Brazil is an emerging energy superpower. Its natural resources—oil, gas, water, wind, and sun—reflect the country’s diversity, size, and favorable geography. However, the development of Brazil’s energy resources has been stymied by government intervention in the sector, which increase the cost of investment. Brazil’s Energy Agenda: The Way Forward issues six recommendations for Brazil’s energy sector. These include realistic local source requirements, prioritization of the natural gas sector, favorable policies towards ethanol development, optimization of hydro resources, development of wind and solar, and the creation of a stable, long-term regulatory policy. Much has been done right with regards to energy production, but challenges remain in providing a favorable environment for both domestic and foreign investment. Brazil’s competitiveness is not guaranteed, and an appropriate policy mix is vital in ensuring that it remains an attractive investment destination.
1. In order to increase certainty for investment in the pre-salt oil fields, production sharing contracts must balance the right amount of risk and profitability potential in order to incentivize companies to bid on blocks and develop the fields.
2. Brazil should prioritize development of the natural gas sector, which has a large growth potential.
3. Brazil should pursue policies favorable towards the development of both sugar-based and second-generation ethanol, including continued tax relief and access to credit.
4. Hydropower should be supplemented with thermal power as necessary to fill in reliability gaps.
5. Energy efficiency should also be pursued aggressively in parallel to the development of renewable energy sources.
6. Government must commit to a stable and long term regulatory policy for the entire energy sector.
About the Energy Action Group:
Americas Society/Council of the Americas Energy Action Group (EAG) brings together the public and private sectors to develop strategic energy policies for the Americas. The EAG hosts forums in cities across the Americas and publishes working papers and recommendations on key energy and climate topics.
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