Within the energy transition agenda, Brazil occupies a prominent place, especially in relation to renewable energy, since almost 90% of electric matrix of the country comes from this type of source – while the world average is 28%.
However, there are still important challenges related to the decarbonization of other segments of the national energy matrix. This is what a new study by PwC Brazil, which outlines four paths to help Brazilian companies structure a solid and effective energy transition.
However, before adopting these strategies, the consultancy highlights that it is necessary to consider the predicted increase in demand for energy in the world: which should grow by up to 1% per year and, in 2050, could be up to 20% above 2021 levels.
Currently, around 80% of primary energy demand is met by molecules originating from hydrocarbons, such as oil, gas and coal. The remaining 20% is supplied by electrons, that is, the electricity sector itself.
In this table of numbers, the company highlights that it is also important to consider that energy consumption represents almost 73% of total greenhouse gas emissions.
Furthermore, even with a predominantly clean electricity matrix, Brazil still has a significant share of emissions. The company cites, for example, that data from EPE (Energy Research Company) show that around 39% of final energy consumption came from oil and derivatives in 2023, and another 7% from firewood.
Furthermore, 60% of the country's primary energy production still comes from non-renewable sources, with sectors such as transport, cement, steel, chemicals and ceramics among the biggest emitters.
When considering these numbers and the scenario of opportunities for the energy transition within and outside Brazil, PwC Brazil assesses that there is a greater possibility of exploring renewable and less polluting resources.
“For the transition to happen responsibly, there are already calculations. Achieving global transition goals ranges from US$4 trillion to US$6 trillion per year, according to the IPCC (International Energy Agency and the Intergovernmental on Climate Change).
Four paths to a well-structured energy transition:
- Search for energy efficiency
The first step, according to PwC, is to decouple economic growth from increased energy consumption. This means producing more goods and services with less energy – a move considered essential to addressing the world’s disproportionate energy consumption.
As an example, it is mentioned that North America and Europe comprise 15% of the global population and for 31% of global energy consumption. In the Brazilian reality, the search for efficiency also involves our structural oversupply.
With new technologies and sources such as solar and wind, it is possible to deliver more energy, as long as there is a favorable regulatory environment, according to Adriano Correia, partner and leader of energy and public utilities at PwC Brazil.
- Consider alternatives
Another way forward is to boost electricity options. For PwC, the world must significantly expand the supply of carbon-free electricity in the coming decades.
In this sense, it would be necessary to increase, in an equivalent way, this demand for the electrification of products and services that used to depend on hydrocarbons.
“This effort encomes a series of actions, such as driving electric vehicles instead of cars and trucks with combustion engines. In Brazil, this movement is still slow due to regional characteristics, but it is underway. The expectation is that we will reach a break even in 2030”, comments Correia.
- Decarbonization
The entity also indicates that it is necessary to decarbonize the hydrocarbon consumption chain through ecological alternatives. The transition to bio-based raw materials, such as replacing plastics with organic-based packaging, can play an important role.
“Companies are taking steps to create supply chains for sectors that are difficult to decarbonize and that can serve as inspiration. In Sweden, there is an initiative to build a green steel plant that will have a production capacity of five
- Autarchy for transition policies
As a fourth step, PwC suggests a kind of “central bank” that sets independent policies on short-term issues or goals, with the aim of ensuring a structured transition to secure a reliable energy supply while also encouraging progress towards net-zero.
This initiative could be built on existing multilateral institutions to countries to move from policy ambition to implementation, which would ensure that the cost of carbon within the system remains in line with overall objectives.
“Brazil has great potential to be a leading player and develop a variety of projects, including green hydrogen, for example. The cost is highly competitive due to the country’s significant wind capacity and solar incidence. In other words, there is a market, but Brazilian companies need to organize themselves to get the best results from this opportunity,” says the partner at PwC Brazil.
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