Brazil in the G20 and leadership in the energy transition

Brazil’s status as current president of the G20 takes the country to the challenge of leading discussions on a series of crucial issues for the future of global society: trade and investments, digital transformations, finance and infrastructure, food and nutritional security, and, mainly, climate change and energy transition.

These last two issues have had particular relevance for the foreign policy of President Lula’s Government, which has made no effort to host COP 30, which will be held in 2025 in the city of Belém. Encouraging other countries to transform the global energy matrix, so that it becomes increasingly cleaner, is an important challenge for Brazil. However, playing this role will allow the country to contribute significantly to the decarbonization of national economies and the ongoing fight against climate change.

Brazil’s ability to lead energy transition efforts is based on government programs and incentives, bills, participation in international agreements involving the production of clean energy, and data on the country’s energy matrix. The New Growth Acceleration Program (PAC), an investment program coordinated by the Brazilian Government with the support of states, municipalities, social movements and the private sector, has stipulated an investment of BRL 417, 5 billion (approximately USD 82 billion) in energy transition actions from 2023 to 2026, a period during which expenditures of BRL 20.9 billion (approximately USD 4.1 billion) are also planned for the development of fuels low carbon.

The Brazilian Government has also presented a series of measures for the energy sector to the country’s National Congress. “E30”, for example, modifies the maximum percentage of ethanol in gasoline, increasing from 27% to 30% and includes the regulation of carbon capture and storage activity. Also highlighted is the Energy Innovation Plan (Plano Inova Energia), an initiative of the National Bank for Economic and Social Development of Brazil (BNDES, for its acronym in Portuguese) to promote the technological development of renewable energy production chains such as solar. and wind power.

The efficiency of spending and the execution of public projects, among the priorities of the G20 member countries

At the international level, Brazil, together with India and the United States, has established the Global Alliance for Biofuels, with the objective of expanding the consumption of this energy source through the consolidation of a global market. During the 2023 United Nations Climate Change Conference, COP 28, the country joined the Global Offshore Wind Alliance, launched by Denmark, by the International Renewable Energy Agency (IRENA). ) and the Global Wind Energy Council, whose objective is to exchange good practices and policies and increase installed capacity in the sector.

The Brazilian energy matrix is ​​one of the cleanest in the world. According to data from the Energy Institute (2023), although oil consumption still exceeds 30% of the total, the country consumes 49% of renewable energy, compared to 51% of non-renewable energy. Regarding electricity generation, the numbers show Brazilian leadership in the use of renewable sources. Currently, the electrical matrix is ​​dominated by hydroelectricity, solar energy, wind energy, biofuels, biomass, geothermal and others, which reach approximately 87% of the total.

The emphasis on biofuels is justified by the great Brazilian experience in the sector. According to information from the Energy Institute (2023), currently, the country is the second largest producer of biofuels in the world, with a share of more than 21% of the total, only behind the United States, which reaches around 38%. According to the Ten-Year Energy Expansion Plan 2032, an informative document from the Brazilian government, long-term expectations for the sector are positive. Projections indicate a growth of 4.1% in biofuel supply and 6.6% in demand over a ten-year period (2022-2032), which could boost the international market, benefiting Brazil.

The Brazilian Government has also presented to the country’s National Congress a series of measures for the energy sector

Regarding the G20 presidency, Brazil has signed a Work Plan for Energy Acceleration with the International Energy Agency (IEA). Within the group of the largest world economies, the country, through the Ministry of Mines and Energy (MME), has the mission of coordinating the Working Group on Energy Transitions, which is structured around three main themes:

i) acceleration of financing efforts for the energy transition;

ii) emphasis on the social dimension to promote a just and inclusive transition;

iii) development of sustainable fuel markets.

These issues represent important challenges for Brazilian diplomacy, particularly the need to allocate a greater volume of resources to finance the transition in countries of the Global South axis, whose energy matrices are still largely dominated by fossil sources. Although investments in clean energy increased by 17% in 2023, reaching USD 1.8 trillion, according to data from the Bloomberg NEF Report “Energy Transition Investment Trends 2024”, this amount needs to increase annually to USD 4.8 trillion by 2024 to 2030, with the aim of adopting a trajectory that guarantees net zero CO2 emissions in 2050.

In other words, one of Brazil’s central missions will be to think of solutions to deconcentrate investments, since a fair and inclusive energy transition must take into account the heterogeneity of energy systems in different regions of the world. The transformation of the energy matrices of developing and relatively less developed countries depends on the support of developed countries and requires a diversification of financing sources.

Brazilian experience in the biofuels sector can contribute to the increase in the use of ethanol globally and lead to its transformation into sustainable hydrogen, which could also be generated from wind and solar energy, thus creating another source of clean energy. In summary, Brazil, through its Government, has the capacity to lead the energy transition using its great potential in new technological routes and its diplomatic experience to foster multilateral cooperation, promoting sustainable fuel markets and guaranteeing energy security.