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CO2 savings in Brazil
C02 savings in Brazil The importance of a small contribution Gilena M.G. Graca and Andrea N. Ketoff
Brazil's development process could lead potentially to a doubling of C02 emissions per capita over the next four decades. This paper shows that the implementation of policy measures promoting energy efficiency and fuel switching could reduce Brazil's energy-related C02 per capita by 11% by 2025 with respect to their 1985 level without necessitating any significant change in lifestyles. While Brazil's total reduci!ions would be equivalent to only 1% of present gtobal carbon emissions, capturing these savings opportunities would both allow Brazil to participate in global efforts to curtail the generation of greenhouse gases into the atmosphere and support Brazil's own economic development process.
a staff scientist at the International Energy Studies Group, Lawrence Berkeley Laboratory, Berkeley, CA c,4720, USA. Ketoff co-wrote this paper visiting Professor at the University of S~o Paulo.
tion produced about 300 mt of carbon. 2'3 The combination of Brazil's large-scale exploitation of hydropower, widespread use of sugarcane alcohol in cars and reliance on fuelwood and charcoal in many industrial processes, has helped to maintain low levels of energy-related CO2 per unit of economic activity and per capita relative to many other developing and industrialized nations. 4 While emissions from deforestation far exceed those from energy-related activities, Brazil must still face the challenge of maintaining these presently low CO2 indicators. In order to quantify current and future carbon emission levels in Brazil and to analyse the potential for reducing Brazil's generation of energy-related carbon, a long-term scenario was developed for the year 2025. 5 The scenario constitutes one possible configuration of Brazil's future based on past economic, demographic and political trends and present conditions within Brazil and in the international arena. Based on this future vision of Brazil, two different variations were created: a reference case and a policy case. The reference case envisages Brazil evolving in a domestic and international setting that places no particular priority on global environmental issues. In contrast, the policy case foresees Brazil progressing in a context where the reduction of carbon emissions is considered a major imperative in both the national and the international policy arenas. While both cases assume that identical socioeconomic trends occur in Brazil between the present and 2025, the nature and extent of energy conservation efforts and fuel switching measures incorporated into the two cases differ substantially. As a result, the reference case indicates a growth in carbon emissions from 45 mt in 1985 to 143 mt in 2025; in contrast, the policy case restrains emissions levels in 2025 to 65 mt. The difference - 78 mt of carbon/year - represents around 1% of current world emissions from fossil fuel combustion. The results of the policy case suggests that Brazil
0301-4215/91/0121003-08 (~) 1991 Butterworth-Heinemann Ltd
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Keywords: Brazil; Carbon savings; Energy-use scenarios
Evaluating the potential for restraining the growth of carbon emissions in developing countries plays an essential role both in the international debate on climate change and in the development of effective energy and environmental planning on the local level. This paper assesses the extent to which Brazil can limit its emissions of CO2, analyzes the most effective means for reducing emissions in each sector and identifies the major barriers to implementing the various CO2 abatement options. In 1987, fossil fuel burning in Brazil generated approximately 50 mt of carbon, equivalent to 13.5% of the carbon emitted by the USA in that )ear. 1 Much more widely discussed, Brazilian deforestaGilena M.G. Graca is at the Instituto de Eletrotecnica e Energia, University of S~o Paulo, Brazil. Andrea Ketoff is
C02 savings in Brazil
could restrain the growth of its energy-related carbon emissions over the next four decades without infringing on personal lifestyles. In fact, by decreasing its generation of energy-related CO2, Brazil could accrue many benefits on a national level and, simultaneously, make a small but meaningful contribution to international efforts to stem emissions of greenhouse gases into the atmosphere.
BACKGROUND Brazil's modern development period began in the 1950s based on an American model of resource management and mobilization. During the first development phase, the nation established an importsubstitution oriented industrial system. During the second phase, Brazil channeled investments into the manufacture of durable consumer goods such as cars and household appliances. Carrying out this model of development required the mobilization of energy sources on a large scale. This effort occurred in a highly nationalistic context; Brazilians perceived state control of resources as a guarantee that they would achieve their development goals. As a result of this drive, Petrobr~s (the national oil company) gained power, Brazil developed large-scale hydroelectric capabilities and, more recently, the nation began to produce sugarcane alcohol. The nation used export revenues to purchase oil and build refineries and, in addition, relied on international loans to buy power generation equipment and technologies. Approximately half of the debts Brazil accumulated during the 1970s stemmed from investments in energy exploration, production and distribution. As a result of its particular development pattern, Brazil has used its resources in a relatively efficient manner. The exploitation of local resources has long been the philosophy underlying Brazil's economic development. In addition, due to the fact that most refineries, distilleries and factories were built during the last two decades, the processes and equipment used are quite efficient. Following the two oil crises of the 1970s, both public and private institutions in Brazil were highly receptive to conservation and oil substitution measures. Similarly, during the last 10 years of economic hardship in Brazil, government and industry alike have typically viewed energy efficiency as an economically viable and effective option for expanding the energy system and helping the private sector. On the international level, environmental concerns are hampering the approval of loans for inefficient and/or environmentally-
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damaging projects; these increasing intern~ational restrictions may actually further open the lines of credit available to encourage energy efficiency in Brazil.
LONG-TERM S C E N A R I O A N D B O U N D A R Y CONDITIONS The long-term scenario relies on a series of detailed assumptions about Brazil's demography, economic structure and the saturation of services and comforts based on past and present economic, political and demographic trends. Using these assumptions, the scenario establishes a unique context in which the energy intensity of the Brazilian economy varies according to specific policy measures. The characterization of the reference case is of paramount importance in the evaluation of potential emissions reductions in the policy case. The reference and policy cases impose two different sets of energy-efficiency and fuel mix assumptions on this same general context. The difference between the two cases lies in the efficiency of energy-using devices, the intensity of industrial processes and the mix of fuels used to fulfill demand requirements. Both cases disaggregate activities in the household and transport sectors by end-use and analyse energyuse patterns in the industrial sector by examining the manufacture of major products. 6 A recent study projects that Brazil's population will stabilize at a level close to 250 million people between 2050 and 2060. Based on this figure, the long-term scenario estimates the size of the Brazilian population in 2025 to equal 214 million. 7 If recent World Bank estimates - which place the size of the Brazilian population in the year 2025 at 236 million had been used, the projected level of carbon emissions in the base case would be 10% higher, s The scenario assumes that the country's economic structure evolves from current conditions into an economy which is more open and more integrated with the rest of the continent. These shifts imply that the present economic and political crises are solved. As a result, the level of available services expands (eg, electrification increases), urban passenger transport improves and the ownership of appliances in lower-income households increases. Brazil's GDP grows by 3.2%/year over the considered period in the scenario, reflecting a doubling of household incomes. Income distribution improves slightly, although not dramatically. The adoption of major policies aimed at redistributing wealth would change the scenario radically, but such a shift does
ENERGY POLICY December 1991
C02 savings in Brazil Table 1. Carbon emissions, savings and sectoral shares.
1985 Total (mt) Per capita (Kg) Residential Industrial Transport Services Agriculture Fuel losses
(A) 45 342 8.4% 32.9% 45.6% 1.8% 4.9% 6.4%
Referen,ee case (B) 143 668 10.2% 33.7% 38.9% 6.7% 4.6% 6.0%
Policy case (C) 65 305 9.8% 33.2% 42.1% 2.3% 6.5% 6.1%
not appear likely in Brazil's near future. The share of each sector in value added remains unchanged aside from a small increase in the service sector's share at the expense of manufacturing. The internal market, which now comprises over 85% of GDP, will continue to foster the same type of activities. The long-term scenario assumes the continued use - and increased availability - of biomass fuels, both fuelwood and alcohol, in Brazil's energy supply, therefore allowing alcohol to maintain its significant role in containing the growth of energy-related COz emissions. On the other hand, financial, political and environmental concerns will limit the expansion of hydropower in Brazil. The growth of power generation demand is bound by efforts to protect the Amazon basin, an issue which we expect to be driven by both the national awareness of the importance of safeguarding the region as well as by international pressure to curtail the destruction of tropical forests. While in the reference case carbon emissions increase by over 200% between 1985 and 20,'5, in the policy case conservation measures limit the total increase to 44% of the 1985 figure. As a result, emissions per capita drop by 11% with respect 1:o the 1985 value. These figures highlight the crucial role of population growth on energy consumption and carbon emissions in developing countries; if popu] ation numbers were to remain stable, as is the c~se in many industrialized nations, the implementation of policy measures could actually help Brazil redtLce its total CO2 emissions while increasing income per capita and access to goods and services. SOURCES
OF CARBON
EMISSION
REDUCTION Brazil's industry and transport sectors generw:e the largest shares of CO2 emissions. Together, these two sectors account for almost 80% of current emissions and, over the next four decades, they will cont~:ibute ENERGY POLICY December 1991
Increased
Potential
emissions
savings
(D=B-A) 98 326 10.8 33.2 35.0 8.7 4.3 5.6
(E=B-C) 78 363 8.2 26.5 28.2 8.1 2.3 4.6
Reduction of increase (F=E/D) 79.6% 111.5% 75.9% 79.7% 80.5% 92.3% 52.6% 81.3%
the largest portion of increased CO2 emissions (column D, Table 1). In the reference case, the service sector shows the largest percentage increase in carbon emissions with respect to 1985 (from 2% to 7%) and the transport sector shows the greatest drop (from almost 46% to 39%). Carbon emissions from thermal power plants are incorporated into the calculation of emissions from individual sectors. 9 Table 1 disaggregates carbon emissions by sector of anthropogenic activity for both cases, showing where the greatest increases in emissions occur between 1985 and 2025 in the reference case and where the greatest potential for carbon savings exist in the policy case. Figure 1 presents the savings by 'location' (ie, where the emissions are actually physically produced). The location analysis places all potential carbon reductions from sectoral electricity savings (including carbon savings from thermal power plants and from reduced fuel loss in the extraction/production system) in the supply system, since lower electricity demand lowers the amounts of fuel burned for power generation. The concept of location savings holds particular relevance for Brazil, where the reliance on hydroelectricity (93% of the total in 1985), has helped to maintain low levels of carbon emissions. In the future, limitations on the expansion of Brazil's hydro capacity will force fuel-fired thermal power plants to cover a growing share of the nation's electricity generation requirements. Efforts to lower Brazil's future electricity requirements will help restrain the increased reliance on fossil sources in electricity generation and, therefore, will help curtail the growth of carbon emitted during the electricity production process. Accordingly, electricity savings play a particularly important role in reducing emissions in the policy case. The disaggregation of emissions by location indicates that 45% of the potential CO2 savings achieved in the policy case lie in the energy supply system. Such reductions imply large savings of capital otherwise required to build generation and distribution 1005
C02 savings in Brazil Location of savings
Industry14%
Source of supply savings
Residential 2%
Efficient generation 5% Reduced fuel loss 15% Agriculture Electricity 2% Services Electricity 20% Transport Electricity 1% Industry Electricity 41%
Residential Electricity 18%
Transport / 36% Agriculture 2% Services 1% Total ; 78 mtC
35 mtC
Figure 1. Potential carbons savings.
facilities. Savings in this area are particularly relevant to Brazil, which has few financial resources to devote to building new generation facilities at present. The other major source of emissions savings is the transport sector, which accounts for 36% of the total potential. To achieve the possible savings, the policy case implements two major measures aimed at: (1) improving the efficiency of cars, buses and trucks; and, (2) establishing the widespread use of alcohol in the car fleet. The success of both these policies depends heavily on international market conditions. The transfer of technology from industrialized countries can accelerate efficiency improvements considerably; on the other hand, the level of alcohol use will depend on the international price of gasoline. Today, alcohol costs between $40 and $60/bbl equivalent of gasoline to produce and is subsidized through gasoline taxes.
SAVING C A R B O N IN THE SUPPLY SYSTEM Figure 1 identifies the measures leading to savings in the supply system. Foremost, improvements in the efficiency of electricity in the industrial sector account for 41% of total supply-located savings. Over the past several years, excess hydro capacity favoured the use of electricity for industrial process heat. Switching back to fuel use in industry could lead to large potential reductions in electricity use, particularly in non-energy-intensive manufacturing where electricity use might be maintained unless strong specific policy measures are implemented. 1006
Higher efficiency and fuel switching in non-energyintensive manufacturing account for more than half of the carbon savings in the policy case (Table 2). A significant amount of the conserved energy results from the introduction of heat pumps and cogeneration, particularly in the manufacture of food products. The major energy-intensive industries - steel, aluminum, chemicals and paper and pulp - offer more limited potential for carbon savings, representing 17% of the supply-located emissions reductions in the policy case. Although modest, reductions in these four industrial sub-sectors jointly correspond to the equivalent of all potential savings from increased electricity efficiency in the residential sector. In the service sector, the opportunity exists to save 7 mt of carbon through the efficient use of electricity. Such savings can be attained largely through the introduction of efficiency in Brazil's growing market for energy-using devices, particularly for air conditioning and lighting. Today, lighting accounts for half of service's total energy consumption; hence the
Table 2. Carbon savings from electricity use in the industrial sector (mt).
(%) Total industry Non-energy intensive Mining Energy-intensive Steel Non-ferrous metals Cement Chemicals Paper and pulp
14.6 7.5 0.9 6.2 1.8 1.7 0.3 1.3 1.1
(100) (51) (7) (42) (12) (11) (2) (9) (8)
E N E R G Y P O L I C Y December 1991
C02 savings in Brazil Table 3. Transport carbon savings (mt).
Total oil Cars from less driving from efficiency from fuel switching Motorcycles Trucks Buses Air, rail and water Coal
28.0 11.0 1.2 5.7 4.1 -0.2 12.8 1.0 3.4 0.0
(%) (100) (39) (4) (20) (15) (- 1) (46) (3) (12) (0)
introduction of improved technology for fluorescent lights could reduce energy use in the service sector considerably in the future. The expected growth of air conditioning can be contained through the enactment of efficiency standards for buildings (eg, regulations governing electricity consumption per square metre) and air conditioners. At present, architectural models and building practices in Brazil fail to take into account the use of daylighting and passive climatization systems. Overall, electricity savings in the service sector represent 22% of the total reduction potential in carbon emissions from power generation. The residential sector holds an additional 18% of these supply-located savings. Approximately 90% of this potential lies in improving appliance efficiencies - particularly refrigerators. The policy case assumes that refrigerator efficiencies improve by 60% with respect to the reference case, which shows llousehold unit consumption for refrigerators rising beyond today's levels as a result of increases in refrigerator sizes and the number of refrigerators per household. Improving the efficiency of refrigerators would be relatively easy to achieve given the technology available to local manufacturers, although the inconsistency and often unreliability of the electricity distribution system considerably reduces the level of savings that could be obtained in a real world situation. Currently, four different levels of low voltage co-exist, l° This situation presents a major obstacle to the adoption of efficient comwessors which, as a result, Brazil produces exclusiv,dy for export. An additional factor possibly causing high electricity consumption levels is the improper use of refrigerators. Laboratory tests for one-door refrigerators in Brazil show an average consumption of between 30 and 40 kWh/month, while measurements of similar refrigerators in households average around 60 kWh/month.l The rest of the carbon savings from residential electricity use result from fuel-switching measures that encourage reliance on natural gas for waterENERGY POLICY December 1991
heating activities. Policies favouring the diffusion of natural gas in the household market should reduce the role of electricity from fueling 99% of all water heaters at present to 70% in 2025. Households will have to use natural gas for both cooking and water heating in order to afford connections to gas grids, which will increasingly penetrate major cities. While Brazilians have particularly high ownership levels of electric water-heating devices (90% of all electrified homes) at present due to the invention of a cheap and efficient device (chuveiro), the expansion of the gas grid will promote considerable fuel switching. Savings from the improved efficiency of power generation are limited to 5% of total supply-located emissions reductions. 12 Carbon savings are not very significant (less than 2 mt) largely because the reference case assumes that thermal plants will be performing at a high level of efficiency - comparable to international levels. At present, Brazil has a quite limited thermal installed capacity. The case assumes hydro generation increases by around 80% of the 1985 level in both cases. The limit of 321 TWh was based solely on the present expansion plans of Eletrob~s 13 and excludes the controversial additional development of capacity in the Amazon basin, where productivity is particularly low relative to the size of flooded areas. 14 All additional generation is assumed to be provided through thermal plants in both cases, predominantly through the use of local and imported natural gas. The 50% contribution of thermal plant in the reference case is based on advanced gas turbines which should be widely available by the time they are needed to supplement Brazil's hydroelectric capacity. In the policy case, reduced electricity demand will delay the construction of thermal capacity and contain its contribution to 15% of total generation.
SAVING C A R B O N IN F U E L - F I R E D END-USES As shown in Table 1 and Figure 1, carbon savings in the transport sector constitute more than one-third of the overall savings potential. Table 3 presents the details of carbon savings in the transport sector. The most important reductions in transport carbon emissions (almost 13 mt) result from the replacement of Brazil's aging and highly inefficient truck fleet and from improvements in freight transport. Fuel switching from gasoline to alcohol accounts for almost 40% of emissions reductions in cars, improved efficiency for 50% and measures promoting shifts from cars to buses and motorcycles for 1007
C02 savings in Brazil
inefficient as is the use of rail. Both show considerable potential for growth. Trains could be used to link major cities. Waterways, which are presently considered uneconomic and used almost exclusively by the riverside population, could be fully transformed into a modern transport system covering the Parana, Sao Francisco and Amazonian basins. 17 Fuel savings in the industrial sector constitute 14% of the total (see Figure 1). Two-thirds of these savings stem from changes in energy-intensive manufacturing processes, primarily steel production (Table 4). Savings result both from switching from oil to natural gas and reducing energy intensity, which drops by 50% of the reference value in the policy case. The decline in intensity occurs due to the modernization of the industrial infrastructure, improved efficiency in manufacturing processes and higher load factors for industrial production capacity. In the present context of economic instability, Brazil under-utilizes its production capacity, therefore, pushing energy intensities upwards. Increased efficiency in the future will depend on investors' confidence in the country's prospects and on the promotion of technology transfers from industrialized countries. The industrial infrastructure improves as the private sector increases its role in industrial activities.
Table 4. Fuel savings in the industrial sector (mt).
Total industry Non-energyintensive Mining Energy-intensive Steel Non-ferrous metals Cement Chemicals Paper and pulp
(%) (100) (26) (6) (67) (42) (3) (6) (12) (5)
11.0 2.9 0.7 7.4 4.6 0.3 0.7 1.3 0.5
personal transport the remainder. Providing incentives to shift to different modes was considered a more viable response to environmental concerns than establishing barriers to car ownership. By 2025, more than 30% of Brazilian households still will not have access to cars; restraining measures would constitute a limit on comfort and availability as well as a constraint on the development of the manufacturing industry. Because car efficiencies are assumed to improve considerably in the reference case, further improvements in the policy case are limited. Average fuel efficiency will increase from 7.2 kilometre per litre (km/lt) in 1985 to 13.8 km/lt in the absence of any particular environmental policy. 15 In the policy case, average car performance reaches 20 km/lt. The poor conditions of the road system and the quality of fuels might make these efficiency targets difficult to reach, 16 but given the overall economic case, most of these barriers should be surmounted by 2025. To achieve the results implied in the policy case, measures need to regulate fuel quality to maintain a constant quality of gasohol, one of the key factors hindering efforts of Brazilian manufacturers to develop higher efficiency vehicles. Another savings opportunity exists in Brazilian freight transport. Despite Brazil's extensive water system, the use of river transport is very limited and
POLICY OPPORTUNITIES AND BARRIERS An overall matrix of potential carbon savings in Brazil indicates that efficiency measures could account for almost 90% of the total savings and fuel switching efforts for the remainder. Figure 2 disaggregates savings resulting from improved efficiency and those from fuel switching measures by sector and fuel source.18 This quantification highlights the areas of major potential policy impact, although
Personal trans Freight transportL ~ S e r v i c e s ~ Agriculturel~ll~ Power generationlI ~ (Fuel i o s s e~s ~ ~ 0
I~1 ~ ~ ~
!1 Fuel efficiency Electricity efficiency Fuel switching Electricity switching
I
I
I
5
10 mt of Carbon
15
I 20
Figure 2. Brazil: carbon savings potential by area of action. 1008
ENERGY POLICY December 1991
COe savings in Brazil
estimates of cost-effectiveness (in $/mt saved) might change any preliminary set of priorities. Few areas dominate the picture: fuel efficiency actions in freight transport, personal transport and energyintensive industry bring about equal savings as do electric efficiency measures in industry, services and households. Fuel switching contributes to carbon savings only in personal transportation, where alcohol use expands. While efficiency measures cause a net reduction in environmental impact, the increasing alcohol use implies a possible displacement of environmental impacts from the global to the local level, as land-use requirements for alcohol production compete with food production. Savings in industry - particularly those in energyintensive industry - and in the service sector are especially relevant since those are the sectors where most investments for economic development will be channelled. These are also the sectors with the highest concentration of energy use - and therefore emissions - per establishment. The total number of industries in the country is in the order of 200 thousand and commercial establishments do not exceed two million. Reaching these institutions would prove far easier than gaining access to Brazil's 30 million households (55 million in 2025). In the residential sector, income distribution allows only 15-20% of all households to purchase new appliances. A good part of these households are so well-off that they purchase appliances irrespective of the cost of energy. Most of the rest of the population can only access the secondhand market, where the efficiency of appliances is constrained by the age of the devices and by the poor level of maintenance. The quality of the maintenance system is bound to the level of education, as well as Eo the low remuneration provided for repairs. A similar situation exists in the car market. ~9 Since development is Brazil's top priority, most economic policies are likely to focus on the productive sectors, ie, industry, transport and services. In these sectors, productivity and efficiency have greater relevance and, therefore, addressing the need for strategical measures for energy efficiency will prove easier. As a country with experience in renewable energy use and energy efficiency, Brazil is more prepared to address the issue of carbon emissions reductior~s that many other nations. Environmental awareness is highly developed in Brazil. Brazil also has welldeveloped technical and scientific capabilities, reflected in institutions like the electric utility conservation programme (PROCEL), the interministe-
ENERGY POLICY December 1991
rial committee on rational energy production and use (GERE) and several other state and local initiatives which are often linked with academic institutions. In the private sector, consulting firms have actively assisted the industrial and service sectors with energy conservation. Several characteristics of the Brazilian energy demand structure also may facilitate the development of an effective energy conservation strategy. An analysis of industrial energy-use since the early 1970s indicates a considerable capacity for this sector to adapt to changing prices by modifying the fuel mix of industrial production, as well as by absorbing new production processes. 2° As for the service sector, its growth is only beginning; hopefully, its expansion will be characterized by the construction of more efficient buildings. Future reductions in energy use and, in particular, electricity-use can save Brazil large amounts of capital that would otherwise be required for supply expansion. However, structural changes (ie, improvements in fuel quality, electricity distribution and road conditions) must occur to support the implementation of such policies. Sophisticated energy-efficient technology requires stabilized voltage which could prove expensive for Brazil. The establishment of an adequate maintenance system also could pose a serious challenge. Brazil's total carbon savings potential represents approximately 1% of present global energy-related CO2 emissions. Achieving this small saving will require substantial efforts, including the implementation of energy efficiency measures, the expansion of alcohol production and the regulation of fuel quality. These efforts will require a reorganization of Brazil's energy institutions and utilities and the implementation of new international technology transfer policies. The success of the carbon reductions will have to rely on improved conditions of technology transfer and a further opening of markets. Less protectionism is needed not only in Brazil, but also in the USA and Europe, Brazil's primary commercial partners. Beyond the environmental benefits, efforts to reduce energy-related carbon emissions present developing nations with the opportunity to renew their technical stock, acquire higher quality technologies and accelerate their economic development. Although halting deforestation practices constitutes Brazil's largest potential contribution to global climate stabilization, energy activities present another key area for Brazil to reduce its CO2 emissions and, simultaneously, promote its own economic development.
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C02 savings in Brazil The views presented in this paper are those of the authors and should not be attributed to their affiliated institutions. The authors would like to acknowledge Nina Goldman for her help. ~No CO2 emissions are assumed from biomass use, as those emissions are recaptured by growing more plants. In the case of alcohol, its production requires an amount of fossil energy sources equivalent to about 20% of the energy content of the alcohol produced. Most of this fossil energy is in the form of fertilizers, and, therefore, is counted in the industrial sector (see M.E. Marcondes Helene and M. Ferreira Bueno, 'Global deforestation and CO2 emissions: past and present. A comprehensive review', Energy and Environment, Vol 2, No 3, 1991, pp 235-282; J.G. Silva, G.E. Serra, J.R. Moreira, J.C. Goncalves and J. Goldemberg, 'Energy Balance for Ethyl Alcohol Production from Crops', Science, Vol 201, No 4359, 1978, pp 903-906. 2Although recent data indicates a decline in the number of forest fires, lowering the deforestation rate still constitutes the major challenge for Brazilian environmental policy. Almost 90% of forest cutting is related to the expansion of pasture land, with minimal carbon uptake potential and limited economic use of the deforested land. 3Helene and Bueno, op cit, Ref 1. 4j. Sathaye and A. Ketoff, 'COz emissions from developing countries: better understanding the role of energy in the long term', The Energy Journal, Vol 12, No 1, 1991, pp 161-196. 5A. Ketoff, J. Sathaye and N. Goldman, eds, C02 Emissions from Developing Countries: Better Understanding the Role of Energy in the Long Term, Volume H: Argentina, Brazil, Mexico and Venezuela, Report No LBL-30059, Lawrence Berkeley Laboratory, Berkeley, CA, USA, 1991. 6For a detailed description see Ibid. 7G. Martine, 'O mito da esplos~o demografica', Ciencia Hoje, Vol 9, No 51, Silo Paulo, Brazil, 1989, pp 28-35. SWorld Bank, World Development Report 1990, Oxford University Press, New York, USA, 1990. 'q'he reason is that they are indirectly associated with the satisfaction of sectoral energy requirements. Fuel losses from fossil fuel ~roduction are counted separately. ~I'he four levels are 110, 115, 117 and 127 volts, each ranging from - 5 % to +3% by regulation. ~G.M. Graca and M. Barghini, Uso de Electricidade no Setor Residencial da Cidade de S(~o Paulo, CESP, S~o Paulo, Brazil, 1987.
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12Note that the decreased use of thermal power plants generates another 4.6% of the savings from reduced losses in the fuji supply system. 13Centrais El~tricas Brasileiras S.A. - Eletrob~s, Plano 2010." Relat6rio Geral, Minist~rio das Minas e Energia, Rio de Janeiro, Brazil, 1987. 14W.J. Junk and J.A.S. Nunes de Mello, 'Impactos ecologicos das represas hidroelecticas na Bacia Amazonica Brasileira', Estados Avancados, Vol 4, No 8, Janeiro/Abril 1990, pp 126-143. ~SCalculating car performance in Brazil is complicated by the coexistence of fleets fueled by alcohol (23.5 KJ/I) and gasohol (34.9 KJ/1) - a mix of gasoline and dehydrated alcohol. The average road performance of the alcohol fleet was estimated to be 5 km/l in 1985 while the gasohol fleet averages at 8 km/l. In the future, the performance of alcohol cars is expected to approach that of the gasohol fleet. 16A. Ketoff, Overcoming Barriers to Energy Efficiency in Transportation: The Case of Brazil, Report No LBL-30444, Lawrence Berkeley Laboratory, Berkeley, CA, USA, 1991. ~VG.M.G. Graca and V. Rodriguez, 'Electricity production, private transportation and CO2 emissions - the five highest energy consumers of the developing countries (Brazil, China, India, Mexico and South Africa)', presentation at workshop on the Human Dimensions of Global Warming, Montebello, Canada, 29 July-1 August 1990. ~SFor each sector or sub-sector, we calculate carbon emissions in the policy scenario had the intensities remained the same as in the reference scenario and, subsequently, the level of emissions for constant fuel shares. For example, in cooking, we calculate carbon savings from efficiency as (Spol*Fpol*Iref) - (Spol*Fpol*lpol), and savings from fuel switching as (Spol*Fref*Ipol) (Spol*Fpol*Ipol) where S is the number of households, F t h e fuel choice and I the unit consumption for each type of fuel used. The terms ref and pol refer respectively to reference and policy scenarios. No savings result from changes in the structural component (S), which is assumed constant in the two scenarios. The only exception is personal transport, where a shift in modes occurs between the two scenarios. Savings in this instance were added to those induced by higher efficiency. 19Ketoff, op cit, Ref 16. 2°G.M. Graca, 'L'6volution harmonique de la consommation petroli6re au Br~sil', Revue de l'Energie, Vol 5, Paris, 1991; Ministerio das Minas e Energia, Balanco Energetico Nacional 1988. Ano Base 1987, Brazil, 1988.
ENERGY POLICY December 1991
Brazil's development process could lead potentially to a doubling of C02 emissions per capita over the next four decades. This paper shows that the implementation of policy measures promoting energy efficiency and fuel switching could reduce Brazil's energy-related C02 per capita by 11% by 2025 with respect to their 1985 level without necessitating any significant change in lifestyles. While Brazil's total reduci!ions would be equivalent to only 1% of present gtobal carbon emissions, capturing these savings opportunities would both allow Brazil to participate in global efforts to curtail the generation of greenhouse gases into the atmosphere and support Brazil's own economic development process.
a staff scientist at the International Energy Studies Group, Lawrence Berkeley Laboratory, Berkeley, CA c,4720, USA. Ketoff co-wrote this paper visiting Professor at the University of S~o Paulo.
tion produced about 300 mt of carbon. 2'3 The combination of Brazil's large-scale exploitation of hydropower, widespread use of sugarcane alcohol in cars and reliance on fuelwood and charcoal in many industrial processes, has helped to maintain low levels of energy-related CO2 per unit of economic activity and per capita relative to many other developing and industrialized nations. 4 While emissions from deforestation far exceed those from energy-related activities, Brazil must still face the challenge of maintaining these presently low CO2 indicators. In order to quantify current and future carbon emission levels in Brazil and to analyse the potential for reducing Brazil's generation of energy-related carbon, a long-term scenario was developed for the year 2025. 5 The scenario constitutes one possible configuration of Brazil's future based on past economic, demographic and political trends and present conditions within Brazil and in the international arena. Based on this future vision of Brazil, two different variations were created: a reference case and a policy case. The reference case envisages Brazil evolving in a domestic and international setting that places no particular priority on global environmental issues. In contrast, the policy case foresees Brazil progressing in a context where the reduction of carbon emissions is considered a major imperative in both the national and the international policy arenas. While both cases assume that identical socioeconomic trends occur in Brazil between the present and 2025, the nature and extent of energy conservation efforts and fuel switching measures incorporated into the two cases differ substantially. As a result, the reference case indicates a growth in carbon emissions from 45 mt in 1985 to 143 mt in 2025; in contrast, the policy case restrains emissions levels in 2025 to 65 mt. The difference - 78 mt of carbon/year - represents around 1% of current world emissions from fossil fuel combustion. The results of the policy case suggests that Brazil
0301-4215/91/0121003-08 (~) 1991 Butterworth-Heinemann Ltd
1 003
Keywords: Brazil; Carbon savings; Energy-use scenarios
Evaluating the potential for restraining the growth of carbon emissions in developing countries plays an essential role both in the international debate on climate change and in the development of effective energy and environmental planning on the local level. This paper assesses the extent to which Brazil can limit its emissions of CO2, analyzes the most effective means for reducing emissions in each sector and identifies the major barriers to implementing the various CO2 abatement options. In 1987, fossil fuel burning in Brazil generated approximately 50 mt of carbon, equivalent to 13.5% of the carbon emitted by the USA in that )ear. 1 Much more widely discussed, Brazilian deforestaGilena M.G. Graca is at the Instituto de Eletrotecnica e Energia, University of S~o Paulo, Brazil. Andrea Ketoff is
C02 savings in Brazil
could restrain the growth of its energy-related carbon emissions over the next four decades without infringing on personal lifestyles. In fact, by decreasing its generation of energy-related CO2, Brazil could accrue many benefits on a national level and, simultaneously, make a small but meaningful contribution to international efforts to stem emissions of greenhouse gases into the atmosphere.
BACKGROUND Brazil's modern development period began in the 1950s based on an American model of resource management and mobilization. During the first development phase, the nation established an importsubstitution oriented industrial system. During the second phase, Brazil channeled investments into the manufacture of durable consumer goods such as cars and household appliances. Carrying out this model of development required the mobilization of energy sources on a large scale. This effort occurred in a highly nationalistic context; Brazilians perceived state control of resources as a guarantee that they would achieve their development goals. As a result of this drive, Petrobr~s (the national oil company) gained power, Brazil developed large-scale hydroelectric capabilities and, more recently, the nation began to produce sugarcane alcohol. The nation used export revenues to purchase oil and build refineries and, in addition, relied on international loans to buy power generation equipment and technologies. Approximately half of the debts Brazil accumulated during the 1970s stemmed from investments in energy exploration, production and distribution. As a result of its particular development pattern, Brazil has used its resources in a relatively efficient manner. The exploitation of local resources has long been the philosophy underlying Brazil's economic development. In addition, due to the fact that most refineries, distilleries and factories were built during the last two decades, the processes and equipment used are quite efficient. Following the two oil crises of the 1970s, both public and private institutions in Brazil were highly receptive to conservation and oil substitution measures. Similarly, during the last 10 years of economic hardship in Brazil, government and industry alike have typically viewed energy efficiency as an economically viable and effective option for expanding the energy system and helping the private sector. On the international level, environmental concerns are hampering the approval of loans for inefficient and/or environmentally-
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damaging projects; these increasing intern~ational restrictions may actually further open the lines of credit available to encourage energy efficiency in Brazil.
LONG-TERM S C E N A R I O A N D B O U N D A R Y CONDITIONS The long-term scenario relies on a series of detailed assumptions about Brazil's demography, economic structure and the saturation of services and comforts based on past and present economic, political and demographic trends. Using these assumptions, the scenario establishes a unique context in which the energy intensity of the Brazilian economy varies according to specific policy measures. The characterization of the reference case is of paramount importance in the evaluation of potential emissions reductions in the policy case. The reference and policy cases impose two different sets of energy-efficiency and fuel mix assumptions on this same general context. The difference between the two cases lies in the efficiency of energy-using devices, the intensity of industrial processes and the mix of fuels used to fulfill demand requirements. Both cases disaggregate activities in the household and transport sectors by end-use and analyse energyuse patterns in the industrial sector by examining the manufacture of major products. 6 A recent study projects that Brazil's population will stabilize at a level close to 250 million people between 2050 and 2060. Based on this figure, the long-term scenario estimates the size of the Brazilian population in 2025 to equal 214 million. 7 If recent World Bank estimates - which place the size of the Brazilian population in the year 2025 at 236 million had been used, the projected level of carbon emissions in the base case would be 10% higher, s The scenario assumes that the country's economic structure evolves from current conditions into an economy which is more open and more integrated with the rest of the continent. These shifts imply that the present economic and political crises are solved. As a result, the level of available services expands (eg, electrification increases), urban passenger transport improves and the ownership of appliances in lower-income households increases. Brazil's GDP grows by 3.2%/year over the considered period in the scenario, reflecting a doubling of household incomes. Income distribution improves slightly, although not dramatically. The adoption of major policies aimed at redistributing wealth would change the scenario radically, but such a shift does
ENERGY POLICY December 1991
C02 savings in Brazil Table 1. Carbon emissions, savings and sectoral shares.
1985 Total (mt) Per capita (Kg) Residential Industrial Transport Services Agriculture Fuel losses
(A) 45 342 8.4% 32.9% 45.6% 1.8% 4.9% 6.4%
Referen,ee case (B) 143 668 10.2% 33.7% 38.9% 6.7% 4.6% 6.0%
Policy case (C) 65 305 9.8% 33.2% 42.1% 2.3% 6.5% 6.1%
not appear likely in Brazil's near future. The share of each sector in value added remains unchanged aside from a small increase in the service sector's share at the expense of manufacturing. The internal market, which now comprises over 85% of GDP, will continue to foster the same type of activities. The long-term scenario assumes the continued use - and increased availability - of biomass fuels, both fuelwood and alcohol, in Brazil's energy supply, therefore allowing alcohol to maintain its significant role in containing the growth of energy-related COz emissions. On the other hand, financial, political and environmental concerns will limit the expansion of hydropower in Brazil. The growth of power generation demand is bound by efforts to protect the Amazon basin, an issue which we expect to be driven by both the national awareness of the importance of safeguarding the region as well as by international pressure to curtail the destruction of tropical forests. While in the reference case carbon emissions increase by over 200% between 1985 and 20,'5, in the policy case conservation measures limit the total increase to 44% of the 1985 figure. As a result, emissions per capita drop by 11% with respect 1:o the 1985 value. These figures highlight the crucial role of population growth on energy consumption and carbon emissions in developing countries; if popu] ation numbers were to remain stable, as is the c~se in many industrialized nations, the implementation of policy measures could actually help Brazil redtLce its total CO2 emissions while increasing income per capita and access to goods and services. SOURCES
OF CARBON
EMISSION
REDUCTION Brazil's industry and transport sectors generw:e the largest shares of CO2 emissions. Together, these two sectors account for almost 80% of current emissions and, over the next four decades, they will cont~:ibute ENERGY POLICY December 1991
Increased
Potential
emissions
savings
(D=B-A) 98 326 10.8 33.2 35.0 8.7 4.3 5.6
(E=B-C) 78 363 8.2 26.5 28.2 8.1 2.3 4.6
Reduction of increase (F=E/D) 79.6% 111.5% 75.9% 79.7% 80.5% 92.3% 52.6% 81.3%
the largest portion of increased CO2 emissions (column D, Table 1). In the reference case, the service sector shows the largest percentage increase in carbon emissions with respect to 1985 (from 2% to 7%) and the transport sector shows the greatest drop (from almost 46% to 39%). Carbon emissions from thermal power plants are incorporated into the calculation of emissions from individual sectors. 9 Table 1 disaggregates carbon emissions by sector of anthropogenic activity for both cases, showing where the greatest increases in emissions occur between 1985 and 2025 in the reference case and where the greatest potential for carbon savings exist in the policy case. Figure 1 presents the savings by 'location' (ie, where the emissions are actually physically produced). The location analysis places all potential carbon reductions from sectoral electricity savings (including carbon savings from thermal power plants and from reduced fuel loss in the extraction/production system) in the supply system, since lower electricity demand lowers the amounts of fuel burned for power generation. The concept of location savings holds particular relevance for Brazil, where the reliance on hydroelectricity (93% of the total in 1985), has helped to maintain low levels of carbon emissions. In the future, limitations on the expansion of Brazil's hydro capacity will force fuel-fired thermal power plants to cover a growing share of the nation's electricity generation requirements. Efforts to lower Brazil's future electricity requirements will help restrain the increased reliance on fossil sources in electricity generation and, therefore, will help curtail the growth of carbon emitted during the electricity production process. Accordingly, electricity savings play a particularly important role in reducing emissions in the policy case. The disaggregation of emissions by location indicates that 45% of the potential CO2 savings achieved in the policy case lie in the energy supply system. Such reductions imply large savings of capital otherwise required to build generation and distribution 1005
C02 savings in Brazil Location of savings
Industry14%
Source of supply savings
Residential 2%
Efficient generation 5% Reduced fuel loss 15% Agriculture Electricity 2% Services Electricity 20% Transport Electricity 1% Industry Electricity 41%
Residential Electricity 18%
Transport / 36% Agriculture 2% Services 1% Total ; 78 mtC
35 mtC
Figure 1. Potential carbons savings.
facilities. Savings in this area are particularly relevant to Brazil, which has few financial resources to devote to building new generation facilities at present. The other major source of emissions savings is the transport sector, which accounts for 36% of the total potential. To achieve the possible savings, the policy case implements two major measures aimed at: (1) improving the efficiency of cars, buses and trucks; and, (2) establishing the widespread use of alcohol in the car fleet. The success of both these policies depends heavily on international market conditions. The transfer of technology from industrialized countries can accelerate efficiency improvements considerably; on the other hand, the level of alcohol use will depend on the international price of gasoline. Today, alcohol costs between $40 and $60/bbl equivalent of gasoline to produce and is subsidized through gasoline taxes.
SAVING C A R B O N IN THE SUPPLY SYSTEM Figure 1 identifies the measures leading to savings in the supply system. Foremost, improvements in the efficiency of electricity in the industrial sector account for 41% of total supply-located savings. Over the past several years, excess hydro capacity favoured the use of electricity for industrial process heat. Switching back to fuel use in industry could lead to large potential reductions in electricity use, particularly in non-energy-intensive manufacturing where electricity use might be maintained unless strong specific policy measures are implemented. 1006
Higher efficiency and fuel switching in non-energyintensive manufacturing account for more than half of the carbon savings in the policy case (Table 2). A significant amount of the conserved energy results from the introduction of heat pumps and cogeneration, particularly in the manufacture of food products. The major energy-intensive industries - steel, aluminum, chemicals and paper and pulp - offer more limited potential for carbon savings, representing 17% of the supply-located emissions reductions in the policy case. Although modest, reductions in these four industrial sub-sectors jointly correspond to the equivalent of all potential savings from increased electricity efficiency in the residential sector. In the service sector, the opportunity exists to save 7 mt of carbon through the efficient use of electricity. Such savings can be attained largely through the introduction of efficiency in Brazil's growing market for energy-using devices, particularly for air conditioning and lighting. Today, lighting accounts for half of service's total energy consumption; hence the
Table 2. Carbon savings from electricity use in the industrial sector (mt).
(%) Total industry Non-energy intensive Mining Energy-intensive Steel Non-ferrous metals Cement Chemicals Paper and pulp
14.6 7.5 0.9 6.2 1.8 1.7 0.3 1.3 1.1
(100) (51) (7) (42) (12) (11) (2) (9) (8)
E N E R G Y P O L I C Y December 1991
C02 savings in Brazil Table 3. Transport carbon savings (mt).
Total oil Cars from less driving from efficiency from fuel switching Motorcycles Trucks Buses Air, rail and water Coal
28.0 11.0 1.2 5.7 4.1 -0.2 12.8 1.0 3.4 0.0
(%) (100) (39) (4) (20) (15) (- 1) (46) (3) (12) (0)
introduction of improved technology for fluorescent lights could reduce energy use in the service sector considerably in the future. The expected growth of air conditioning can be contained through the enactment of efficiency standards for buildings (eg, regulations governing electricity consumption per square metre) and air conditioners. At present, architectural models and building practices in Brazil fail to take into account the use of daylighting and passive climatization systems. Overall, electricity savings in the service sector represent 22% of the total reduction potential in carbon emissions from power generation. The residential sector holds an additional 18% of these supply-located savings. Approximately 90% of this potential lies in improving appliance efficiencies - particularly refrigerators. The policy case assumes that refrigerator efficiencies improve by 60% with respect to the reference case, which shows llousehold unit consumption for refrigerators rising beyond today's levels as a result of increases in refrigerator sizes and the number of refrigerators per household. Improving the efficiency of refrigerators would be relatively easy to achieve given the technology available to local manufacturers, although the inconsistency and often unreliability of the electricity distribution system considerably reduces the level of savings that could be obtained in a real world situation. Currently, four different levels of low voltage co-exist, l° This situation presents a major obstacle to the adoption of efficient comwessors which, as a result, Brazil produces exclusiv,dy for export. An additional factor possibly causing high electricity consumption levels is the improper use of refrigerators. Laboratory tests for one-door refrigerators in Brazil show an average consumption of between 30 and 40 kWh/month, while measurements of similar refrigerators in households average around 60 kWh/month.l The rest of the carbon savings from residential electricity use result from fuel-switching measures that encourage reliance on natural gas for waterENERGY POLICY December 1991
heating activities. Policies favouring the diffusion of natural gas in the household market should reduce the role of electricity from fueling 99% of all water heaters at present to 70% in 2025. Households will have to use natural gas for both cooking and water heating in order to afford connections to gas grids, which will increasingly penetrate major cities. While Brazilians have particularly high ownership levels of electric water-heating devices (90% of all electrified homes) at present due to the invention of a cheap and efficient device (chuveiro), the expansion of the gas grid will promote considerable fuel switching. Savings from the improved efficiency of power generation are limited to 5% of total supply-located emissions reductions. 12 Carbon savings are not very significant (less than 2 mt) largely because the reference case assumes that thermal plants will be performing at a high level of efficiency - comparable to international levels. At present, Brazil has a quite limited thermal installed capacity. The case assumes hydro generation increases by around 80% of the 1985 level in both cases. The limit of 321 TWh was based solely on the present expansion plans of Eletrob~s 13 and excludes the controversial additional development of capacity in the Amazon basin, where productivity is particularly low relative to the size of flooded areas. 14 All additional generation is assumed to be provided through thermal plants in both cases, predominantly through the use of local and imported natural gas. The 50% contribution of thermal plant in the reference case is based on advanced gas turbines which should be widely available by the time they are needed to supplement Brazil's hydroelectric capacity. In the policy case, reduced electricity demand will delay the construction of thermal capacity and contain its contribution to 15% of total generation.
SAVING C A R B O N IN F U E L - F I R E D END-USES As shown in Table 1 and Figure 1, carbon savings in the transport sector constitute more than one-third of the overall savings potential. Table 3 presents the details of carbon savings in the transport sector. The most important reductions in transport carbon emissions (almost 13 mt) result from the replacement of Brazil's aging and highly inefficient truck fleet and from improvements in freight transport. Fuel switching from gasoline to alcohol accounts for almost 40% of emissions reductions in cars, improved efficiency for 50% and measures promoting shifts from cars to buses and motorcycles for 1007
C02 savings in Brazil
inefficient as is the use of rail. Both show considerable potential for growth. Trains could be used to link major cities. Waterways, which are presently considered uneconomic and used almost exclusively by the riverside population, could be fully transformed into a modern transport system covering the Parana, Sao Francisco and Amazonian basins. 17 Fuel savings in the industrial sector constitute 14% of the total (see Figure 1). Two-thirds of these savings stem from changes in energy-intensive manufacturing processes, primarily steel production (Table 4). Savings result both from switching from oil to natural gas and reducing energy intensity, which drops by 50% of the reference value in the policy case. The decline in intensity occurs due to the modernization of the industrial infrastructure, improved efficiency in manufacturing processes and higher load factors for industrial production capacity. In the present context of economic instability, Brazil under-utilizes its production capacity, therefore, pushing energy intensities upwards. Increased efficiency in the future will depend on investors' confidence in the country's prospects and on the promotion of technology transfers from industrialized countries. The industrial infrastructure improves as the private sector increases its role in industrial activities.
Table 4. Fuel savings in the industrial sector (mt).
Total industry Non-energyintensive Mining Energy-intensive Steel Non-ferrous metals Cement Chemicals Paper and pulp
(%) (100) (26) (6) (67) (42) (3) (6) (12) (5)
11.0 2.9 0.7 7.4 4.6 0.3 0.7 1.3 0.5
personal transport the remainder. Providing incentives to shift to different modes was considered a more viable response to environmental concerns than establishing barriers to car ownership. By 2025, more than 30% of Brazilian households still will not have access to cars; restraining measures would constitute a limit on comfort and availability as well as a constraint on the development of the manufacturing industry. Because car efficiencies are assumed to improve considerably in the reference case, further improvements in the policy case are limited. Average fuel efficiency will increase from 7.2 kilometre per litre (km/lt) in 1985 to 13.8 km/lt in the absence of any particular environmental policy. 15 In the policy case, average car performance reaches 20 km/lt. The poor conditions of the road system and the quality of fuels might make these efficiency targets difficult to reach, 16 but given the overall economic case, most of these barriers should be surmounted by 2025. To achieve the results implied in the policy case, measures need to regulate fuel quality to maintain a constant quality of gasohol, one of the key factors hindering efforts of Brazilian manufacturers to develop higher efficiency vehicles. Another savings opportunity exists in Brazilian freight transport. Despite Brazil's extensive water system, the use of river transport is very limited and
POLICY OPPORTUNITIES AND BARRIERS An overall matrix of potential carbon savings in Brazil indicates that efficiency measures could account for almost 90% of the total savings and fuel switching efforts for the remainder. Figure 2 disaggregates savings resulting from improved efficiency and those from fuel switching measures by sector and fuel source.18 This quantification highlights the areas of major potential policy impact, although
Personal trans Freight transportL ~ S e r v i c e s ~ Agriculturel~ll~ Power generationlI ~ (Fuel i o s s e~s ~ ~ 0
I~1 ~ ~ ~
!1 Fuel efficiency Electricity efficiency Fuel switching Electricity switching
I
I
I
5
10 mt of Carbon
15
I 20
Figure 2. Brazil: carbon savings potential by area of action. 1008
ENERGY POLICY December 1991
COe savings in Brazil
estimates of cost-effectiveness (in $/mt saved) might change any preliminary set of priorities. Few areas dominate the picture: fuel efficiency actions in freight transport, personal transport and energyintensive industry bring about equal savings as do electric efficiency measures in industry, services and households. Fuel switching contributes to carbon savings only in personal transportation, where alcohol use expands. While efficiency measures cause a net reduction in environmental impact, the increasing alcohol use implies a possible displacement of environmental impacts from the global to the local level, as land-use requirements for alcohol production compete with food production. Savings in industry - particularly those in energyintensive industry - and in the service sector are especially relevant since those are the sectors where most investments for economic development will be channelled. These are also the sectors with the highest concentration of energy use - and therefore emissions - per establishment. The total number of industries in the country is in the order of 200 thousand and commercial establishments do not exceed two million. Reaching these institutions would prove far easier than gaining access to Brazil's 30 million households (55 million in 2025). In the residential sector, income distribution allows only 15-20% of all households to purchase new appliances. A good part of these households are so well-off that they purchase appliances irrespective of the cost of energy. Most of the rest of the population can only access the secondhand market, where the efficiency of appliances is constrained by the age of the devices and by the poor level of maintenance. The quality of the maintenance system is bound to the level of education, as well as Eo the low remuneration provided for repairs. A similar situation exists in the car market. ~9 Since development is Brazil's top priority, most economic policies are likely to focus on the productive sectors, ie, industry, transport and services. In these sectors, productivity and efficiency have greater relevance and, therefore, addressing the need for strategical measures for energy efficiency will prove easier. As a country with experience in renewable energy use and energy efficiency, Brazil is more prepared to address the issue of carbon emissions reductior~s that many other nations. Environmental awareness is highly developed in Brazil. Brazil also has welldeveloped technical and scientific capabilities, reflected in institutions like the electric utility conservation programme (PROCEL), the interministe-
ENERGY POLICY December 1991
rial committee on rational energy production and use (GERE) and several other state and local initiatives which are often linked with academic institutions. In the private sector, consulting firms have actively assisted the industrial and service sectors with energy conservation. Several characteristics of the Brazilian energy demand structure also may facilitate the development of an effective energy conservation strategy. An analysis of industrial energy-use since the early 1970s indicates a considerable capacity for this sector to adapt to changing prices by modifying the fuel mix of industrial production, as well as by absorbing new production processes. 2° As for the service sector, its growth is only beginning; hopefully, its expansion will be characterized by the construction of more efficient buildings. Future reductions in energy use and, in particular, electricity-use can save Brazil large amounts of capital that would otherwise be required for supply expansion. However, structural changes (ie, improvements in fuel quality, electricity distribution and road conditions) must occur to support the implementation of such policies. Sophisticated energy-efficient technology requires stabilized voltage which could prove expensive for Brazil. The establishment of an adequate maintenance system also could pose a serious challenge. Brazil's total carbon savings potential represents approximately 1% of present global energy-related CO2 emissions. Achieving this small saving will require substantial efforts, including the implementation of energy efficiency measures, the expansion of alcohol production and the regulation of fuel quality. These efforts will require a reorganization of Brazil's energy institutions and utilities and the implementation of new international technology transfer policies. The success of the carbon reductions will have to rely on improved conditions of technology transfer and a further opening of markets. Less protectionism is needed not only in Brazil, but also in the USA and Europe, Brazil's primary commercial partners. Beyond the environmental benefits, efforts to reduce energy-related carbon emissions present developing nations with the opportunity to renew their technical stock, acquire higher quality technologies and accelerate their economic development. Although halting deforestation practices constitutes Brazil's largest potential contribution to global climate stabilization, energy activities present another key area for Brazil to reduce its CO2 emissions and, simultaneously, promote its own economic development.
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C02 savings in Brazil The views presented in this paper are those of the authors and should not be attributed to their affiliated institutions. The authors would like to acknowledge Nina Goldman for her help. ~No CO2 emissions are assumed from biomass use, as those emissions are recaptured by growing more plants. In the case of alcohol, its production requires an amount of fossil energy sources equivalent to about 20% of the energy content of the alcohol produced. Most of this fossil energy is in the form of fertilizers, and, therefore, is counted in the industrial sector (see M.E. Marcondes Helene and M. Ferreira Bueno, 'Global deforestation and CO2 emissions: past and present. A comprehensive review', Energy and Environment, Vol 2, No 3, 1991, pp 235-282; J.G. Silva, G.E. Serra, J.R. Moreira, J.C. Goncalves and J. Goldemberg, 'Energy Balance for Ethyl Alcohol Production from Crops', Science, Vol 201, No 4359, 1978, pp 903-906. 2Although recent data indicates a decline in the number of forest fires, lowering the deforestation rate still constitutes the major challenge for Brazilian environmental policy. Almost 90% of forest cutting is related to the expansion of pasture land, with minimal carbon uptake potential and limited economic use of the deforested land. 3Helene and Bueno, op cit, Ref 1. 4j. Sathaye and A. Ketoff, 'COz emissions from developing countries: better understanding the role of energy in the long term', The Energy Journal, Vol 12, No 1, 1991, pp 161-196. 5A. Ketoff, J. Sathaye and N. Goldman, eds, C02 Emissions from Developing Countries: Better Understanding the Role of Energy in the Long Term, Volume H: Argentina, Brazil, Mexico and Venezuela, Report No LBL-30059, Lawrence Berkeley Laboratory, Berkeley, CA, USA, 1991. 6For a detailed description see Ibid. 7G. Martine, 'O mito da esplos~o demografica', Ciencia Hoje, Vol 9, No 51, Silo Paulo, Brazil, 1989, pp 28-35. SWorld Bank, World Development Report 1990, Oxford University Press, New York, USA, 1990. 'q'he reason is that they are indirectly associated with the satisfaction of sectoral energy requirements. Fuel losses from fossil fuel ~roduction are counted separately. ~I'he four levels are 110, 115, 117 and 127 volts, each ranging from - 5 % to +3% by regulation. ~G.M. Graca and M. Barghini, Uso de Electricidade no Setor Residencial da Cidade de S(~o Paulo, CESP, S~o Paulo, Brazil, 1987.
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12Note that the decreased use of thermal power plants generates another 4.6% of the savings from reduced losses in the fuji supply system. 13Centrais El~tricas Brasileiras S.A. - Eletrob~s, Plano 2010." Relat6rio Geral, Minist~rio das Minas e Energia, Rio de Janeiro, Brazil, 1987. 14W.J. Junk and J.A.S. Nunes de Mello, 'Impactos ecologicos das represas hidroelecticas na Bacia Amazonica Brasileira', Estados Avancados, Vol 4, No 8, Janeiro/Abril 1990, pp 126-143. ~SCalculating car performance in Brazil is complicated by the coexistence of fleets fueled by alcohol (23.5 KJ/I) and gasohol (34.9 KJ/1) - a mix of gasoline and dehydrated alcohol. The average road performance of the alcohol fleet was estimated to be 5 km/l in 1985 while the gasohol fleet averages at 8 km/l. In the future, the performance of alcohol cars is expected to approach that of the gasohol fleet. 16A. Ketoff, Overcoming Barriers to Energy Efficiency in Transportation: The Case of Brazil, Report No LBL-30444, Lawrence Berkeley Laboratory, Berkeley, CA, USA, 1991. ~VG.M.G. Graca and V. Rodriguez, 'Electricity production, private transportation and CO2 emissions - the five highest energy consumers of the developing countries (Brazil, China, India, Mexico and South Africa)', presentation at workshop on the Human Dimensions of Global Warming, Montebello, Canada, 29 July-1 August 1990. ~SFor each sector or sub-sector, we calculate carbon emissions in the policy scenario had the intensities remained the same as in the reference scenario and, subsequently, the level of emissions for constant fuel shares. For example, in cooking, we calculate carbon savings from efficiency as (Spol*Fpol*Iref) - (Spol*Fpol*lpol), and savings from fuel switching as (Spol*Fref*Ipol) (Spol*Fpol*Ipol) where S is the number of households, F t h e fuel choice and I the unit consumption for each type of fuel used. The terms ref and pol refer respectively to reference and policy scenarios. No savings result from changes in the structural component (S), which is assumed constant in the two scenarios. The only exception is personal transport, where a shift in modes occurs between the two scenarios. Savings in this instance were added to those induced by higher efficiency. 19Ketoff, op cit, Ref 16. 2°G.M. Graca, 'L'6volution harmonique de la consommation petroli6re au Br~sil', Revue de l'Energie, Vol 5, Paris, 1991; Ministerio das Minas e Energia, Balanco Energetico Nacional 1988. Ano Base 1987, Brazil, 1988.
ENERGY POLICY December 1991