Navigating Brazil's Energy Transition: Challenges and Opportunities

PROBLEM DEFINITION

Brazil holds the largest freshwater reserve in the world, with about 12% of global reserves concentrated in its territory, mostly in less populated regions far from consumption centers. The North region has 69% of this natural resource and a population density of 4.12 inhabitants per km². The Midwest follows with 16% of the water and a population density of 8.75 inhabitants per km², making it the most balanced distribution in the country. The South and Southeast regions have population densities of 48.58 and 86.92 inhabitants per km², respectively, and each holds about 6% of the water resources. The Northeast region has 3.3% of the country's water and a population density of 34.15 inhabitants per km². Only the Drought Polygon region in the Northeast suffers from water scarcity, which could be avoided with proper public policies. Despite this, the country faces its third water crisis in the last 20 years due to poor management of natural resources. There is a lack of investment in research, soil moisture monitoring, and renewable energy sources. There is no water management plan or data to predict future droughts and water crises. Droughts increase energy costs, raise CO₂ emissions due to the activation of thermoelectric plants to compensate for reduced hydroelectric capacity, and could compromise the country's and the world's food security, as Brazil is a major food producer. It is essential to optimize water use for essential activities, reducing dependence on rainfall: for agriculture, through sustainable exploitation of groundwater, creating a soil moisture monitoring plan, ending deforestation in the Amazon, and reducing waste; for electricity generation, it is necessary to diversify the energy matrix by increasing wind and solar capacity. The UN predicts that droughts will occur even more frequently due to climate change, making drought mitigation actions essential for the country's energy security.

In 2019, greenhouse gas emissions increased by 9.6% compared to 2018, while generating about 3% less wealth per ton of carbon emitted. The main sources were land-use changes (44%), agriculture (28%), the energy sector (19%), industrial processes (5%), and waste (4%). Land-use changes represented almost half of gross emissions in 2019, with deforestation (98%) being the primary driver, mainly for agriculture. However, protected areas, secondary vegetation, and forest regeneration removed 38% of gross emissions related to land-use changes in 2019. Emissions can be reduced cost-effectively by investing in deforestation control measures and strict penalties for offenders. Agriculture accounted for 28% of emissions due to increased livestock, synthetic fertilizer use, and soil liming. Well-managed pastures and integrated systems can capture carbon in this sector, and these practices are growing. However, degraded areas under conventional systems are also increasing. To reduce emissions in this sector, low-carbon production must expand through credit lines, utilization of already open and underutilized areas, pasture recovery, and implementation of integrated systems. The energy sector contributed 19% of emissions, including fuels and electricity generation. Positively, the consumption of biofuels has increased, solar and wind energy capacity has grown by 875% since 2005, and greenhouse gas emissions from the industrial sector have declined.

A new study by Carbon Brief ranks Brazil as the 4th most polluting country in the world, up from 6th place. The data, cumulative from 1850 to 2021, includes CO₂ emissions from fossil fuel burning, land use for agriculture and livestock, and deforestation. About 80% of the country's emissions over the last 30 years were generated by these activities, and Brazil leads the ranking when considering only deforestation and land-use changes. Cumulative historical research is important because CO₂ emitted hundreds of years ago remains in the atmosphere and contributes to global warming. Thus, countries at the top of the list are the most responsible for global warming. Government representatives argue that Brazil should not be classified as a major polluter, stating that the commitment to reduce emissions by 43% by 2030, based on 2005 levels, is ambitious enough and that richer countries should be held to higher standards.

LITERATURE REVIEW

According to the presented problem, the main challenges for the country, which will have the greatest impact if properly addressed, are:

• Deforestation and poor land use.
• Lack of diversification in the electricity matrix.
• Concentration of water resources far from consumer communities.

According to Carvalho et al. (2002), there are government initiatives to reduce deforestation: the Soy Moratorium—an agreement between civil society and the soy industry to prohibit the trade of soy from deforested areas in the Amazon; the Cattle Agreement (TAC)—aimed at blocking the commercialization of cattle from lands under embargo due to deforestation or failure to meet legal requirements; and federal laws prohibiting the trade of timber from deforested areas, requiring several documents for the commercialization of forest products. These initiatives fail due to a lack of monitoring and control, as producers find ways to circumvent the rules. The authors propose alternatives, such as transparency in product origins, allowing consumers to choose sustainable products. Actions by importing countries can pressure the government to improve conservation efforts and end deforestation. According to Andrews (2020), Norway took the first step by banning products contributing to deforestation.

Electricity generation in Brazil is heavily dependent on hydroelectric plants.

Brazilian Energy Matrix

The podcast CRISE DE ENERGIA (2021) states that this dependence is being reduced with the growth of wind and solar energy, but 62% of the country's energy is still generated by hydroelectric plants. This dependence puts the sector at risk, as climate change and deforestation in the Amazon reduce rainfall, decreasing reservoir capacity and, consequently, energy generation. To diversify the energy matrix, one of the fastest-growing segments is solar photovoltaic energy, which has significant potential in the country. It is expected that, in 30 years, solar and wind energy will dominate Brazil's electricity matrix.

The country has the natural resources needed for the energy transition and diversification without requiring massive investments. Uruguay, according to Watts, produces 97% of its energy using renewable sources. Previously dependent on fossil fuels and electricity imports, Uruguay transitioned in just 20 years. Droughts drove the diversification of its energy matrix to reduce dependence on hydroelectric plants. The author highlights that government proactivity was crucial for the development of the energy sector, making Uruguay a global reference for energy transition. Incentives for investors, such as fixed feed-in tariffs and stable policies, could also be applied in Brazil to aid the energy transition.

For Matsumura (2022), decentralization and digitalization are essential for Brazil's energy transition. Decentralization brings energy supply closer to consumption centers and allows for a new relationship between consumers and producers, such as rooftop solar panels. Digitalization enables the identification of variations in consumer lifestyles and behaviors.

Brazil has great potential to become a global leader in the energy transition and achieve the carbon neutrality desired today. Strengthening deforestation control and monitoring activities, not only in the Amazon but in all ecosystems, is essential for the success of these initiatives. Regarding the energy matrix transition, there are significant opportunities for visionary companies, as the country has abundant natural resources and still relies heavily on hydroelectric plants and fossil fuels for electricity generation.