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Brazil needs fossil-fuel phase-out plan

  • Märkte: Crude oil, Electricity, Emissions, Natural gas
  • 13.09.23

Brazil needs a clear fossil-fuel phase-out plan if it wants to position itself as a frontrunner in climate policy and implementation, delegates heard at the Brazil Climate Summit in New York.

The government of President Luiz Inacio Lula da Silva is working on a green package that includes regulation for green hydrogen development, carbon, capture, utilization and storage (CCUS), offshore wind and the creation of a carbon market. But there are no signs of a fossil-fuel phase-out plan to support the transition to cleaner energies.

"There are energy transition departments in the government but there isn't a plan to phase out fossil fuels with a starting date and an end date," president of Brazilian think tank Instituto Tanaloa, Natalie Untersteller, said. "We need a clear, full and fair phase out of fossil fuels."

Brazil's economy strongly depends on its oil and gas industry, with about 3mn b/d, it is far ahead of other South American countries in oil production.

Apart from that, the industry carries years of expertise in energy transportation and other logistics that could benefit the transition to low-carbon energy.

"[The] oil and gas [sector] is part of the energy transition, we can't leave anyone behind" said Luciana Costa, director of infrastructure, energy transition and climate change at Brazil's central bank BNDES. The bank is working with state-controlled Petrobras on developing an energy transition plan for the firm.

The state-controlled company currently spends 6pc of its total capital expenditure (capex) in energy transition, but will increase that amount to up to 15pc in its 2024-28 strategic plan, due to be unveiled in November.

The firm will also invest in energy transition and decarbonization projects as part of its portfolio under the federal government's growth acceleration program.

The firm last week announced that it had bought 175,000 voluntary carbon credits from the deforestation and forest degradation (REDD+) Brazilian Envira project in the Amazon rainforest. Under its 2023-2027 strategic plan, Petrobras planned to spend up to $120mn in carbon credits by 2027.

Brazil's has a target of reducing its greenhouse gas emissions by 37pc in 2025 and by 50pc by 2030, both compared with a 2005 baseline.


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