Brazil: New Government in Place | What to Expect from Current and new Policies on Renewable Energy Sector

published on 28th February 2023

In 2022 the presidential elections took place in Brazil and the president elected was Luiz Inácio Lula da Silva, in his third mandate in the country, with 50.90% of the valid votes.

For the Ministry of Mines and Energy - an agency of the Federal Executive Branch whose sectorial competence involves the exploration, production, and trade of minerals and energy in Brazil - the appointed minister was Alexandre Silveira (52), who says his main goal is to structure the public policies needed to place Brazil as a world leader in clean energy, and for this he will create a National Secretariat for Energy Transition.

Some of the other initiatives cited by the new minister are:

Completion of the Light for All Program, which aims to bring electrification to remote areas and with subsidized tariffs by the Federal Government, state governments and distributors;

About fuels, Silveira affirmed the need to pay attention to the petroleum and natural gas reserves, which, having sustainability as an objective, need to be well taken care of and used;

About mining, the minister highlighted the relevance of mining for the national economy and the guarantee of sustainability of the activity, always guided by environmental justice. According to him, Brazilian mining can still contribute much more to the world's energy transition, such as nickel, cobalt, lithium, and copper, and promised that the government will make an effort in this regard.

The current government has also appointed Marina Silva as Brazil's Minister of Environment and Climate Change. At her inauguration, Marina Silva highlighted that she will give priority to environmental policy, and that this will also be the priority of the government as a whole. She also announced the creation of new secretariats, as well as the resumption of essential measures for the protection of Brazilian forests, biodiversity and development with economic, social and cultural sustainability.

News about renewable energy generation in Brazil

Photovoltaic

Energy Generation Growth

In September 2022, Brazil surpassed the mark of 20 GW of installed solar energy power (9.6% of the country's energy matrix). With this, this energy source is about to become the second largest source of energy generation in the country, second only to the hydroelectric matrix, according to Absolar - Brazilian Photovoltaic Solar Energy Association.

It is worth remembering that within this installed power are added the large plants and also the own generation systems on roofs, facades, and small plots of land - the number of residential solar systems installed in September 2022 reached approximately 1.2 million, according to Absolar. Also according to the association, from January to October 2022 solar energy grew 44% (from 13.8 GW to 20 GW).

Investments

Investments in solar energy in Brazil have altogether passed the 100 billion reais, more than 27.2 billion in revenue to the public coffers and generated more than 600,000 new jobs in the country, accumulated since 2012, according to Absolar. Thus, avoiding the emission of 28.4 million tons of CO2 in energy generation.

Change in the Law

According to a new law (14.300/2022) published in the beginning of 2022, it has changed the charge on the electricity bill, starting in 2023, called the solar tax.

Before the new law, ANEEL was the agency that distributed the rules for charging energy through normative resolutions, and one of the things that most attracted Brazilian consumers was the offsetting of credits on the electricity bill. With this new law, the credits go through a new fee, which covers the expenses that the distributor has with the infrastructure and investment in the electric grid.

However, it is important to know that those who already have a solar panel in their residence and/or company will be exempt from this tax until 2045.

Biogas

The biogas market keeps growing in Brazil as the expectation for the year 2022 is that the country will have reached the production of 2.8 billion cubic meters, a growth of 21.3% when compared to 2021.

Last year, at least 56 new plants were installed or renovated, and the estimates of CIBiogás - International Center for Renewable Energies - is that by 2030 the country should reach the equivalent of 11 billion cubic meters produced per year.

With the heating of the market, investments are on the rise. 40 plants should start operating in the next 5 years, demanding investments of around R$ 8 billion, according to Abiogás (Brazilian Biogas Association). In the last few years, the market has moved about R$ 3 billion.

Green Hydrogen

Expected to exceed $2.5 trillion by 2050, the race is on for the green hydrogen market - which represents 20% of global energy consumption, according to projections by the Hydrogen Council.

Investors, especially Europeans, who are unable to produce this type of hydrogen to meet their own demands in their countries, are forming an international energy market where potential partners are countries with available land, sun and wind, and have elected Brazil to explore the next frontier of the energy market. The contributions already announced in green hydrogen projects in the country exceed US$ 27 billion, 10% of the global total.

Operations are expected to start as early as 2025, with concentration in ports in the northeastern region of Brazil. The expectation is that there will be the generation of 1,400 direct jobs and the production of 16.1 million tons of green hydrogen per year and 2.8 million tons of green ammonia, serving mainly the foreign market.

Wind offshore

Brazil has 7,367 km of coastline and 3.5 million km² of maritime space under its jurisdiction, the country therefore has an extensive continental shelf that confers favorable characteristics for the installation and operation of offshore power generation projects.

The Federal Government of Brazil issued a decree, in January 2022, regulating the assignment of the use of physical spaces and the exploitation of natural resources in sea waters under the Union's domain for the generation of electricity. The Decree regulates how the procedures should be conducted, where the assignment requests can be presented, and what steps the entrepreneur must follow to achieve the undertaking.

In October last year, the Ministries of Mines and Energy (MME) and of the Environment (MMA), published an ordinance that creates the Single Portal for Management of the Use of Offshore Areas for Power Generation (PUG-offshore). Unifying, in this platform, all the services of offshore production authorization requests and follow-ups.

COP30 in Amazônia

"We hope to be able to host the world's largest climate event in a city part of the Brazilian Amazônia," said President-elect Luiz Inácio Lula da Silva when he announced on January 11, 2023 that the Ministry of Foreign Affairs formalized the candidacy of the state of Pará to host COP30 in 2025.