting. • This policy would require a 40% reduction in CO2 emissions, by 2010, 75% would be from fuel efficiency improvement and 25% from through increased sales of ethanol vehicles. • The average fuel economy would be 16km/l, by 2010.

  12. Policy 8: Expand the Production and Use of Ethanol Fuel • Increase demand and supply for ethanol fuel • Low interest loans to stimulate construction of distilleries. • Strategic Ethanol Reserve • New price or tax incentives to stimulate purchase of neat ethanol cars again. • Ethanol could be blended with diesel, up to 12%.

  13. Policy 9: Stimulate CHP Systems Using Bagasse and Other Sugarcane products. • Potential to generate excess electricity using more efficient power generation technologies. • Some Policies would be similar to Policy 4 (CHP with natural gas). • Adopting this policy could result in 2,400MW of bagasse CHP Capacity by 2005 and 6,300 MW by 2010. • The shift from manual to mechanized harvesting would be gradual.

  14. Policy 10: Stimulate Grid-Connected Wind Power • Substantial potential (i.e. state of Ceara has 25,000 MW potential). • ANEEL established buyback rates • originally 48$/MWh • increased to $57/MWh(for approved projects by the end of 2001, $52/MWh(for approved projects by the end of 2002) • Law enacted requiring 80%, of average retail electricity price, over a 15-year period (2002). • Many new wind farms were proposed or under construction as of mid-2002. • Possible to implement 7,000+MW of wind power capacity by 2010, if this policy could be extended.

  15. Policy 11: Stimulate Renewable Energy Use in Off-Grid Applications • PRODEEM installed approximately 5,700 solar photovoltaic (PV) systems in off-grid areas, for no cost. • Many of these systems were not maintained. • Develop a private sector PV supply which will provide micro-financing and subsidies to households (subsidies would be reduced as technology improves). • Could lead to as many as half of rural households obtaining solar PV systems by 2010. • Could foster social and economic development in poorer regions.

  16. Policy 12: Improve the Efficiency of Freight Transport • R&D and demonstration programs • Tax incentives to encourage production and purchase of higher-efficiency trucks and locomotives. • This policy could yield fuel economy improvements of 16% for freight trucks and 12% for rail transport by 2010. • Shift cargo among modes. • Possible to increase/decrease fraction of freight shipped by: • Rail 21%->29%. • Water 14%->18%. • Truck 60%->48%. From 2000 to 2010.

  17. Energy and Other Impacts • IMEP – Integrated Model for Energy Planning

  18. Conclusions • The Policies proposed may be difficult to implement by 2010. • If the some or all of the Policies are Implemented Social and Economic Development can occur faster.

  19. Brazil is highly urbanized • 80% Brazilians live in urban areas (Geller, 2000) • 31% urban in low income countries (WB, 2001) • Geller does not emphasize rural energy issues

  20. Energy in Brazil: Critique Tom Wright

  21. Brazil: poor country or rich? • The 9th largest economy in the world • Per capita income in 2000 was $3300 • 73 of 208 countries under $1000 in 2002

  22. Brazil is highly urbanized • 80% Brazilians live in urban areas (Geller, 2000) • 31% urban in low income countries (WB, 2001) • Geller does not emphasize rural energy issues

  23. Author knows Brazil well • He worked there extensively as a consultant • Hesitates in presenting full historical and political context so as not to offend future clients?

  24. What Brazil shares with other developing countries… • High inflation makes the “long term” short • Economic transition means unemployment too • Weak institutions mean no stable regulations • Donations: “Nobody has ever washed a rental car”

  25. “Could, could, could…would, would, would” • Scenario analysis can isolate the analyst • Need historical and cultural context or else… • Policies meant for elsewhere miss the mark

  26. Privatization: cure-all or (!) conspiracy? • Geller seems to accept privatization as a given • World Bank and IMF have imposed privatization as a condition for granting loans… • But government sector is often the only domestic employer for the educated elite in poor countries

  27. Role of us engineers • We need to tell the policy wonks, “No that’ll never work!” And then show them a better way • Go work overseas! And not for two weeks! • Stay long enough to learn the local scene • Bring their better ideas back to the US

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