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10 Abatement of carbon dioxide emissions in Brazil

Brazil energy economy
Energy subsector analyses
Changing land-use trends
Conclusion
References

Jose Moreira and Alan Poole

This chapter concentrates on energy-related carbon dioxide (CO₂) emissions, the principal greenhouse gas, of which Brazil is an important contributor at a global level. The clearing of forest land for non-energy uses is its largest source of CO₂ emissions. Quantitative estimates of this source are controversial, however. It is not possible to be precise as to the amount and costs of carbon conservation associated with land use changes in Brazil. For this reason, this chapter will focus on the abatement of fossil CO₂ emissions released from the energy sector. But we will also discuss policies to decelerate deforestation and outline some crucial interrelationships between land use, energy policy, and carbon conservation strategies.

Brazil energy economy

Contemporary energy related emissions of CO₂

In 1990, Brazil's total energy consumption reached 183.7 million tonnes of oil equivalent (MTOE). In that year, 37 per cent of Brazil's primary energy came from fossil fuels, 26 per cent from biomass fuels and 37 per cent from hydroelectricity (see Table 10.1). Important features of Brazil's energy balance are: the preponderant role of hydropower in electricity generation (94.4 per cent); the relatively large amount of biomass that is used at an industrial scale (alcohol, charcoal and wood - see Table 10.2); and the small penetration of natural gas.

The energy system resulted in 1990 in the emission of approximately 51.6 million tonnes of carbon (TC) as CO₂ from the combustion of fossil fuels (Table 10.3).

Table 10.1 Energy supply and consumption, Brazil 1990 (M TOE)

Source :Boletim do Balanco Energetico Nacional,1991.
Data for fuel include derivatives of the primary energy source (for example, coke from coal, alcohol from sugarcane). Electricity (last column) is calculated assuming that 1 MWhe = 0.29 TOE.

a Includes transformation and other losses and energy use (for example, in refineries).
b For gross internal supply and electricity generation includes all energy consumption, thereafter electricity is excluded. The actual inputs for electricity generation are included in this column, since these are different than the coefficient of 0.29 TOE used in last column. There is a slight discrepancy.

Lessons from climate change in Brazil

Each year, much human suffering has been caused by climate hazards in Brazil and billions of dollars have been lost ... The Brazil study concludes that human actions have inadvertently led to increased societal vulnerability to climate variations. Deforestation in the Northeast has made the semiarid region more vulnerable to droughts. Inadequate urban planning in Rio de Janeiro has made the city much more vulnerable to floods. Deforestation in the Upper Paraguay River Basin may be altering the pattern of floods and droughts in the Pantanal (Great Swamp) region, thus contributing to ecological imbalance.

On the other hand, some action has been taken to increase resilience to climate variations. The modernization of the salt industry in the state of Rio Grande has made that industry more resistant to heavy rains. Agricultural research has led to the development of several new crop varieties more resistant to climate variability. Relief action in Northeast Brazil has [reduced] the very heavy impacts of droughts on the poor rural population.

It is clear that the same climatic event may have different impacts according to local socio-economic and environmental characteristics. Rainfall that brings terrible floods to Rio de Janeiro is a beneficial event in the Pantanal area. Drought may cause huge losses to agriculture in the Northeast but can also bring economic benefits for the salt industry in the same region. Moreover, while the majority of the poor population will suffer from droughts, a small group of large land owners and businessmen may indeed profit from them. Climatic variations can thus have differing effects on different regions, ecosystems, economies and social classes.

Government policy needs to integrate short-term relief actions during extreme climatic events with long-term actions aimed at increasing societal resilience to climate variability and change. It also needs to pursue a goal of sustainable development, by seeking to increase the technological capacity of people to face climatic extremes, reduce the social impacts of the weather, reduce poverty (since the poor are the most vulnerable) and improve our knowledge and thus increase our capacity to accommodate adverse variations of climate. A policy of sustainable development would pursue both a reduction in greenhouse gases emissions and an improvement of the capacity of the environment to adapt to possible future climate changes. To achieve this will require international cooperation to enable the transfer of resources and technology that will allow developing countries to use the most environmentally appropriate available technologies to their development process.

Excerpt from M Parry, A Magalhaes, Nguyen H Ninh, The Potential Socio-Economic Effects of Climate Change, A Summary of Three Regional Assessments, UN Environment Programme, Nairobi, Kenya, 1991, p. 12.

Table 10.2 Biomass supply and consumption, 1990 (MTOE)

Source: Boletim do Balanco Energetico Nacional, 1991 .
a includes transformation losses and fuel use; specifically losses in producing charcoal from wood and alcohol from cane;
b Basically pulp mill liquor;
c Sugarcane bagasse;
d Alcohol;
e Charcoal.

To simplify our analysis, we assumed that hydroelectricity has zero CO₂ emissions. Similarly, we assumed that sugarcane supply (alcohol and bagasse) and 'other renewables' (pulp industry liquors) also produce zero CO₂ emissions. In the case of alcohol, however, we included fossil fuel inputs to alcohol production.

Estimates of carbon emissions from wood uses are problematic and vary widely according to end use sector. Most wood used in the residential and agricultural sectors does not appear to contribute to deforestation. The relatively dispersed use in rural areas does not exceed natural regeneration. In this regard, Brazil's fuelwood problem is unlike that in many other countries. Little information is available to quantify deforestation in the areas that it occurs. In this study, we simply assumed that 20 per cent of the fuelwood used in the residential and agricultural sectors results in net CO₂ emissions.

Conversely, fuelwood used in the industrial sector is more geographically concentrated. Demand from this subsector of fuelwood consumption often destroys natural forests in Brazil. Again, precise information as to rates and magnitudes of this phenomenon are scarce. We have assumed that 60 per cent of industrial fuelwood contributes to CO₂ emissions. Charcoal, however, presents a special case requiring the analyst to adopt additional assumptions. The impact on the forests of converting wood to charcoal (the largest use of fuelwood) is highly controversial. An estimated one third only of Brazil's charcoal is supplied from planted forest. The remainder is made with fuelwood obtained by clearing the natural forest, mostly the drier forests of the cerrado. Most of this land is cleared for grazing and/or agriculture of which charcoal is a mere by-product. We assume, therefore, that 75 per cent of the charcoal from natural forest results in deforestation. Thus, we estimate that roughly 50 per cent of fuelwood used to make charcoal results in net CO₂ emissions.

Table 10.3 CO₂ emissions from energy consumption (MTC)

a For conversion factors see [5].
b Sugarcane and 'other biomass' assumed to have no CO₂ emissions. For wood it is assumed that deforestation results from 20% of residential, commercial and agricultural use; from 60% of industrial fuelwood use; and from 50% of charcoal use. These shores are somewhat arbitrary as discussed in the text.
c All due to conversion of fuelwood to charcoal.
d CO₂ equivalent of fossil fuel used, if they were burnt. See text.
e Includes non-energy CO₂ equivalent in parenthesis. (See note d above).

On this basis, about 40 per cent of total fuelwood use generates annual CO: emissions of 11.4 millions of tonnes of carbon as carbon dioxide (TC) or 22 per cent of that resulting from fossil fuel use. Evidently, fuelwood is not yet a renewable resource in Brazil. In spite of its importance, fuelwood-related carbon emissions constitute only 3-4 per cent of a total deforestation-related emission each year of about 300 million tonnes of carbon (MTC).

Total (fossil fuel plus biefuel) energy-related emissions of CO₂ in 1990 are estimated to be about 63 MTC. This figure increases to about 71 MTC if the non-energy use of fossil fuels is valued at its combustion equivalent. This figure is roughly 470 kgC/capita per year.

Existing energy scenarios and their impacts

An official study was recently performed in Brazil as a basis for policy recommendations (SNE 1991a). This study analysed two basic policy postures. The first, a reference scenario called 'tendencies', assumed that current political and economic constraints in the energy sector (including those on pricing policy) will persist. The second scenario, called the 'alternative', postulated substantial changes in the status quo. This latter scenario sought to actively pursue greater efficiency in the overall use of energy resources; to promote competition and private sector investment in energy supply; and to stimulate the use of certain energy forms in some applications - principally biomass, but also coal and natural gas.

Relative to 'tendencies', the 'alternative' scenario contains moderate reductions in energy use. In both scenarios, lower and higher economic growth cases were studied. In the alternative scenario, primary energy use falls approximately 9 per cent by 2000 and approximately 18 per cent by 2010 in both the lower and the higher economic growth cases (see Tables 10.4 and 10.5). The fact that the reduction is proportionately the same in both the lower and higher growth cases is somewhat odd. One might expect a proportionately greater reduction in energy use in the higher economic growth case, since faster growth permits the more rapid penetration of new technology in the marketplace. Other key differences between the alternative and tendencies scenarios are that in the former, hydroelectricity and petroleum products are projected to grow less, and biomass use to grow more in the latter.

Total fossil fuel emissions are 12 per cent less in the low growth alternative case relative to the 'tendencies' in 2000 and 21 per cent less in 2010. However, the fossil fuel emissions in the lower growth version of the 'alternative' scenario are still 42 per cent and 103 per cent higher than in 1990. Transport offers the biggest abatement in fossil fuel CO₂ emissions in the National Energy Secretariat (SNE) scenarios. Even so, this sector remains the biggest single source of carbon (see Table 10.6).

Fossil carbon emissions from electricity generation do not fall in the alternative scenario, despite substantial reduction of total electricity consumption. Indeed, thermal generation increases substantially, though this growth is mostly the result of increased use of biomass (mainly from sugarcane). Thus, the 'alternative' scenario retains the significant increase in fossil fuel emissions found in the 'tendencies' scenario. From 9 TC/GWhe today (Moreira 1991a), the carbon intensity of electricity increases to 23 TC/ GWhe in 2000. Even so, this ratio is still very low by international standards.

Table 10.4 Official energy scenarios - basic characteristics

Source projection from Reexame de Matriz Energ‚tica Nacional, Ministerio da Infraestrutura, Brasilia, 1991.
a Based on gross internal supply of fossil fuels and thus includes a non-energy component.

Table 10.5 Sources of energy supply-official scenarios(16)

Sources: Reexame da Matriz Energética Nacional; Balanco Energética Nacional.
High economic growth case.

The 'alternative' scenario projects large economic benefits. Energy sector investments, for example, fall by US$26 billion between 1991 and 2000 and $58 billion between 2001 and 2010 (in the high economic growth case) (SNE 1991a). Moreover, almost all of the carbon abatement in the alternative scenario result from 'no regrets' policy measures. That is, these steps are justified on non-greenhouse grounds (Ayres 1991), and accounting for CO: emissions only makes already economically viable changes even more desirable. Thus, these steps should be taken regardless of the scientific and other uncertainties surrounding greenhouse phenomena.

We have briefly described these scenarios to delineate the CO₂ emissions implied by official energy planning. The SNE study is also the only recent example of an integrated energy analysis in Brazil. This planning did not emphasize CO₂ abatement, however. New scenarios are needed badly to evaluate the costs of carbon abatement. The following end-use analysis is a first step in that direction.

Table 10.6 FossiI CO₂ emissions by activity

Source: based on Secretaria Nacional de Energia, Reexame da Matriz Energética Nacional, 1991. Low economic growth scenario.

Methodology of subsector analysis

An important input for CO₂ emissions abatement policy formulation is the analysis of sets of energy end-uses and transformations that constitute the various fuel cycles. This approach is not widely used in Brazil, and is most advanced in the electrical sector. In sectors where quantitative analysis is rudimentary, we will make qualitative observations. The time horizon for quantitative analysis is the year 2000. While politically realistic, this horizon is quite short for energy planning or carbon abatement analysis.

To construct a CO₂ emission abatement cost curve entails that we address a series of methodological issues in the Brazilian context. These include: the reference scenarios; and the parameters and scope of cost-benefit analysis. Choosing a reference scenario is not trivial - especially in Brazil where key economic and political factors are highly uncertain. The reference scenario greatly influences the estimate of abatement potential. Here, we take the socio-economic assumptions and the energy projections of the low growth, 'tendencies' scenario (described above) as our reference scenario.

Cost-benefit parameters used in the analysis must be comparable to those used in other countries, or subject to sensitivity analysis. A key parameter is the cost of capital, which is higher in Brazil than in the industrialized countries. We assume a 12 per cent discount rate. This discount rate is quite high but it reflects Brazil's high debt burden and the scarcity of internal investment capital.

The scope of the cost-benefit analysis can greatly affect the evaluation of net costs and benefits. This issue is relevant to quite specific technologies (such as vehicles) as well as to broader system changes (such as shifting transport modes). Analysis of the latter type of changes, however, is particularly susceptible to changes in analytical scope. The narrowest definition of benefits is the energy saved or substituted. We always incorporate such benefits in this study. In cases such as electrical equipment, this definition of benefits is adequate. But in others, it gives an erroneous estimate of net costs. Governments, for example, undertake many energy-related investments to achieve multiple objectives, including stimulating productivity, improving the quality of products, responding to environmental constraints, even improving social welfare (as with much rural electrification or public transport). In such cases, much broader definitions of benefits enter the picture which may outweigh the values attributed to energy savings or carbon abatement.

Finally, we used current 'frozen' costs in 2000. That is, our analysis of energy savings (and associated carbon reduction) in 2000 is based on current new technology costs and current energy prices. We selected only more efficient technologies that are already economic compared with existing technologies. We also assumed no increase in the real price of oil, oil derivatives, and electricity in 2000. This approach is conservative as the cost of new technologies often falls as it enters service; and the price of fossil fuels may be expected to increase in real terms as it becomes increasingly scarce.

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