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Oil and natural gas prospects in South America: Can the petroleum industry pave the way for renewables in Brazil?

Author

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  • Goldemberg, José
  • Schaeffer, Roberto
  • Szklo, Alexandre
  • Lucchesi, Rodrigo

Abstract

A large share of Brazil's current investments is concentrated in the development of petroleum resources in new frontiers. Perspectives for large offshore pre-salt fields are particularly good. However, challenges are also huge. On one hand, pre-salt resources development will draw vast amounts of economic and human resources and pose significant macroeconomic risks. On the other hand, the petroleum industry can generate multiplicative effects into the country's economy and, even more importantly, generate rents that can be diverted towards the promotion of renewable energy sources. This paper simulates the rent generation of Brazil's petroleum development up to 2030 according to: the country's current fiscal regime, projections of petroleum supply and a probability analysis of Brent price evolution, and assesses how these economic resources, if properly allocated, can pave the way for an increased use of renewables in Brazil. Findings show that an ambitious energy innovation program based on a target-oriented agency plus a program for solar development would cost less than half the minimum average annual petroleum rent free for investing in renewables between 2013 and 2030. The remaining budget could improve the security of ethanol fuel supply, by avoiding the negative impacts of sugar prices spikes on Brazil's ethanol production.

Suggested Citation

  • Goldemberg, José & Schaeffer, Roberto & Szklo, Alexandre & Lucchesi, Rodrigo, 2014. "Oil and natural gas prospects in South America: Can the petroleum industry pave the way for renewables in Brazil?," Energy Policy, Elsevier, vol. 64(C), pages 58-70.
  • Handle: RePEc:eee:enepol:v:64:y:2014:i:c:p:58-70 DOI: 10.1016/j.enpol.2013.05.064
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    Cited by:

    1. Postic, Sebastien & Selosse, Sandrine & Maïzi, Nadia, 2017. "Energy contribution to Latin American INDCs: Analyzing sub-regional trends with a TIMES model," Energy Policy, Elsevier, vol. 101(C), pages 170-184.
    2. Mendes, Pietro A.S. & Hall, Jeremy & Matos, Stelvia & Silvestre, Bruno, 2014. "Reforming Brazil׳s offshore oil and gas safety regulatory framework: Lessons from Norway, the United Kingdom and the United States," Energy Policy, Elsevier, vol. 74(C), pages 443-453.
    3. Aragão, Amanda & Giampietro, Mario, 2016. "An integrated multi-scale approach to assess the performance of energy systems illustrated with data from the Brazilian oil and natural gas sector," Energy, Elsevier, vol. 115(P2), pages 1412-1423.

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