#260 Searching for Sustainability: The Energy Sector in Brazil

By Luis Pinguelli Rosa, Alexandre Salem Szklo, Mauricio Tiomno Tolmasquim

Contents

Preface

Introduction: The Evolution of a Crisis
Craig M. Fagan

The Deregulation of the Energy Sector in Brazil: A Comparison between Electrical Energy, Oil and Natural Gas Sectors
Luiz Pinguelli Rosa

Brazil’s Cogeneration Regulatory Framework: In the Light of International Experience
Mauricio Tiomno Tolmasquim and Alexandre Salem Szklo

From the Preface

This working paper brings together a background summary on the evolution of Brazil's energy sector, and two of the papers presented at a 2001 conference on the impending concerns for this sector. Dr. Pinguelli is the director of COPPE, the Graduate School of Engineering at the Federal University of Rio de Janeiro while both Drs. Tolmasquim and Sklo are from the Energy Planning Program of the Graduate School of Engineering at the Federal University of Rio de Janeiro. Pinguelli’s paper addresses the deregulation of the energy sector from a technical standpoint while incorporating extensive policy analysis into his argument. He emphasizes the importance of the definition of the energy matrix for Brazil’s future and concludes that, overall, the privatization of the electric energy sector in Brazil has had negative results, considering both the final prices for the consumer, the quality of service offered, and the inability of the system to expand electricity generation proportionally to increases in demand.

Tolmasquim’s and Szklo’s paper focuses on the topic of cogeneration in Brazil, a process that simultaneous generates two or more forms of energy from a single source. They analyze the impact of changes in the country’s regulatory structures on the development of cogeneration. Particular attention is paid to Brazil’s legal framework for cogenerators and how this has constrained the establishment of such facilities. The authors stress a concern over the misperception of authorities about the potential benefits of cogeneration facilities for Brazil’s energy sector. Tolmasquim and Sklo suggest that the current administration has opened the market to competition without adequately distinguishing between cogenerators and independent power producers. As a consequence, the state has been, and will continue to be, unable to encourage energy efficiency as long as private investments are not channeled towards cogeneration projects, which have proven to be more efficient than ordinary power generation plants.