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Energy Economics 56 (2016) 564–574

Contents lists available at ScienceDirect

Energy Economics
journal homepage: www.elsevier.com/locate/eneco

Climate policy scenarios in Brazil: A multi-model comparison for energy


André F.P. Lucena a,⁎, Leon Clarke b, Roberto Schaeffer a, Alexandre Szklo a, Pedro R.R. Rochedo a,
Larissa P.P. Nogueira a, Kathryn Daenzer c, Angelo Gurgel d, Alban Kitous e, Tom Kober f
a
Energy Planning Program, Universidade Federal do Rio de Janeiro, Brazil
b
Pacific Northwest National Laboratories, Joint Global Change Research Institute, College Park, MD, USA
c
Pennsylvania State University, College of Agricultural Sciences, University Park, PA, USA
d
São Paulo School of Economics, Fundação Getúlio Vargas (EESP/FGV), Brazil/MIT Joint Program on the Science and Policy of Climate Change, USA
e
European Commission, Joint Research Centre, Sevilla, Spain (The views expressed are purely those of the author and may not in any circumstances be regarded as stating an official position of the
European Commission)
f
Energy research Centre of the Netherlands, Policy Studies, Amsterdam, The Netherlands

a r t i c l e i n f o a b s t r a c t

Article history: This paper assesses the effects of market-based mechanisms and carbon emission restrictions on the Brazilian en-
Received 1 September 2014 ergy system by comparing the results of six different energy-economic or integrated assessment models under
Received in revised form 29 September 2014 different scenarios for carbon taxes and abatement targets up to 2050. Results show an increase over time in
Accepted 6 February 2015
emissions in the baseline scenarios due, largely, to higher penetration of natural gas and coal. Climate policy sce-
Available online 14 February 2015
narios, however, indicate that such a pathway can be avoided. While taxes up to 32 US$/tCO2e do not significantly
JEL classification:
reduce emissions, higher taxes (from 50 US$/tCO2e in 2020 to 162US$/tCO2e in 2050) induce average emission
H23 reductions around 60% when compared to the baseline. Emission constraint scenarios yield even lower reduc-
C88 tions in most models. Emission reductions are mostly due to lower energy consumption, increased penetration
Q40 of renewable energy (especially biomass and wind) and of carbon capture and storage technologies for fossil
Q54 and/or biomass fuels. This paper also provides a discussion of specific issues related to mitigation alternatives
C61 in Brazil. The range of mitigation options resulting from the model runs generally falls within the limits found
C63 for specific energy sources in the country, although infrastructure investments and technology improvements
C68
are needed for the projected mitigation scenarios to achieve actual feasibility.
O57
© 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
Keywords: (http://creativecommons.org/licenses/by-nc-nd/4.0/).
Climate policy
Low-carbon energy scenarios
Mitigation alternatives
Brazil

1. Introduction Most of Brazil's deforestation takes place in the Brazilian


Amazon, where its rate has decreased substantially in the recent years
The increase in greenhouse gas (GHG) emissions in the recent de- (from a 10-year deforestation average of 19,500 km2 year−1 in 2005
cade has been dominated by the emerging economies, explained mainly to 5843 km2 year− 1 in 2013 — Nepstad et al., 2014). According to
by the growth in their economic activity (Peters et al., 2012). In the case Aguiar et al. (2012), the reduction in deforestation rates in that biome
of Brazil, emissions up to 2010 have been dominated by land-use carbon alone leads to a drop in annual CO2 emissions from more than
dioxide (CO2) and non-CO2 gases, pinpointing the key role played by de- 1.1 billion tons of CO2 in 2004 to 298 million tons of CO2 in 2011, assum-
forestation and agriculture in the country and placing it in fourth-place ing a direct conversion of lost biomass into carbon. Should deforestation
when it comes to ranking national contributions to observed global stabilize at this new level, the energy sector will, in the near future, be-
warming (Matthews et al., 2014). When accounting only for CO2 emis- come the main source of emissions in Brazil.
sions from fossil-fuel burning, cement production and gas flaring, how- Globally, Brazil is in a favorable position when it comes to the use of
ever, Brazil is ranked as fifteenth (Boden et al., 2013). renewable energy sources. In 2013, over 40% of all primary energy pro-
duced in the country came from renewable sources (EPE, 2014), a value
that is relatively high compared to the world average of around 13%
⁎ Corresponding author.
(IEA, 2013). Most of the renewable sources used in the country come
E-mail addresses: andrelucena@ppe.ufrj.br (A.F.P. Lucena), larissa@ppe.ufrj.br from sugarcane products (16.1%), hydropower (12.5%) and other bio-
(L.P.P. Nogueira). mass (8.3%). Wind, solar and other renewable resources still play a

http://dx.doi.org/10.1016/j.eneco.2015.02.005
0140-9883/© 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574 565

small role, with less than 5% of the total primary energy produced in absence of discussions about possible future mitigation policy choices,
Brazil (EPE, 2014). testing standard mitigation instruments, such as carbon prices and
However, socioeconomic development of the country will result in emission targets, can provide useful information for climate policy mak-
higher energy use that is not guaranteed to come from renewable sources. ing in the country, given that the model scenarios analyzed here for
In spite of the current high share of renewables in the Brazilian energy these instruments provide cost-effective mitigation options. Additional-
mix, the country faces a situation where, on the one hand, it needs to in- ly, by using a standardized set of policy scenarios, it is possible to com-
crease its energy production to foster socioeconomic development, job pare the effects of these policies across countries in Latin America (e.g.
creation and poverty alleviation. On the other hand, the country faces Clarke et al., 2016–in this issue).
the near exhaustion of its environmentally feasible hydropower potential The core baseline scenario is based on business-as-usual assump-
and is expected to increase fossil energy use, with the recent oil discover- tions at the regional and global levels and is used as the reference for
ies in the pre-salt1 fields and the perspectives for increased coal-fired the climate policy scenarios. It does not include the Brazilian Copenha-
power generation (EPE, 2013; Nogueira et al., 2014; Saraiva et al., 2014). gen Pledge3 or new climate or energy policies except those implement-
Different policy options are available to foster a low-carbon econo- ed prior to 2010. The four climate policy scenarios are divided into two
my. The evaluation of market based policies, such as a carbon tax or ne- different sets: two scenarios with CO2 price paths applied to all GHGs —
gotiable emission permits, has been widely conducted in worldwide Low CO2 price and High CO2 price; and two others with emission reduc-
and regional analyses (Clarke et al., 2012; GEA, 2012; IPCC, 2014). To tions applied to all fossil fuel and industrial (FF&I) CO2 emissions — 20%
date no study has analyzed the effects of different carbon policies, abatement (FF&I) and 50% abatement (FF&I). The scenarios are progres-
such as taxes and/or caps, on the Brazilian energy system by running sively stringent in terms of mitigation efforts. Both sets of policies begin
and comparing different integrated assessment models (IAM). in 2020 and all other assumptions are the same as in the baseline.
As part of the Latin American Modeling Project and Table 1, shows the CO2 price paths and emission reductions assumed
Integrated CLimate Modelling And CAPacity building in Latin by the climate policy scenarios. For a more detailed description of the
America (LAMP–CLIMACAP — van der Zwaan et al., 2016a–in this scenarios used in this study see van der Zwaan et al. (2016a–in this
issue), six teams have generated profiles of the Brazilian energy sys- issue), van Ruijven et al. (2016–in this issue) and Clarke et al. (2016–
tem out to 2050 under different carbon tax and abatement target re- in this issue).
gimes using different IAMs. This paper compares the models’ results2 In this paper the results of the different models/scenarios are ana-
for Brazil in order to assess the possible effects of GHG mitigation lyzed only for the industrial and energy sectors. For an analysis of land
strategies on the country’s energy system. Based on the identifica- use and forestry emissions resulting from the LAMP–CLIMACAP model-
tion of key energy segments provided by this analysis, this paper ing efforts see Calvin et al. (2016-in this issue). Because the sectoral
provides a discussion of issues particularly relevant to Brazil. scope of the models is different – e.g. some models have endogenous
This paper is organized as follows. Section 2 discusses the models land use modules – in the 20% abatement (FF&I) and 50% abatement
and scenarios used in the study. Section 3 presents the basic assump- (FF&I) emission reductions are applied to energy and industry only.
tions and baseline results. Section 4 shows the results for climate policy Still, not all models include emissions from industrial processes. Howev-
scenarios. Section 5 discusses specific issues in the Brazilian energy sys- er, since these are relatively small compared to energy emissions, they
tem and relates them to climate change mitigation policies. Finally, do not significantly affect the model comparison (for simplicity, hence-
Section 6 concludes the paper with some final remarks. forth the term ‘emissions from energy’ will refer to emissions from en-
ergy and industry).
2. Participating models and scenario description
3. Basic assumptions and baseline scenarios
Within LAMP–CLIMACAP, six modeling teams assessed Brazil as an
independent region and were, therefore, considered in this study. Model Projections are largely dependent on the basic assumptions
These groups have produced five scenarios for the Brazilian energy guiding the evolution of the main drivers for energy production and
mix out to 2050 under different climate policy regimes. The models consumption. Assumptions about technological development, costs, be-
used in this study are: EPPA (Paltsev et al., 2005, 2013); GCAM (Calvin havior, and trade, vary greatly across models (for more information on
et al., 2011); MESSAGE-Brazil (IAEA, 2006; Lucena et al., 2010; the technological specifications within the models used in the LAMP ex-
Nogueira et al., 2014); Phoenix (Wing et al., 2011); POLES (Griffin ercise, see van der Zwaan et al., in this issue). The models were not har-
et al., 2014; Kitous, 2010); and TIAM-ECN (Kober et al., 2014 and van monized for Gross Domestic Product (GDP) and population growth,
der Zwaan, 2013, 2016b–in this issue). These models differ from each which creates a broad range of future pathways. The basic population
other in terms of their modeling approach (optimization or simulation), and GDP assumptions used in each model are described in detail in
spatial resolution (national or global), sectoral scope (partial or general van Ruijven et al. (2016–in this issue). Some models are computable
equilibrium), degree of foresight (myopic or perfect foresight) and rep- general equilibrium (CGE) models (Phoenix and EPPA) with endoge-
resentation of technological options (type, availability and costs). The nous GDP pathways that vary across the different scenarios prepared
models also differ in how they treat the potential for energy resources for this comparison exercise. In all other models, GDP is exogenous
and represent technological change. A comparison of model features and is the same across scenarios.
can be found in van der Zwaan (2016b–in this issue) and Clarke et al. The models generally assume that Brazil's population stabilize at dif-
(2016–in this issue). ferent levels by 2050 (except GCAM) and, in some cases, population
A baseline scenario and four climate policy scenarios developed peaks in 2040 and then decreases. The assumptions for GDP vary greatly
within the LAMP–CLIMACAP exercise are used in this paper and other across models, ranging from a 2.5 to more than a 4-fold increase from
studies within this special issue (Clarke et al.; van der Swaan et al.; Cal- 2010 to 2050. In per capita terms, the spread of GDP assumptions is
vin et al.; van Ruijven et al.). The current climate policy in Brazil is lim- also large, nearly doubling in the lower case and increasing by 3.6
ited to 2020 and there is not a clear picture or deep discussion in the times by 2050, when compared to 2010.
country about a climate policy strategy beyond 2020. Considering this
3
The Brazilian pledges were announced at the UNFCCC Conference of Parties in Copen-
1
The pre-salt oil fields are so called because of the 2000 m layer of salt above the oil. Es- hagen, 2009. These voluntary pledges set emission reduction targets of 36.1–38.9% com-
timated reserves in these fields range from 30 to 100 billion barrels of oil (OCD, 2009). pared to baseline emissions projected up to 2020 (Brasil, 2009). The extent to which
2
The results database of the LAMP-CLIMACAP project can be found at https://secure. these pledges are based on a realistic baseline is debatable (see, for example, Lucon
iiasa.ac.at/web-apps/ene/LAMPDB/. et al., 2013; Clarke et al., 2016–in this issue).
566 A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574

Table 1
CO2 price paths and emission reductions assumed by the climate policy scenarios.

Scenario Scenario description

Core baseline Business-as-usual scenario including climate and energy policies enacted prior to 2010
Low CO2 price A carbon tax is levied of 10 $/tCO2e in 2020, growing at 4%/year to reach 32 $/tCO2e in 2050.
High CO2 price A carbon tax is levied of 50 $/tCO2e in 2020, growing at 4%/year to reach 162 $/tCO2e in 2050.
20% abatement (FF&I) Fossil fuel and industrial CO2 emissions are reduced by 5% in 2020, linearly increasing to 20% in 2050, with regard to 2010.
50% abatement (FF&I) Fossil fuel and industrial CO2 emissions are reduced by 12.5% in 2020, linearly increasing to 50% in 2050, with regard to 2010.

The wide range in GDP and population growth, however, is not total- and produce biofuels, resulting in lower levels in 2010 compared to the
ly reflected in projected primary energy consumption since different models which include all biomass primary energy. For power generation,
models assume different energy efficiency improvement rates. In all models show a more homogenous composition of the fuel mix for 2010,
models, primary energy roughly doubles from 2010 until 2050 (ranging with little differences across them. For a discussion about base year varia-
from an increase 2.14 to 2.51 times the 2010 levels). As a result, primary tions across models, see van Ruijven et al. (2016–in this issue).
energy intensity decreases in all models, from just below 2010 values to In the baseline scenario the share of fossil fuel increases in all models
almost half of that. In per capita terms, primary energy consumption but POLES due to a large penetration of natural gas and/or coal. In abso-
roughly doubles in all models by mid-century. The reasons for the de- lute terms, these two energy carriers are projected to increase in all
creasing energy intensities vary across models, but generally are related models. Models agree that oil will remain an important energy carrier
to both projected energy efficiency improvements and changes in the in the future, but generally project it to increase at a rate below that of
economic structure of the country. total primary energy. In four out of six models oil consumption in-
The composition of the primary energy mix up to 2050 in the baseline creases little from 2020, despite the large, recently discovered oil re-
scenario is shown in Fig. 1. Some discrepancies can be noticed in 2010, serves in the pre-salt fields.
which are the result of differences in variable definitions, information In all models renewable energy sources increase in the baseline sce-
sources and base year across models. For example, results for biomass in nario. However, their share in total primary energy consumption is
Phoenix only include primary energy that is used to generate electricity projected to decrease by 2050 given the large penetration of fossil

35
30
25
EJ/year

20
15
10
5
0
EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

2010 2030 2050


Oil Coal Gas Nuclear Hydro Biomass Solar Wind Other
1800
1600
1400
TWh/year

1200
1000
800
600
400
200
0
EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

EPPA

GCAM

MESSAGE-Brazil

POLES

Phoenix

TIAM-ECN

2010 2030 2050


Hydro Oil Coal Gas Nuclear Biomass Solar Wind Other

Fig. 1. Primary energy (upper panel) and electricity (lower panel) mix in the Core baseline scenario for Brazil.
A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574 567

Fig. 2. Emissions from energy in all scenarios for Brazil (Core baseline range shown in all plots, CO2 price scenarios shown in upper row and emission restriction scenarios shown in lower
row).

fuels. This result reflects the expected lower projected cost of fossil fuels the baseline scenarios shows evidence that a low tax does not substan-
relative to that of renewable energy in a scenario without any kind of tially affect emissions from energy and industry in Brazil (average re-
climate policy. The only exception is the baseline scenario from POLES, duction from baseline projections around 20% by 2050). A high tax, on
which shows a higher penetration of renewable energy sources. the other hand, induces larger emission reductions in all models to
Electricity generation more than doubles by 2050 in all models in the levels much below the lower boundary of the baseline scenarios (aver-
baseline scenario, ranging from a 2.22 to a 3.18-fold increase. Per capita age reduction from baseline around 60% by 2050). In general, however,
electricity consumption increases in all models. In terms of power gen- the tax scenarios in this exercise yield less stringent emission reductions
eration mix, in the baseline scenario all models projects a diversification than cap scenarios, the only exception being GCAM.
by 2050 compared to today's hydropower-based electricity mix, despite Emission reductions are induced by a combination of actions, such as
a still expected increase in hydropower. Most models see a higher share reduced energy demand, decarbonization of primary energy and of
of fossil-based generation with an increase in natural gas after 2020 and electricity supply mix, carbon dioxide capture and storage (CCS) with
an increase in coal based generation from 2030 onwards. After 2030–40, fossil fuels as well as CCS with biomass (BioCCS). The solution found
wind and solar power increase in all models (except solar in TIAM- by different models in terms of the best mitigation alternatives in differ-
ECN), but only in a few models do these sources reach a more relevant ent climate policy scenarios is discussed below.
share by 2050. Biomass-based electricity generation increases in all As mitigation efforts become more intense all models see a reduction
models except in MESSAGE-Brazil, but does not increase beyond a 15% in final energy consumption (Fig. 3). While a low tax does not have
share of total generation. All models project a small increase in nuclear much effect on final energy consumption, in more stringent scenarios
energy in the baseline. some models project reductions in energy consumption that are half
Emissions from energy increase in all models in the baselines. Up to of the baseline levels by 2050, which is very close to 2010 levels
2030, there is a small range across models, which broadens to 2050, (EPPA and Phoenix).5 Other models see much lower reductions (e.g.
when model results range from 910 to 1665 Mt CO2/year. The range of MESSAGE-Brazil, GCAM and POLES at around 10% below baseline levels
fossil fuel and industrial emissions in the baseline scenarios is shown in very stringent scenarios). The same result applies in terms of primary
in Fig. 3; for model specific results we refer to van Ruijven et al. energy, except for MESSAGE-Brazil. In all models, conversion efficiency
(2016–in this issue). The results for emissions and GHG mitigation op- from primary to final energy decreases as mitigation efforts change the
tions are discussed in the next section. primary energy mix towards less-efficient-to-use energy sources, such
as biomass. In MESSAGE-Brazil, this effect is large enough to make pri-
4. Climate policy scenarios mary energy consumption increase above baseline, even while final en-
ergy consumption decreases.
Emissions from energy use for all models are shown in Fig. 2 accord- Besides reducing energy consumption, mitigation also occurs
ing to different mitigation scenarios vis-a-vis the baseline scenarios. As through changes in the primary energy mix of the country, which is
expected, the range of results across models for the cap scenarios – 20% shown in Fig. 3. In general, a low carbon tax does not affect the primary
abatement (FF&I) and 50% abatement (FF&I) – is much smaller than for energy mix by a large extent. In the higher tax or emission restriction
the tax scenarios — Low CO2 price and High CO2 price. The difference
across the cap scenarios reflects, on the one hand, differences in base
year values and, on the other, differences due to trade between Latin
5
American countries. These emission reduction scenarios impose restric- These are CGE models, which consider the impacts of the policy on the overall econo-
tions across Latin America, thus yielding slightly different results for my. As so, there are four main channels leading to the decrease in energy consumption:
i) GDP decreases under the carbon policies, reducing the per capita income and, as a con-
Brazil specifically.4 The difference between the two tax scenarios and
sequence, the energy consumption relative to the baseline scenario; ii) carbon policies in-
crease the costs of the fossil energy sources, which reduces consumption; iii) higher
4
By being the only country specific model, MESSAGE-Brazil shows lower emissions energy prices induce energy efficiency; and iv) as carbon policies are applied to other
than the other models, which implies that emission reduction efforts in the rest of Latin countries, there is a decrease in the global economic activity, reducing again the use of
America are greater than those in Brazil. energy.
568 A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574

40
2030
35

30
EJ/year 25

20

15

10

0
EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN
Core baseline $10 CO2 price $50 CO2 price 20% abatement (FF&I) 50% abatement (FF&I)
Oil Oil w/CCS Coal Coal w/CCS Gas Gas w/CCS Nuclear Hydro Biomass Bio w/CCS Solar Wind Other

40
2050
35

30

25
EJ/year

20

15

10

0
EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN
Core baseline $10 CO2 price $50 CO2 price 20% abatement (FF&I) 50% abatement (FF&I)
Oil Oil w/CCS Coal Coal w/CCS Gas Gas w/CCS Nuclear Hydro Biomass Bio w/CCS Solar Wind Other

Fig. 3. Primary energy mix in baseline and climate policy scenarios for Brazil.

scenarios the primary energy mix changes substantially with regard to within the 2050 time horizon. However, most of the power system ex-
the baseline. pansion is based on other sources/technologies. The penetration of fossil
As expected, a decrease in fossil fuel consumption is observed in cli- fuels, which is high in the baseline scenario, greatly decreases in climate
mate policy scenarios. Coal loses importance in some models in re- policy scenarios, being replaced by renewable energy sources and/or
sponse to the low tax but faces large reductions in all models in the converted to facilities coupled with CCS. As GHG mitigation policy be-
other climate policy scenarios. Most of the remaining coal consumption comes more stringent, models see a penetration of wind, biomass and
in stringent climate policy scenarios is used with CCS technologies. Nat- solar, though the mix of these sources varies from model to model. Nu-
ural gas, however, remains relevant in all models and scenarios (except clear energy also increases in all climate policy scenarios.
EPPA), in some cases with CCS. Results show that mitigation policies,
such as carbon taxes or abatement targets, have some effect on oil con- 5. Implications of future pathways to the Brazilian energy industry
sumption. However, results show, in general, that oil consumption does
not decline much as GHG mitigation efforts increase. One reason is the 5.1. Fossil fuels
rapidly increasing demand for transport services and the high costs to
switch from oil products to alternative fuels, which is, in the cases of Although models point to a lower use of fossil fuels in climate policy
electricity and hydrogen, accompanied by considerable infrastructure scenarios, these energy sources remain relevant in the Brazilian energy
investments. mix through 2050 in all scenarios, either coupled with CCS technologies
In terms of renewable energy, the importance of biomass increases or not. Below a discussion about issues related to the use of fossil fuels in
in all models as mitigation policies become more rigorous (except Brazil is made. CCS is discussed in Subsection 5.4.
TIAM-ECN). Some models make use of negative emissions from BioCCS
to achieve climate policy objectives. In some models, biomass becomes 5.1.1. Coal
the major primary energy source in climate policy scenarios by 2050. Under mitigation scenarios, models show that coal would become
Solar and wind increase in climate policy scenarios, but only in TIAM- feasible when equipped with CCS. In a baseline scenario, or under low
ECN and POLES do they reach a relevant share by the end of the period. carbon taxes, expansion of primary energy consumption includes a
Results for the mix of sources/technologies used in electricity gener- high penetration of coal. Current projects underway in Brazil corroborate
ation in 2030 and 2050 are presented in Fig. 4. Hydropower is currently such a scenario. Brazil's current installed coal-based power plant capac-
the major source of electricity generation and should remain important ity includes ten power plants totaling 2 GW which represents roughly
A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574 569

2000
1800
2030
1600
1400

TWh/year
1200
1000
800
600
400
200
0
EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN
Core baseline $10 CO2 price $50 CO2 price 20% abatement (FF&I) 50% abatement (FF&I)
Hydro Oil Coal Coal w/CCS Gas Gas w/CCS Nuclear Biomass Biomass w/CCS Solar Wind Other

2000
1800
2050
1600
1400
TWh/year

1200
1000
800
600
400
200
0
EPPA

MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
Phoenix
TIAM-ECN

EPPA
GCAM
MESSAGE-Brazil
POLES
GCAM

Phoenix
TIAM-ECN
Core baseline $10 CO2 price $50 CO2 price 20% abatement (FF&I) 50% abatement (FF&I)
Hydro Oil Coal Coal w/CCS Gas Gas w/CCS Nuclear Biomass Biomass w/CCS Solar Wind Other

Fig. 4. Electricity mix in the baseline and in the climate policy scenarios for Brazil.

1.6% of the country's total installed capacity. This capacity is about to in- 20 million tons per year mostly for the iron and steel industry (EPE,
crease in the near future, as three new coal power plants, totaling some 2014). Expansion in the use of imported coal for power generation
1.4 GW, are currently under construction in the northeast, which will would likely take place in the northeast and southeast regions (EPE,
run on imported coal, mostly from Colombia (ANEEL, 2014). In the 2007). EPE (2007) estimates that major ports are capable, without the
near future, six additional new coal power plants will be built, adding need for additional investments, of receiving an amount of imported
more 3.4 GW to the system (ANEEL, 2014). coal sufficient to supply 10 GW of coal-based power plants with an av-
Coal reserves in Brazil are located mostly in the southern region of erage capacity factor of 0.75 (around 65 TWh/year). Further analysis
the country. While BP (2014) estimates proven reserves (90 percent should evaluate the possibility of expanding this coal import capacity
probability) of coal in Brazil of 7068 million tons, DNPM (2013), using if values projected by some models are to become feasible.
a deterministic approach, estimates measured reserves of about
6710 million tons. However, the quality of Brazilian coal is relatively 5.1.2. Oil and gas
low (average 3200 kcal/kg and high ash content), leading to its use in Although models show that oil consumption in Brazil would be af-
subcritical fluidized-bed-combustion power plants with low first-law fected by climate policy, it remains relevant in all scenarios and models.
efficiencies (around 33%), which yields an estimated theoretical poten- Brazil has offshore petroleum reserves and has recently discovered re-
tial of 28 GW in new coal-based power plants running on domestic coal, sources in the pre-salt fields. While the pre-salt offshore fields are the
with a capacity factor of 0.60 (EPE, 2007). most relevant petroleum exploration frontier in Brazil, there are large
A greater use of domestic coal in thermal power plants has been uncertainties regarding the amount of resources and reserves in
studied by different authors (Antunes, 2009; Gavronski, 2007; this area. Estimates of reserves in the pre-salt vary greatly. Low
Hoffmann, 2010; Ortiz, 2011). They show that, given the low quality estimates consider 30 billion barrels (Costa and Souza-Santos,
of the Brazilian coal, all plants running on domestic coal already are, 2009; Denmark, 2009), while the more optimistic estimates reach
and need to be, located in the south of the country, near the mines. As 100 billion barrels (Denmark, 2009; Fishman, 2010; Maugeri, 2012).
such, the exploration of this potential will require new investments in Saraiva et al. (2014) applied a modified multi-Hubbert model to es-
transmission lines to export the excess of electricity from coal-based timate Brazil's oil production curves according to different ultimate re-
power expansion in the south. coverable resource (URR) scenarios for offshore fields. Assuming a low
High levels of penetration of coal in the Brazilian energy mix, there- estimate for pre-salt reserves (30 billion barrels), oil production in the
fore, would rely on imported coal. Brazil currently imports some country would peak in 2027 at 4.9 million barrels a day (Mb/day),
570 A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574

while assuming 50 million barrels of reserves (USGS, 2000) would lead 2014), the cash flow of shale exploration is based on regular CAPEX and
to a peak production of 5.4 Mb/day in 2034. In the latest case, the sce- OPEX expenditures given the need to constantly drill new wells (Lage
narios of Saraiva et al. (2014) show the possibility of sustaining an oil et al., 2013). This constant drilling rhythm may be hindered by institu-
production at levels higher than 4 Mb/day for almost 30 years. This fig- tional barriers related to the lack of speed to cope with a high frequency
ure is almost twice the current petroleum production in Brazil.6 of biding rounds, logistic barriers to transport this gas to consumer cen-
Therefore, even without considering the most optimistic estimates ters and the lack of capacity of the national industry to attend such a
of reserves in the country, Brazil would become a major oil producer, high demand for equipment and services.
provided that these resources can, in fact, become reserves and be put
into production. There are many challenges related to exploration and 5.2. Renewable energy
production of oil in the Brazilian pre-salt, such as technical, economic
and institutional barriers. The reserves of the pre-salt cluster are located All models indicate that renewable energy sources will increase their
at a depth of over 6000 m, below a salt layer of about 2000 m, and there role in Brazil's energy system in climate mitigation scenarios, besides
are many challenges to extracting hydrocarbons in such conditions the already and sustained relevant role of hydropower in the country's
(PETROBRAS, 2011). Still, such high levels of production would lead electricity generation. This is increasingly important for scenarios with
the country to a position of a large oil exporter. One issue, that is rele- higher carbon tax or carbon caps. Nevertheless, there remain challenges
vant for Brazil, is the extent to which the country would be able to pro- either in keeping the role of hydropower in the electricity generation or
duce those reserves in a stringent mitigation scenario in which a global in increasing the role of wind, biomass and solar. This section addresses
tax, for instance, would be applied. Country specific models (e.g. these issues.
MESSAGE-Brazil) are limited in this regard since they assume that sur-
plus oil production can be exported. Global models have the advantage
5.2.1. Bioenergy
of capturing global effects of a climate policy and, therefore, the possibil-
The results of the models analyzed in this study point to biomass as a
ity of restrictions in the global market for oil which could, eventually,
major energy source in Brazil up to 2050, both in the baseline scenario
hamper the production of oil in Brazil. The global models analyzed in
and, with increasing importance, as GHG mitigation targets become
this study that reported oil trade project high exports of oil up to 2050
more stringent. This is true in terms of primary energy and electricity
in all scenarios, regardless of global climate policy.
generation. Therefore, modern biomass consumption in Brazil is (and
The model results point to natural gas as a crucial energy source for
would remain) mainly associated with electricity generation and pro-
Brazil through 2050. In most scenarios, natural gas remained a relevant
duction of liquid biofuels. Although charcoal is also relevant, its use is
energy source regardless of climate policy. Brazil has historically been a
limited to the iron and steel industry.
natural gas importer (e.g. from Bolivia) and in all models/scenarios the
As of today, electricity from biomass is derived mostly from
country will continue to be a net importer. Most of the country's pro-
combined-heat-and-power facilities fuelled with sugarcane bagasse,8
duction of natural gas is associated with oil production and this will
which itself is driven by ethanol demand. Thus, biomass is strictly linked
probably continue to be the case given the large offshore oil production
to both electricity and liquid fuel markets in Brazil. Although this has
frontier of the pre-salt basins.
some advantages, an eventual decrease in ethanol demand in the future
On the one hand, onshore natural gas potential production faces
caused by, for instance, a replacement of the current auto-fleet by elec-
challenges related to the expansion of the gas transportation grid,
tric vehicles would, on the one hand, increase electricity demand while,
given its high upfront costs and the monopolistic nature of the
on the other, decrease the availability of biomass (sugarcane) for elec-
Brazilian market (Camargo et al., 2014; Mathias and Szklo, 2007). On
tricity generation. Models used in this study, however, did not see a
the other hand, transporting the production of offshore pre-salt associ-
large penetration of electric vehicles up to 2050.
ated gas to consumer centers is costly, given the far distance from the
The amount of agro-industrial residues that can be converted to
coast (round 300 km). Additionally, associated natural gas in pre-salt ba-
electricity in Brazil is much higher than what is being currently used
sins has a high CO2 content (11–40% on average, volume basis) requiring
(MAPA, 2014). For instance, Portugal-Pereira et al. (2014) sized
separation from the natural gas to allow the fuel's transportation and
Brazil's bioenergy potential according to the theoretical capacity of bio-
commercialization (avoiding clathrate formation). Therefore, CCS (in-
mass production,9 its environmental impacts, and technical–economic
cluding enhanced oil recovery — EOR) in pre-salt petroleum basins is
viability. Overall, their findings indicate that the technical potential of
needed.7 Besides costs, which are still relevant, a main issue is the car-
agricultural and agro-industrial residue conversion to electricity was
bon capture equipment footprint and the restricted area available in
nearly 141 TWh/year in 2010 (compared to the current 38 TWh10 —
ultra-deep water oil platforms. Imperio et al. (2014) estimated that
EPE, 2014). Nearly 88% of the total potential derives from residues of
only one module of carbon capture membranes would fit in platforms
sugarcane, soybean and maize crops, as these are major cash crops in
designed for pre-salt basins in Brazil. This would not be sufficient to pro-
Brazil. In addition, the adoption of better thermodynamic cycles in the
cess all the natural gas produced. Therefore, assuming no improvement
country's current biomass-fuelled thermal-power plants and the in-
in membrane performance, natural gas reinjection will likely increase,
creasing possibility of using dedicated forestry resources to power gen-
which means that less saleable gas will be produced as it will be progres-
eration (Hoffmann and Szklo, In Press) can expand the already large
sively diluted.
potential for electricity production from biomass.
Finally, Brazil holds resources of unconventional gas, but the extent
In general, there are no major challenges related to direct and indi-
to which these resources will have an important role in the country's
rect land use changes which could undermine the models’ results for
energy mix is unclear. Although the level of resources in the country is
electricity from biomass. However, increasing use of biomass,
estimated to be the 10th largest in the world (245 trillion cubic feet —
EIA, 2011), the level of geological knowledge of shale gas resources in 8
Black liquor fuelled cogeneration plants and some small power plants based on char-
Brazil is still very low, making estimates very uncertain. Nevertheless,
coal or elephant grass can also be found in Brazil (ANEEL, 2014).
the challenges that unconventional gas faces in Brazil are huge. Regard- 9
The theoretical capacity defines the maximum available bioenergy under biophysical
less of environmental restrictions and water availability (Camargo et al., and agro-ecological conditions that hold down the growth of crops and residues, such as
temperature, solar radiation, rainfall, and soil properties. This theoretical potential is albeit
limited by environmental constraints, as agricultural residues are important biome regu-
6
According to BP (2014), only four countries currently produce more than 4 Mb/day: lators (Portugal-Pereira et al., 2014). The authors do not include electricity generation
Saudi Arabia, Russia, United States and China. from black liquor in the paper and pulp industry.
7 10
In fact, this has been treated as a baseline scenario by Petrobras, the Brazilian oil Excluding electricity generation from black liquor so as to be comparable to the values
company. estimated by Portugal-Pereira et al. (2014).
A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574 571

particularly through dedicated forestry in specific regions of Brazil, can CEPEL (2001) estimated, based on 50-meter-high measurements,
have negative local impacts (Hoffmann and Szklo, In Press). The same some 143 GW (yielding, in average, 272 TWh/year), other estimates,
is valid for liquid biofuels. According to Leal et al. (2013), yield improve- that assume the deployment of larger wind turbines capturing stronger
ments and the combination first- and second-generation biofuels would wind resources at higher elevations (100-meters and higher) quote
allow an ethanol production of some 300 billion liters in 2030 using some 300 GW (Simões, 2010), or even 350 GW (GWEC, 2011), in
22 Mha of land.11 These numbers are not a cause of concern on a nation- some regions with average annual capacity factors reaching 0.40
al scale, but under a local perspective they could cause major impacts on (Borba et al., 2012) or even 0.50 (IEA, 2013). Therefore, the wind
traditional agriculture (Leal et al., 2013). power potential in Brazil is not a constraint for the expansion of this
The extent to which the use of biomass is effective for mitigating technology over time in the country. In fact, wind energy has become
GHG emissions, however, depends on the life cycle of such energy increasingly important recently, increasing from nearly zero in 2005
sources. Some models used in this study only account for direct emis- to a currently installed capacity of 3.1 GW. In addition to that, as of
sions, while others have an endogenous land use model. Nevertheless, today, plants with 3.3 GW of capacity are under construction and
there are many uncertainties surrounding the methodologies in use other plants with 5.9 GW of capacity are being licensed (ANEEL, 2014).
today for life-cycle analysis of GHG emissions for land use change However, large deployments of this technology still face technical
(Larson, 2006; Nassar et al., 2011). Calvin et al. (2016-in this issue) ex- and operational challenges (Borba et al., 2012). Up to a 20% limit “the in-
plores this complex issue in more detail in order to evaluate whether or tegration of wind energy generally poses no insurmountable technical
not land use might influence the amount of mitigation required from barriers and is economically manageable” (Wiser et al., 2011, pp. 560).
the energy sector. Nevertheless, the degree of penetration of wind that a system can inte-
grate depends on the characteristics of the system. Brazil has some op-
5.2.2. Hydropower portunities for integrating wind and hydropower, for example in the
Hydropower is currently the main source of electricity in Brazil northeast of the country due to seasonal complementarities between
(around 80%, on average, over the last ten years — EPE, 2014) and is these two sources (Simões, 2010). Interestingly enough, the anticipated
projected to remain important over the coming decades according to growth in hydro-capacity in Brazil based on run-of-river projects, which
the models assessed in this study. All models see, in absolute terms, are very much dependent on seasonal variations, can, in fact, with prop-
some increase in hydropower generation up to 2050. er electric power interconnections, be balanced, at relatively low inte-
Hydropower expansion in Brazil is controversial. The inventoried re- gration costs by the seasonal supply patterns of wind in the northeast
maining potential is still large, estimated at 126 GW. However, around of the country (IEA, 2013). However, the degree to which wind power
60% of that (including the best sites) is located in the Amazon basin can be actually integrated into the Brazilian grid has not yet been thor-
and another 10% in regions with high environmental impacts elsewhere oughly assessed and the models used in this study are not capable of ex-
in the country (EPE, 2008). There still remain important environmental ploring this issue at full length, which may lead to an underestimation of
concerns and social–politic conflicts associated with the construction of the penetration of wind energy in Brazil. The models used here are fo-
dams and the consequent flooding of large areas in those regions cused on long-term system expansion and do not have the ability to
(Bermann, 2012; Pimentel, 2012). Thus, increasing the production of evaluate operational strategies in detail. For that, dispatch models
hydropower in Brazil can generate pronounced local environmental adapted to the particularities of the Brazilian interconnected system
and social impacts. are needed. Furthermore, looking at the 2050 horizon, power system
One implication of the potentially high environmental impacts is operation will depend on the thechnologies used in the expansion of
that the share of remaining potential to be eventually exploited will the Brazilian system until then.
likely be based on run-of-the-river hydropower plants with smaller res-
ervoirs so as to minimize local environmental impacts.12 These plants
5.2.4. Solar power
are most vulnerable to climate since river flow can be highly variable,
Although all models assessed here see some penetration of solar en-
especially across seasons. Reservoir storage capacity can compensate
ergy through 2050, only POLES and TIAM-ECN see a large penetration of
for seasonal (or even annual) variations in river flow, enabling electric-
this technology in this time frame. Brazil has abundant global solar re-
ity generation throughout the year and matching varying power de-
sources. Solar incidence in the country ranges from 1500 kWh/m2 per
mand. In the operation of the Brazilian interconnected system, thus,
year to 2153 kWh/m2 per year13(SolarGIS, 2013). The region with the
hydropower production based on new run-of-the-river plants would
highest average overall daily radiation is the northeast of the country,
need to be increasingly complemented by other power sources. Also,
a semi-arid region. Nevertheless, currently Brazil only has about
global climate change can add a significant amount of uncertainty to
10 MWp of photovoltaic (PV) installed capacity (ANEEL, 2014).
the climate variability and, hence, to the planning and operation of hy-
Centralized solar generation participated in the national auctions for
dropower (Lucena et al., 2009 and 2010).
contracting new power in 2013 without success, which indicates that
large-scale centralized plants are not yet cost-competitive under the
5.2.3. Wind power current Brazilian electric power market conditions (Miranda et al.,
While models do not project a large penetration of wind in the base- 2014). However, the potential for concentrated solar plants (CSP) is
line scenario (except POLES), wind power generation expands consider- huge14 and some specific arrangements could improve feasibility in
ably with climate policy. However, all models show a share of wind the medium to long term. For example, Malagueta et al. (2014) show
below 20% of total generation, possibly because of operational con- that the hybridization of CSP plants can reduce the levelized cost by
straints, which indicates that the contribution of this source to climate 30% to 50% (depending on the location) for two main reasons: increased
change mitigation may be limited. annual production (higher capacity factors) based on the combustion of
Most of the high-quality wind resources are found in the north-east natural gas or biomass; and reduction in the solar multiples and the use
and south of Brazil. Distinct sources of information provide different
estimates for the total onshore wind power potential in Brazil. While
13
For comparison purposes, Germany, which is the country with the largest installed
photovoltaic capacity in the world, receives about 1300 kWh/m2 per year (SolarGIS, 2013).
11 14
Embrapa (2009) indicates that 65 Mha of land can be devoted for sugarcane without Considering restrictions related to, e.g., water and land availability, the annual techni-
significant impacts on food production and on the environment. cal potential for CSP using parabolic trough plant potential is around 1900 TWh, while the
12
This has been the case, for example, of the Belo Monte hydropower plant (11 GW) in technical potential of solar towers with thermal storage is around 1000 TWh (Burgi,
the Brazilian Amazon, whose reservoir is now two thirds the size of the original project. 2013).
572 A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574

of fewer collectors. Also, by allowing the combination of solar and bio- considers capture and compression, which represent around 70–80%
mass residues for power generation, hybridization could help by gener- of the whole carbon capture system cost (Rochedo and Szklo, 2013b).
ating income in the poor semi-arid regions in the northeast of Brazil. Carbon transportation and storage, although are not the main cost
In the case of PV, although centralized generation is not yet compet- drivers, might face a huge barrier, since carbon transportation requires
itive, distributed generation may be an alternative since, from the stand- an institutional arrangement to deal with social acceptability, hub plan-
point of the final consumer, electricity prices are perceived, rather ning, property rights, tariff definition and storage monitoring (Costa,
than electricity generation costs (Miranda et al., 2014). Some 70% of 2014). Brazil already faces challenges to expand the country's natural
the value of electricity tariffs in Brazil account for taxes, transmission gas grid, as mentioned above. Natural gas is a tradable fuel, while CO2
and distribution costs (Fugimoto, 2010). By comparing costs and tariffs is a negative externality, for which the value is associated with carbon
for roof-top installed PV in Brazil, Miranda et al. (2014) show that, from mitigation policies.17 Hence, it can be expected that it will be challeng-
an economic point of view, around 68,000 households could justify the ing to establish an institutional arrangement for the construction of CO2
installation of photovoltaic arrays on their roofs. However, the imple- pipelines in Brazil (Costa, 2014).
mentation of large scale distributed PV generation would also depend The CCS potential in Brazilian thermal power plants should also con-
on the development of PV services in the country. sider that today's expected major technological option (post-combus-
tion capture with amines, according to Rochedo and Szklo, 2013a)
requires additional water consumption and a concurrent generation of
5.3. Nuclear energy
residues. Some studies performed for Brazil indicated that some regions
of the country would not support the higher water demand that carbon
Although not having a significant role in the scenarios analyzed, a
capture systems would eventually add to existing or planned coal fired
small expansion of nuclear energy was observed in all models. Some
plants (Hoffmann et al., 2014; Merschmann et al., 2013).
models/scenarios only include the one nuclear plant currently under
Moreover, given the large energy penalties of carbon capture sys-
construction (Angra III), whereas extreme scenarios see a four-fold ex-
tems, CCS increases the coal consumption of a power plant. Branco
pansion in nuclear generation by 2050.
et al. (2013) performed a life-cycle assessment (LCA) for a coal-fired
The implementation of nuclear plants in Brazil is highly controver-
power plant in Brazil and showed that, with CCS, a plant which captures
sial. Actually, there have been many debates in Brazil about the comple-
90% of its CO2 would have its GHG avoidance potential reduced to 72%
tion of Brazil's third nuclear power plant, Angra III (Cabrera-Palmer and
when accounting for indirect emissions. This is the result of an increase
Rothwell, 2008), while different government plans suggest an expan-
in coal consumption and the associated CH4 emissions at the coal-
sion that would add 6 GW up to 2030 (Eletronuclear, 2011; EPE,
mining stage.18
2007). On one side, the country's nuclear industry emphasizes the ad-
In sum, the implementation of CCS in Brazilian thermal power plants
vantages of this option (including carbon emission mitigation, but fo-
faces considerable challenges, qualitatively equal to the ones faced glob-
cusing more on technological development and energy security). On
ally, but intensified by the lack of major domestic technological and in-
the other side, experts highlight the problems of cost overruns, spent
stitutional development related to this option. However, BioCCS and
nuclear fuel management (which is still an issue in other countries,
even CCS in hydrogen generation plants in petroleum refineries show
Singer 2013), and inflexible operation of nuclear plants (Borba et al.,
brighter prospects. BioCCS in ethanol distilleries presents no major
2012). For example, Carvalho and Sauer (2009) analyzed the cost over-
technical challenges for capturing, given the higher CO2 content in the
runs of the Angra III nuclear power plant, with construction lasting for
fermentation exhaust. The same is valid for hydrogen production plants
more than two decades,15 and concluded that, given the country's ener-
with CCS. Some studies also consider the possibility of using CO2 for pro-
gy resources, “the potential decision to finish construction work on
ducing chemicals, e.g. methanol, thus avoiding the problem of carbon
Angra III simply to justify the existing sunk could prove to be a mistake”.
transportation and storage (Farias, 2014).
They also contested the opinion of some Brazilian policy-makers and
experts that, given the Brazilian uranium reserves16 and the country's
technical and industrial capability to enrich it (Cabrera-Palmer and 6. Final remarks
Rothwell, 2008), nuclear plants would be also justifiable by the need
to maintain the country's technological development and expertise. This study compared scenarios produced by six modeling teams
with different baseline assumptions for GDP, population, energy costs
and technological development. Although Brazil’s current energy mix
5.4. CCS and BioCCS
has a relatively low carbon intensity due to a high share of renewable
energy, the baseline scenarios through 2050 suggest that this picture
The models identified CCS as a potential technology to decarbonize
would radically change. Models project, for the baseline scenario, a 2
the energy sector. However, to date, there are no commercial CCS appli-
to 3.5-fold increase in emissions from energy in relation to 2010 as a re-
cation in the power sector or in energy-intensive industries and only a
sult of a growing penetration of fossil fuels. This indicates that, without
handful of large-scale demonstration projects are in operation or under
dedicated climate policies, Brazil may take a pathway distinct from that
construction worldwide, with only one located in Brazil (Santos Basin,
required by all countries to keep the average rise in global temperature
see Subsection 5.1.2). In 2012, a pilot plant was designed to demonstrate
to below 2 °C, when compared to pre-industrial levels, as indicated by
CO2 capture in a planned coal-fired thermal power plant in Brazil
the Copenhagen Accord of 2009 and the Cancun agreements in 2010
(Rochedo and Szklo, 2013a). However, this project was discontinued.
(UNEP, 2013).
Studies performed for Brazilian coal or gas fired-thermal power plants
Nevertheless, models show that climate policies can reverse this
identified that mitigation costs hover between 70 and 100 US$/tCO2,
pathway in Brazil. High carbon taxes may induce large reductions in
not considering the risk of being pioneer plants (Hoffmann, 2013;
emissions when compared to baseline. The emission constraint scenar-
Hoffmann et al., 2012; Rochedo and Szklo, 2013b), which can increase
ios, in turn, showed that emission levels below that of 2010 are techno-
the costs by more than 50% (Hoffmann and Szklo, 2011). This range
logically feasible when considering industry and energy emissions.
15
Mitigation would be achieved by a combination of actions, such as ener-
Angra III is planned to start operation in 2018.
16 gy demand reductions, decarbonization of primary energy and of
Regardless of the debate, from a long term perspective, uranium supply is not a restric-
tion to the expansion of nuclear energy in Brazil (EPE, 2007). According to a simple esti-
17
mate, if all of Brazilian uranium reserves (309,370 tU — EPE, 2014) would be used with Although CO2 can have a price when used in EOR, this does not imply that there is a
an efficiency of 28.5 kg U/GWh, it would be possible fuel of 22.9 GW of nuclear for large market for CO2.
18
60 years. Based on a global warming potential metric with a 100-year horizon.
A.F.P. Lucena et al. / Energy Economics 56 (2016) 564–574 573

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