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5th International Conference on Future-Oriented Technology Analysis (FTA) - Engage today to shape tomorrow Brussels, 27-28 November 2014 THEME 1: FTA AND INNOVATION SYSTEMS - 1 - ENERGY FORESIGHT, SCENARIOS AND SUSTAINABLE ENERGY POLICY IN BRAZIL Nathaniel Horner 1 Antonio de Paula-Oliveira 2 Richard Silberglitt 1 [email protected] [email protected] [email protected] Marcelo Poppe 2 Barbara Rocha 2 [email protected] [email protected] Abstract Brazil is a leader in renewable energy, but considering policies is critical to maintaining this leadership in light of its strong dependence on hydropower for electricity, rising energy demand from economic growth, and need to support the aspirations of a growing middle class. The Center for Strategic Studies and Management in Science, Technology and Innovation (CGEE) is participating in ongoing prospective studies of technologies to increase energy efficiency and maintain high levels of renewable energy, as well as of carbon reduction scenarios to mitigate global climate change. This paper will apply scenario analysis techniques to evaluate the effect of policy and technology development and implementation on total primary energy consumption, economic efficiency of energy use, and decarbonisation of the fuel mix. Scenarios of total energy consumption versus GDP growth per unit of energy and level of decarbonisation from the International Energy Agency and from current Brazilian studies will be compared and developed into meta-scenarios with policy ramifications. Finally, we will discuss the use of FTA to inform and support policy decisions using these meta-scenarios. Keywords: Energy, meta scenarios, policy recommendations 1 Introduction Through both fortunate geography and fortuitous policy planning, Brazil is a leader in renewable energy, having one of the least carbon-intensive economies in the world. Brazil’s energy system is unique in several ways. First, the country currently gets three-quarters of its electricity from hydroelectricity. Second, it has made a concerted effort to introduce sugarcane- based biofuels into the transport sector—first in the 1970s through ethanol-fueled vehicles, and more recently (and more successfully) through blending requirements and flex-fuel vehicles, which now constitute 50% of the passenger fleet. Nonetheless, change could very well be coming. Rapid demand growth could pressure the existing electricity supply system, which is already constrained by environmental laws that makes it more difficult to further exploit hydropower capacity. Brazil experienced widespread blackouts in 2001 due to low rainfall totals, leading to a surge in construction of natural gas power plants. Recent discovery of vast deepwater oil reserves off the coast could further hasten a swing back towards fossil fuels. At the same time, recent policy has created robust growth in wind farm capacity, which is proving to be a strong renewable resource for Brazil. The policies Brazil enacts in the near future could have a significant effect on whether the country’s low-carbon leadership continues. The scenarios studied here aim to provide a better 1 RAND Corporation - Washington Office: 1200 South Hayes Street, Arlington, Virginia 22202-5050, USA 2 CGEE - Ed. Parque Cidade Corporate, Torre C, 4º andar, Salas 401 A 405, Brasília-DF, CEP 70308-200, Brazil

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  • 5th International Conference on Future-Oriented Technology Analysis (FTA) - Engage today to shape tomorrow Brussels, 27-28 November 2014

    THEME 1: FTA AND INNOVATION SYSTEMS

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    ENERGY FORESIGHT, SCENARIOS AND SUSTAINABLE ENERGY POLICY IN BRAZIL

    Nathaniel Horner1 Antonio de Paula-Oliveira2 Richard Silberglitt1 [email protected] [email protected] [email protected]

    Marcelo Poppe2 Barbara Rocha2 [email protected] [email protected] Abstract Brazil is a leader in renewable energy, but considering policies is critical to maintaining this leadership in light of its strong dependence on hydropower for electricity, rising energy demand from economic growth, and need to support the aspirations of a growing middle class. The Center for Strategic Studies and Management in Science, Technology and Innovation (CGEE) is participating in ongoing prospective studies of technologies to increase energy efficiency and maintain high levels of renewable energy, as well as of carbon reduction scenarios to mitigate global climate change. This paper will apply scenario analysis techniques to evaluate the effect of policy and technology development and implementation on total primary energy consumption, economic efficiency of energy use, and decarbonisation of the fuel mix. Scenarios of total energy consumption versus GDP growth per unit of energy and level of decarbonisation from the International Energy Agency and from current Brazilian studies will be compared and developed into meta-scenarios with policy ramifications. Finally, we will discuss the use of FTA to inform and support policy decisions using these meta-scenarios.

    Keywords: Energy, meta scenarios, policy recommendations

    1 Introduction Through both fortunate geography and fortuitous policy planning, Brazil is a leader in

    renewable energy, having one of the least carbon-intensive economies in the world. Brazils energy system is unique in several ways. First, the country currently gets three-quarters of its electricity from hydroelectricity. Second, it has made a concerted effort to introduce sugarcane-based biofuels into the transport sectorfirst in the 1970s through ethanol-fueled vehicles, and more recently (and more successfully) through blending requirements and flex-fuel vehicles, which now constitute 50% of the passenger fleet.

    Nonetheless, change could very well be coming. Rapid demand growth could pressure the existing electricity supply system, which is already constrained by environmental laws that makes it more difficult to further exploit hydropower capacity. Brazil experienced widespread blackouts in 2001 due to low rainfall totals, leading to a surge in construction of natural gas power plants. Recent discovery of vast deepwater oil reserves off the coast could further hasten a swing back towards fossil fuels. At the same time, recent policy has created robust growth in wind farm capacity, which is proving to be a strong renewable resource for Brazil.

    The policies Brazil enacts in the near future could have a significant effect on whether the countrys low-carbon leadership continues. The scenarios studied here aim to provide a better

    1 RAND Corporation - Washington Office: 1200 South Hayes Street, Arlington, Virginia 22202-5050, USA 2 CGEE - Ed. Parque Cidade Corporate, Torre C, 4 andar, Salas 401 A 405, Braslia-DF, CEP 70308-200, Brazil

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    understanding of possible Brazilian futures, as well as a comparison of Brazil to others in the BRICS3 peer group.

    2 Brazilian Energy History and Policy Context In order to analyse scenarios for the Brazilian energy policy, it is important to understand

    how Brazils energy matrix has evolved. Brazils favourable position as a low-carbon leader results from key policy decisions taken over the past four decades. For example, after the oil shocks of the 1970s, oil imports were reduced drastically, internal production increased, and fuel blending mandates brought robust development of sugarcane ethanol, making Brazil self-sufficient in the transport sector.

    Figure 1 shows Brazils energy consumption trend (top) and proportional fuel mix (bottom) since 1970. As an emerging market, Brazil has experienced rapid growth in energy demand. Since 1990, the countrys energy demand has doubled, reaching nearly 300 Mtoe in 2013, and has outpaced GDP growth over the period, posting a compound average annual growth rate of 3.1% vs. 2.8% for GDP.

    3 Brazil, Russia, India, China, South Africa

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    Figure 1: Brazil total primary energy consumption energy by source, 1970-2013. Top: consumption growth trend;

    dashed line=GDP. Bottom: proportional fuel mix.

    To meet this energy demand, Brazils energy sector has faced huge challenges to keep growing its energy supply. Natural gas, oil, and derivatives account for 80% of energy supply growth over the last ten years [1]. Nonetheless, renewable energy sources remain a strong component in the domestic fuel mix, representing 41% of its total in 2013 (down from ~60% in 1970).4 This puts Brazil as one of the least carbon-intensive economies in the world, with a 1.55 tCO2/toe emissions factor versus the 2.37 tCO2/toe world average [1].

    The 1988 Brazilian Constitution, enacted after two decades under a military regime, placed natural resources, including hydraulic energy potential and mineral deposits, under federal control and defined mandatory bidding processes for concessionaires to gain the right to 4 It should be noted that nearly half of Brazils 1970 energy consumption came from firewood and charcoal, which, though renewable resources, can have large land-use consequences and is not carbon-neutral if replanting does not occur. Nowadays only around 10% comes from wood, mostly based on fast-growth forest cultures.

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    explore and exploit them, but this bidding process was not implemented until 1995. Seven years later, the new government elected in 2002 revised the process. Federal control of the energy sector has allowed Brazil to dictate its energy development. However, the resulting series of changing legislation and new institutional organizations, while somewhat necessary to respond to changing events, have created uncertainties for energy market players and investors.

    Three main foci of Brazils energy policy have allowed it to maintain this decarbonized footprint: biomass, hydropower, and energy efficiency. ProAlcool, a national program to increase the use of sugarcane bioethanol in the national energy supply, was created in 1975 after the first oil shock. The mandatory use of up to 25% of bioethanol (E25) in the gasoline-bioethanol blend was a key factor for its market development, and a response to the rising prices of oil. Nowadays over 90% of the new cars manufactured in Brazil are flex fuel (running indifferently with both E25 or E100) and bioethanol and bio-power from sugarcane accounts for 17% of the country`s primary energy supply [1].

    The increasing proportion of non-renewable supply over the 2000sparticularly from natural gasis explained both by the lack of favourable meteorological conditions and by barriers to hydropower expansion. A draught contributed to low reservoir levels and widespread blackouts in 2001, which prompted construction of gas plants as a hedge against this risk in the future [2]. Furthermore, about 70% of Brazils hydropower potential is located in the Amazon region [3], where strict environmental legislation limits exploitation. Nonetheless, the IEA estimates a further 67 GW of hydropower capacity is available outside of environmentally sensitive areas and notes that run-of-river plants, rather than dams, may mitigate some concerns (though such plants have different performance characteristics) [2].

    The creation of PROINFA, an incentive program for new renewables in 2002, has strengthened the development of competitive small hydro, bio-power, photovoltaic, andprincipallywind power plants. Brazils next energy bonanza may in fact be wind; though winds are seasonal, some wind farms regularly record extremely high capacity factors well in excess of 50% [2], [4]. The countrys installed wind capacity increased by 84% last year [4].

    Regarding energy efficiency, two national programs were created: PROCEL5 for electricity in 1985, and CONPET6 for oil and gas in 1991. The establishment of voluntary labelling (in 1986) and awards (in 1993) programs for appliances and equipment was followed by mandatory minimum performance standards in 2001. Financial resources were provided, mainly by the utilities, through the energy efficiency obligation introduced in 1998. The main policies discussed above are summarized in Table 1.

    Table 1: Principal Brazilian programs and legislations created since the 1970.

    Year Policy Focus Impacts and Consequences

    1975 Decree 76.593 ProAlcool Promotion of sugarcane bioethanol

    Bioethanol 20% of fuel mix; Sugarcane 17% of energy matrix

    1980s Petrobras & Research Centers R&D efforts

    Deep water oil prospection & extraction Self-sufficiency in oil

    5 A Brazilian program for energy conservation created to promote the efficient use of electricity and to reduce costs and sectorial expenditures for electricity. 6 A Brazilian program created in 1991 by Presidential Decree to promote the development of an anti-wasteful culture in the use of non-renewable natural resources.

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    1988 New Federal Constitution Mandatory bidding processes for natural energy resources

    Appropriation of natural resources by the federal government

    1993 Law 8.631 Tariffs fixation for the power sector Transparency and cost-based prices

    1995/6 Laws 8.987 & 9.074

    Normative for Concessions and Permissions

    Private and public utilities under public service regime

    1996 Law 9.427

    Foundation of ANEEL Electricity Regulatory Agency

    Fair rules for both concessionary and consumers

    1997 Law 9.478 Foundation of ANP Oil , Gas and Biofuels Regulatory Agency

    Expansion of the fuel sector and reliability of products

    1997 Law 9.478 Foundation of CNPE - National Council for Energy Policy

    Inter-ministerial coordination

    1998 Law 9.648 Free market for buying and selling electricity

    Power sector development and consolidation

    2002 Law 10.438 PROINFA promotion of small hydro, biomass, and wind

    Lower prices: wind US$ 55/MWh

    2004 Law 10.847 Creation of EPE Energy Office Professionalization of energy sectors planning

    3 Methodology To gain insight into the performance of the Brazilian energy system, we adopt a set of

    metrics previously used to analyze the energy sectors of the United States and various countries in Southeast Asia [5], [6]. First, we examine energy efficiency, the gross domestic product (GDP) per unit of total primary energy consumption (TPEC), measured in 2013 US dollars per tonne oil equivalent (toe).

    We also look at emissions performance. We define carbonization, C, to be the ratio of actual carbon emissions from the energy sector to the counterfactual carbon emissions if all energy use was based on coal:

    = actual carbon emissionscarbon emissions normalized to 100% coal

    = !!!!!!!!!!!!!!!!!

    ,

    where tp, tg, and tc are the emissions factors for petroleum, natural gas, and coal, respectively, in megatonnes carbon per megatonne oil equivalent (Mt-C/Mtoe), and Ep, Eg, and Ec are the total primary energy from those same three fuel sources. E in the denominator is the total primary energy use for the country; note that this term includes primary energy from all sources, including renewables. Thus, this metric implicitly treats important Brazilian renewable sources such as hydroelectric and biomass as having an emission factor of zero. This treatment follows the convention of the Intergovernmental Panel on Climate Change (IPCC) in assuming that, between harvesting and regrowth, annual crops have no net carbon emissions [7]. If biomass crops result in land-use changes, then this assumption will not hold.

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    A country that consumed only energy from coal would have a carbonization of 1.0. We then define decarbonisation as the inverse of C; therefore, countries with greener energy systems will have higher decarbonisation (1/C) ratios. The final metric is carbon efficiency, or GDP per tonne of carbon emitted.

    We plot each of these metrics against total primary energy consumption for both historic trends as well as various future scenarios to (1) get an idea of how productivity changes as energy use changes and (2) understand if changes in energy consumption lead to changes in GHG performance.

    4 Scenario Definitions In this analysis, we plot two policy scenarios specific to Brazil against three general energy

    scenarios published by the IEA [8], which we describe briefly in this section.

    4.1 Brazil Policy Scenarios We focus on Brazil using new data from the Energy Research Company, EPE, outlining

    likely futures under current policies, based on the 10-Year Energy Expansion Plan report [9], and under adoption of new policies according to the Brazilian Energy Plan PNE 2050 [10].

    4.1.1 Current policies scenario The current policy scenario is based on the PDE 2023 [9], a ten-year energy expansion

    plan, which forecasts changes to the energy sector through the year 2023 based on current policies.

    In liquid fuels, the scenario anticipates that Brazil will be one of the major world producers and exporters of oil in ten years, producing 5 million barrels per day (bpd) and exporting 1.5 million bpd. The oil from offshore pre-salt basins will make the country a major producer and exporter by 2023.

    The growing demand for fuel by Otto cycle vehicles (4.1% annually) still leads to a significant increase in the supply of hydrous ethanol fuel at an average rate of 7.6% per year. Thus, domestic ethanol production is expected to grow from the current 28 billion litres to 48 billion litres in 2023. Natural gas increases net production to 134 million m3/day by 2023, a gain of 150% over 2013 levels.

    Brazils share of renewables in the fuel mix is expected to continue at around 42%, a level well above the world average of 13% and the OECD country average of 9%. Despite the loss of relative share of hydropower from 67% in 2014 to 60% in 2023, it is still expected that a significant expansion of more than 28 000 MW of generation capacity will occur over this timeframe.

    The scenario also anticipates growth in other renewables as a result of recent policies. Most significantly, a six-fold increase in wind farms capacity to 22,400 MW by 2023 is expected. At this level, wind will comprise 11.5% of the installed generation capacity, reflecting the competitiveness of this source in the decennial horizon. Furthermore, solar energy will reach 3500 MWaround 2% of the total installed capacity.

    Finally, the scenario includes the expansion of 7500 MW thermoelectric power plants over the last five years of the horizon in order to meet the growing electricity demand. Nevertheless, the participation of non-renewable sources in the energy matrix is expected to fall from 17% in 2014 to 16% in 2023.

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    4.1.2 New policies scenario The new policies scenario is based on the Brazilian Energy Plan, PNE 2050 [10]. In the

    period 2013-2050, it is estimated that the total Brazilian energy demand will increase slightly more than double compared to the base year, with emphasis on the advancement of natural gas and electricity and the decline in consumption of oil and firewood/charcoal as shown in Table 2.

    Table 2: Brazilian energy projections for demand within the context of new policies

    2014 2020 2030 2040 2050 NON-RENEWABLE ENERGY % % % % %

    Petroleum and oil products 38.60 42.20 42.3 41.7 39.4 Natural gas 11.70 9.90 10.3 10.8 11.2 Coal and coke 6.40 4.60 4.5 4.4 4.1 Uranium (U308) 1.30 0 0 0 0

    RENEWABLE ENERGY Hydroelectric and electricity 13.60 16.70 18.1 20.1 23.1 Firewood and charcoal 8.60 6.60 5.4 4.7 4.5 Sugar cane products 15.40 17.70 16.8 15.8 15.2 Others 4.50 2.30 2.6 2.5 2.5

    TOTAL (MTOE) 311.98 353.00 460.00 549.00 605.00

    These results reflect the growing penetration of natural gas in the Brazilian fuel mix, displacing the consumption of petroleum in industry and households (fuel oil and LPG, mainly). The drop in the share of oil is also due to the penetration of biofuels in the transport sector, particularly ethanol in individual transport vehicles. Firewood and charcoal also decline, resulting from the substitution of coal in the steel industry and substitution of LPG and natural gas in the residential sector. Other energy sources contributed marginally in the long run.

    In terms of transport, the scenario includes ethanol-gasoline blend mandates of 18-25% ethanol and voluntary fuel efficiency labelling for passenger light-duty vehicles. The mandatory blend of biodiesel will also increase from the present day level of 5%.

    With these projections in mind, the new policies scenario expects a 36% reduction in GHG emissions compared with business-as-usual by 2020. The policy drivers for this reduction include further implementation of the measures in the National Plan for Energy Efficiency, such as the Brazilian Labelling Programme, the Energy Conservation Program, and the Energy Efficiency Program, under which the utilities must spend >0.5% of their total revenue in energy efficiency and >0.5% in R&D.

    4.2 ETP Scenarios The IEA World Energy Outlook publishes three future scenarios looking ahead through

    2035: the current policies scenario, which extrapolates current trends forward in a business as usual case; the new policies scenario, which includes adoption of pledges and other policies currently under consideration; and the 450 scenario, which demonstrates what it would take to have a 50% chance of limiting average global temperature increase to 2C long-term [11].

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    The IEA published three similar scenarios corresponding to global temperature increases of 6C, 4C, and 2C with a time horizon of 2050 in Energy Technology Perspectives report [8]. We refer to these as the ETP-6, ETP-4, and ETP-2, and they are broadly consistent with the WEO current policies, new policies, and 450 scenarios, respectively [8]. For this analysis, we use the ETP scenarios with the longer time horizon.

    These scenarios report primary energy use by fuel type in five-year increments for various countries and regions of interest. The main differences among the scenarios are the rate of energy use increase (through efficiency gains) and CO2 emissions rates (through decarbonisation). Though it is conceivable for GDP growth among different energy scenarios, the ETP and WEO scenarios assume the same GDP growth in each case.

    We use the ETP scenarios to compare Brazils possible future energy systems with those of other countries.

    4.3 U.S. EIA Scenarios We also use two scenarios from the United States Energy Information Administration

    (EIA) as a means of putting the ETP scenarios in context. The EIA issues an annual report with results from the National Energy Modeling System (NEMS) that can run many different scenarios for the U.S. energy sector. We show the Reference Case, which is representative of current policies, and the GHG25 scenario, which represents unspecified policies resulting in a carbon price of $25/t-CO2 beginning in 2015 and rising 5% annually, from the 2014 report [12].

    5 Results and Discussion Brazils trend and future scenarios for each of the three metrics of interest are shown in

    Figure 2. We observe that Brazils energy efficiency, decarbonisation, and carbon efficiency have remainedon averagegenerally stagnant over the past four decades. In fact, the more recent trend over the past five years is retrograde, with decreases in all three metrics.

    To better understand the decarbonisation rate, we recall the fuel mix proportions in Figure 1, showing that even though the energy demand has quintupled since 1970, the ratio of renewable to non-renewable sources has flipped from 60%/40% to 40%/60%. Consequently, the decarbonisation index has gradually declined.

    We also noted in Figure 1 that energy consumption has outpaced GDP growth, leading to the gradual decrease in energy efficiency since 1980 seen in Figure 2. Lack of growth in energy efficiency is expected for an emerging economy, as the focus is on growth rather than efficiency. As an example, Brazil has been involved in electrification projects for isolated populations over the last 20 years, a policy that would be expected to initially add to energy consumption more than GDP.

    Of course, a large factor may simply be that Brazil started out with an efficient, decarbonized energy system and focused its policies on maintaining it rather than driving towards even greater improvements, balancing economic growth with energy development. Indeed, a comparison with peer countries (Figure 3) verifies that Brazil remains a leader in all three metrics. Its decarbonziation, in particular, is remarkable: under the ETP-6 and ETP-4 scenarios, none of the other countries will achieve Brazils present-day decarbonisation rating by the year 2050. This decarbonisation is due to the large proportion of hydropower electricity generation and early emphasis on biofuels. Furthermore, Brazil has the potential to improve its performance even more despite continuing increases in overall energy use, whereas gains in

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    other countries (e.g., the U.S., China, and South Africa) are more dependent on flattening or even decreasing energy consumption.

    How realistic are such gains? The declining energy usage for some countries shown in the ETP-2 scenario seems to be extremely optimisticparticularly with respect to declining energy useso we benchmarked these scenarios against two U.S. EIA scenarios for the United States, shown in Figure 4 [12]. The EIA reference case roughly tracks the ETP-6 case with respect to energy and carbon efficiency but is closer to the ETP-4 scenario with respect to decarbonisation. The GHG25 casewhich is the most aggressively green scenario reported by the EIAfalls between ETP-6 and ETP-4 in energy efficiency tracks ETP-4 in carbon efficiency, and falls between ETP-4 and ETP-2 with respect to decarbonisation. Importantly, none of the EIA scenarios show the decrease in energy consumption implied by the ETP-2 scenario, and the high levels attained on all three metrics in this scenario remain well out of reach in the GHG25 scenario. Certain aspects of ETP-4, on the other hand, do look reasonable.

    While performing similar benchmarking for other countries is beyond the scope of this paper, the U.S. results provide some basis for considering the ETP-2 scenario to be aggressively optimistic. Our future work for Brazil involves looking at specific policy scenarios to see if doubling the countrys decarbonisation measure by 2050 is within the realm of possibility.

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    Figure 2: Brazil energy system metrics, historic and future scenarios.

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    Figure 3: Brazil and peer country energy systems in future scenarios

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    Figure 4: U.S. and China energy systems in future scenarios

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    One useful tool for scenario analysis is the definition of meta-scenarioscreation of a set of more generic, but uniquely identified, possible futures based on ranges of the various published scenarios. Meta-scenarios help the discussion avoid getting bogged down in the details of scenario-specific assumptions while preserving the general characteristics of various possible future states of the system.

    For Brazil, we define three meta-scenarios: Business as Usual (BAU), which roughly corresponds to current policies; A Greener Brazil, in which new policies are adopted to break the stagnation and begin further decarbonizing the energy system; and Global Sustainability, in which Brazil participates in aggressive worldwide efforts to limit temperature increase. We present the three meta-scenarios, juxtaposed with the specific scenarios presented above, in Figure 5.

    The benefit of a meta-scenario approach is seen in the fact that the various individual scenarios in cross boundaries of the more generic scenarios; for instance, in energy efficiency, both ETP-6 and ETP-4 seem to point toward A Greener Brazil, but in decarbonisation the former is more aligned with BAU. These individual differences may result from specific assumptions within each individual scenario, but examining them in concert allows us to identify key catalystsincluding policy decisionsthat will define the pathway ultimately taken. We discuss these pathways in the next section.

    Figure 5: Decarbonization in Brazil meta-scenarios. Black lines represent individual published scenarios for Brazil;

    coloured regions indicate meta-scenarios.

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    6 Policy Implications We noted above that Brazils energy system is remarkable. However, deviating from BAU

    is dependent upon making further policy choices to support decarbonisation. While our analysis comparing the WEO scenarios with detailed scenarios specific to the U.S. indicated that Global Sustainability scenarios may be outside the bounds of most current policy forecasts, the fact remains that some degree of further decarbonisation of Brazils energy system is possible. Based on commonalities among the scenarios examined, moving away from BAU towards A Greener Brazil depends on implementing policies supporting:

    Continued hydropower development, most of which will be run-of-river technology rather than dams;

    Reduced reliance on road transport for freight, implying the need for investments in Brazils underdeveloped transport infrastructure;

    Increased use of biofuels in transport; and,

    Increases in energy efficiency programs.

    Moving further, towards Global Sustainability, requires more aggressive policies in the above areas in addition to CO2 pricingnot only in Brazil, but elsewhere.

    Examination of meta-scenarios allows us to develop signposts to determine which path is currently being trod and warning of potential roadblocks. A few barriers to further decarbonisation of Brazils energy system are:

    Limited access to capital. Investments in hydropower projects, wind farms, and transport infrastructure require construction capital. Another recession, or the inability to bring in foreign investment, could make it more difficult to complete these projects.

    Inexpensive domestic fossil fuels. Competition from inexpensive domestic oil and gas may make it more difficult for the government to justify higher fuel-blending mandates for biofuels as well as put pressure on other renewables. While deepwater extraction poses technical challenges, the shale gas boom in the U.S. has shown how quickly access to fossil fuels can change the energy picture. The Global Sustainability case involves reductions in petroleum use on the order of 10% in Brazil and 30% globally, which will not happen if gasoline remains a competitive vehicle fuel.

    However, the desire to support a strong domestic sugarcane industry may counterbalance the push to use new oil production domestically. Brazils policies which determine how the offshore pre-salt basins are developed and where the products are sold will be important.

    Droughts and climate change. The electricity crisis of 2001 demonstrated how dependent Brazils electricity grid is on rainfall. Run-of-river hydroelectric plantslikely the dominant type to be installed in the futureare even more highly dependent on rainfall. Any climate changes that reduce river and reservoirs levels will force the use of back up thermal power plants.

    Higher sugar prices. An increase in sugar prices could increase the price of ethanol and minimize its share in the gasoline blend. Further, since much of the Brazilian fleet consists of flex-fuel vehicles, and consumers can switch rather seamlessly

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    between the fuels, demand for ethanol would be expected to have positive cross-price-elasticity with gasoline.

    Lack of a carbon price. The Global Sustainability case seems to require that a carbon price be implemented in many countries within the next few years.

    Brazils current policy trajectory (BAU) seems to be one of continued stagnation in decarbonisationalbeit one in which the country remains a world leader in green energywhile efficiency gains eventually take hold as the country becomes more developed. However, new policies supporting more hydroelectric development, increased ethanol blending mandates, and energy efficiency, coupled with infrastructure investment leading to structural changes in the transport sector, can lead to further gains aligned with A Greener Brazil. Comparison with other benchmarks indicates that the Global Sustainability scenario will be extremely challenging to attain, requiring significant policy intervention.

    In future work, we plan to examine more specific policy scenarios for Brazil, placing them within the context of the meta-scenario framework we have described.

    7 References [1] EPE, Brazilian Energy Balance 2014 Year 2013, Rio de Janeiro. [2] Organisation for Economic Co-operation and Development and International Energy Agency, Brazil Energy

    Outlook, in World energy outlook 2013, Paris: OECD/IEA, 2013, pp. 301417. [3] EPE, Brazilian Energy Plan 2030, Rio de Janeiro, 2007. [4] A. Spatuzza, Brazil wind capacity factor at 50%, Recharge, 21-Oct-2014. [Online]. Available:

    http://www.rechargenews.com/wind/1380860/Brazil-wind-capacity-factor-at-50. [Accessed: 10-Nov-2014]. [5] R. Silberglitt, A. Hove, and P. Shulman, Analysis of US energy scenarios, Technol. Forecast. Soc. Change, vol.

    70, no. 4, pp. 297315, May 2003. [6] R. Silberglitt and S. Kimmel, Energy Scenarios for Southeast Asia, Technol. Forecast. Soc. Change, In press

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