Renewable electricity expansion and its effects on employment and regional migration in Brazil

Brazil has been planning to increase the share of renewables in its electricity generation mix mostly by raising the share of wind and solar sources. According to the last Brazilian Decennial Energy Plans (PDE 2026 and PDE 2027), during the next decade, the country should more than double its installed capacity for wind power and drastically increase its capacity for solar. About US$ 60 billion are estimated only for new projects. This investment will be mostly concentrated in the poorest regions of the country such as the Northeast region – best site for both wind and solar generation. Therefore, the expansion of renewables also entails socioeconomic and regional issues. By applying the CGE model TERM-BR10 this paper aims to study the economic impacts of the national energy expansion plan (PDE 2026), focusing on impacts over labour market and migration. TERM-BR10 is a regional, bottom-up and recursive dynamic computable general equilibrium model. It has a highly disaggregated electricity generation industry into eight different sources, allowing for substitutions among them. The PDE2026 plan presents scenarios for the country’s future electricity mix with different shares of renewable sources. One scenario was set as a baseline and three were analysed as policy scenarios, from which two contain higher share of renewables. Results show that the Northeast region experiences the largest real wage increase relative to baseline, the largest employment creation and therefore attracts the largest migration cumulative inflows in the 2035 time horizon. Sao Paulo state and the South, Southeast and Center West regions experience negative variations in their labour market, resulting in emigration to other regions. Our preliminary results also show that work force attracted by the Northeast region is relatively higher in skilled groups, suggesting that investments in renewable energy create regional co-benefits.