Positioning Brazil in the Energy Security of Latin America
Positioning Brazil in the Energy Security of Latin America
The understanding of energy security majorly portends two magnitudes: long-term energy security that mainly relates to timely investments to ensure supply in tune with sustainable development; and short-term energy security that would center around the system’s ability to react promptly to sudden changes within the supply-demand equilibrium. The Latin American and Caribbean (LAC) countries have witnessed growing energy demands, commensurate with industrialisation and modernisation, and have been compelled to identify appropriate energy supply and demand situations as a priority. Despite the prevalence of regional disparities in the existence and abundance of energy resources and the presence of a myriad of regionalism, there exist ample and unique opportunities for energy collaboration among the countries of the region.
In terms of ‘energy mix’, the LAC region stands out as one that is fortunate to have the cleanest electricity matrix, with a sharp contrast in the share of renewables when compared to other regions in the world. However, their aggregate figures hide extensive heterogeneity among the LAC countries, portraying primarily the performance of the six larger economies of the region. The power generation within these countries easily accounts for nearly eighty percent of the total electricity generation of the entire region. If Brazil were to be excluded from the regional calculation, the total renewable generation in LAC would slide from 52.4% to 38.2%. (IADB 2016). From the time Brazil was affected by the 1970s oil crisis due to heavy imports of oil, it has adopted aggressive policies with the goal of reducing dependency on imported oil. The development of large domestic potential for alternative renewable energy sources coupled with transition to a low-carbon economy, have been helpful. Even though LAC appears to be the region with the cleanest power matrix, the Brazilian case is worth emulation.
In 1938, the then President of Brazil, Getúlio Vargas was prudent enough to take an early decision to create the National Petroleum Council (CNP-O Conselho Nacional do Petróleo) to increase state control over the fairly new energy industry. Vargas furthered this goal by signing unique Law 2,004 that resulted in the creation of Petrobras, a state-owned enterprise (SOE). The unwavering support to its national oil company Petrobras, on deeper examination, reveals a government-ensured, fairly consistent financial support for diversifying the company’s research and development in the emerging activities related to deep-water explorations, during the 1980s. The stand taken by the government paid rich dividends because this hurled Petrobras into the elite league of deep-sea operations. The outcome was Petrobras being positioned as a market leader. Additionally, the government ensured that this firm continues to have a relatively free hand in running its operations despite recurring global oil shocks. Petrobras gained salience in 1997 when President Cardoso declared the end of the state monopoly and opened Petrobras to local and foreign private investment.
The 2007 discovery of the Tupi oil field, off the coast of the Rio de Janeiro state, by Petrobras, and subsequent discoveries in Campos and Espirito Santo were the largest hydrocarbon finds in the whole of Americas. It was estimated that the total reserves could amount to 50 to 100 billion barrels of oil and gas. The treasure was so substantial that there were even speculations of Brazil becoming part of the Organization of Oil Exporting Countries (OPEC). The Brazilian government, Petrobras and other related companies were predictably euphoric over the discovery. President Lula was so ecstatic over the find that he went to the extent of exclaiming “God is indeed Brazilian” and Hugo Chavez joked that Lula might be renamed ‘Sheikh Lula’. As things unfolded, there emerged criticisms of the scam related to Petrobras by Lula da Silva and Dilma Rousseff of only rewarding the faithful, to fund political activities and control inflation.
It would be worthwhile to examine here how competing claims about energy security and climate change policies have played out for domestic politics in Brazil. The question of whether the Brazilian government’s attempt to seamlessly weave climate and energy security narratives around the notion of ‘sustainability’ becomes pertinent to rationalize the substantive impact on Brazil’s energy policy. Domestic (public and private) and even the international environmental actors have had significant roles in pushing the government to include an environmental dimension in the energy security approach. Some critics even argue that environmental and climate change concerns might not be at the core of the government’s energy policy agenda. Encouraging environmental results that may have emanated in Brazil as fringe benefits from past energy-related policies have been dexterously utilised by the government as an effective tool to promote Brazil’s proactive credentials related to climate change within world forums like the IPCC (UNFCCC). All this while, the main spotlight has been on the home-grown biofuels (gasohol) technology. This has been projected as the pride and joy of the Brazilian contribution to tackling climate change.
Crumbling under the pressure of international political giants would be immense given the rising and volatile energy prices, geopolitical uncertainties in key oil supplying OPEC countries. Making environmental impact assessments (EIA) and energy audits mandatory for industries would improve the energy consumption pattern. Practices like energy pride, resource nationalism, shift to low carbon pathways, and changing the attitude of citizens can go a long way in attaining energy security.
The global oil crisis of 1970s, when Brazil was devoting half of its currency reserves towards oil imports, provided the much-needed impetus to the search for alternative fuel and reliance on cleaner forms of energy like hydropower. Additionally, the size of its energy market, geo-political significance and the abundance of both renewable and non-renewable domestic energy resources, has a pivotal role to play in the promotion of regional energy security.
Dr. Aprajita Kashyap is an Assistant Professor at the Centre of Canadian, US and Latin American Studies, Jawaharlal Nehru University, New Delhi.