The Brazilian renewable energy policy framework: instrument design and coherence

Markus Fraundorfer and Florian Rabitz

Climate Policy, 2020, vol. 20, issue 5, 652-660

Abstract: In the context of Brazil's rising energy-related greenhouse gas (GHG) emissions, we develop a forward-looking analysis of the domestic renewable energy policy framework. We probe the overall effectiveness of this framework by focusing on instrument design (in terms of stringency and predictability) as well as policy coherence. We analyze the development of solar, wind and hydropower, as well as biodiesel and ethanol, in the period between 2003 and 2018. We find strong increases in stringency for biodiesel, solar and wind power, marginal ones for ethanol, and decreasing ones for hydropower. Predictability presents a consistent challenge for policy effectiveness, with the exception of biodiesel. Overall policy coherence improves with fossil fuel subsidy reductions after 2014, although the complex environmental licensing regime as well as ad hoc fiscal interventions and price controls in the fuel markets create tensions for biofuels expansion. The policy framework as it has evolved through the period under consideration is neither likely to slow down/reverse the growth trend in natural gas consumption for power generation, nor to significantly alter the fuel mix in light-vehicle transportation. Considering that improvements in the policy framework are partially driven by non-climate rationales, we conclude that rising energy-related GHG emissions will increasingly challenge Brazil's contribution to international temperature targets while diminishing its stature in global climate diplomacy.Key policy insights Renewable energy policies in Brazil suffer from a lack of predictability.While recent reductions in fossil fuel subsidies have improved policy coherence, significant incoherencies between policy instruments impede renewable energy expansion.Increasingly ambitious expansion targets for solar and wind power will need to close the supply gap resulting from the relative decline of hydropower in order to avoid further increases in natural gas consumption.Although the Bolsonaro administration has not created substantial policy changes so far, it introduces additional uncertainties regarding long-term decarbonization, while also diminishing Brazil's diplomatic stature in international negotiations.

Date: 2020
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DOI: 10.1080/14693062.2020.1754157

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