Brazil’s mines and energy minister has rejected calls by the International Energy Agency (IEA) to halt new fossil fuel projects, insisting the South American nation has “all the conditions” to become a net zero economy by 2050 and can be a future green hydrogen exporter despite this.

“I understand this is desirable but at the moment it’s not possible,” Bento Albuquerque told Recharge when asked if Brazil – a global centre for the hydrocarbons sector – would follow the IEA’s landmark recommendation issued to all governments earlier in May to make no further investments in oil & gas exploration or coal ventures.

“In Brazil we will keep on with our exploration and mainly production programme of our hydrocarbon reserves, and we will keep on in parallel with the expansion of our energy matrix, making it more and more clean and renewable,” he said, through an interpreter.

“It’s desirable that the world should become less and less carbonised. I believe this will happen, but not at this exact moment.”

Brazil was the world's eighth-largest oil producer in 2020 according to US government data, and is preparing to offer up new exploration acreage off its coasts, while state oil giant Petrobras has retrenched around its core activities, dropped investment in renewables technologies, even as some of its international oil & gas peers make moves into wind and other renewables.

Despite refusing to row back from its large-scale petro-operations, Albuquerque insisted Brazil is on course to meet the 2050 net zero emissions ambition laid out by President Jair Bolsonaro earlier this year.

Brazil has all the conditions to achieve net zero. We have the cleanest electric matrix in the world.

“Brazil has all the conditions to achieve net zero. We have the cleanest electric matrix in the world,” claimed Albuquerque, referring to the nation’s hydropower-dominated energy mix.

Severe droughts have put a debilitating strain on the country’s network of hydro-dams recently, but Albuquerque said despite this, and the impact of the Covid pandemic that has convinced other nations to speed up their energy transition, Brazil will stick to its long-established system of medium- and long-term planning, rather than act “on the will of who is responsible for energy policy in the country at the moment, in the [current] case me”.

In any event, he asserted Brazil is already on course to have a 90% “clean and renewable” power system by 2030, with reliance on hydro falling from 65% now to 49%, and wind and solar – the latter currently the nation’s fastest growing energy source – growing to 25% between them from 12%.

A large question mark looms beyond the power sector, in the wider vectors to decarbonise Brazil’s total energy matrix, where fossil sources still dominate. Will hydrogen play a part, and if so, will fossil-rich Brazil see any role for the green variety from renewables as well as the blue type produced using abated gas?

“Hydrogen is already foreseen in our plans. [In] June we will present to the country the national hydrogen programme,” said Albuquerque, who added that Brazil already has “many co-operations” in H2 underway with nations including Chile, the UK and Germany, as well as the IEA and the International Renewable Energy Agency (Irena).”

In a country such as Brazil, there is space for blue as well as green hydrogen.

The minister added: “In a country such as Brazil, with an abundance of natural resources, there is space for blue as well as green hydrogen, mainly to supply green hydrogen to other countries. But this is a process that will run a long time.”

Renewable auctions resume

Wind power in particular has already proved a success story in Brazil, with a major local supply chain and almost 18GW installed onshore by the end of 2020, according to Global Wind Energy Council figures, making it by far the largest LatAm market and still among the biggest internationally.

With Brazil poised in June to restart government auctions for new wind and solar power projects after a two-year gap caused by a crash in demand and the pandemic, Albuquerque declined to be drawn on how much capacity he expects to be procured.

He also chose his words carefully on the subject of the future of regulated market auctions. Brazil’s unregulated ‘free market’ has proved a powerful engine to buy green energy while the government tenders lapsed, so should the regulated market continue to procure at all?

“We have a calendar for auctions in the regulated market for the next three years in our latest plan,” Albuquerque said, speaking to Recharge ahead of the two-day Brazil Investment Forum starting 31 May where he will join a panel.

“Our free market for energy, nowadays 32%, has a [potential] to be 50% of the electric energy market up to 2030. This market has to grow in a harmonised manner with the regulated market. All should have the same cost to assure energy security in our country.”

One type of auction that did not stop during the pandemic was for power transmission capacity, which is urgently needed as Brazil races to transport electricity from far flung regions that have some of the world’s best wind resources to demand centres across the country.

Albuquerque said Brazil will have another two transmission auctions this year. “It’s no use having an expansion in generation if you have no means to transport this to the consumer centres,” he underlined.

'Major potential offshore'

Could that expanded transmission system one day be accepting power generated rom wind at sea? Brazil is seen as one of the world’s great untapped potential markets for offshore wind, with the likes of Equinor and Iberdrola scoping out huge projects in a market that still has no regulatory base, although a bill is working its way through the nation’s Congress.

Albuquerque said “regulation of this kind of energy source should be concluded [by] the end of this year – there’s major potential for it by the way”.

However, Albuquerque refused to be drawn on when the first Brazilian offshore wind farm may be in the water, beyond referring to the nation’s long-term energy planning which foresees 16GW by 2050.

The minister noted the “high cost” of offshore wind – a familiar barrier in a market where onshore turbines can already operate at offshore-like capacity factors and produce some of the world’s cheapest green electricity.