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How will Brazil's energy privatization law affect climate change?

by Fabio Teixeira | @ffctt | Thomson Reuters Foundation
Tuesday, 13 July 2021 12:31 GMT

ARCHIVE PHOTO: Power lines connecting pylons of high-tension electricity are seen in Brasilia, Brazil August 31, 2017. REUTERS/Ueslei Marcelino

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With Eletrobras' sale, Brazil will raise billions in cash - but the deal raises concerns for workers, indigenous communities and the climate

By Fabio Teixeira

RIO DE JANEIRO, July 13 (Thomson Reuters Foundation) - Brazil's President Jair Bolsonaro has signed into law a bill to privatize Latin America's biggest power utility company, known informally as Eletrobras.

The government expects to raise R$25 billion ($4.8 billion) from selling its shares, and hopes the sale will lead to lower energy prices in Brazil as well as new investment in power generation.

But the law will lead to the construction of new natural-gas power plants in Brazil, and it backs a new power line over indigenous land - provisions that have sparked climate change and land rights concerns.

The sale also worries labor groups because it might lead to a loss of jobs at Eletrobras, a company that directly employs about 13,000 people.

What would be the impact of the new natural gas plants?

The bill requires Centrais Eletricas Brasileiras SA - better known as Eletrobras - to buy energy from natural gas powerplants in the north, midwest, northeast and southeast of Brazil.

This will require building new powerplants, experts say. Under the law, they would start supplying electricity by 2026, for at least 15 years.

The Institute of Energy and Environment (IEMA), a Brazilian non-profit, estimates this would boost carbon emissions by Brazil's energy industry by at least 25%.

The industry already was responsible for 19% of all Brazil's climate-changing emissions in 2019, IEMA said.

The new natural gas plants would further shift Brazil - long dependent on renewable energy - towards fossil fuel power.

About 48% of Brazil's electricity currently comes from renewables, such as wind and hydro - but a slight majority is now non-renewable, including from natural gas plants, government data shows.

"If you're worried about global warming, thermal power is the wrong way to go," said Jose Goldemberg, a former member of Eletrobras' board and the former head of Sao Paulo's energy company Eletropaulo.

He said the law reverses decades of energy planning in Brazil, and that the placement of the new plants is "irrational."

The law states the new powerplants must supply areas where gas supply lines and other infrastructure for them do not yet exist, in order to drive development in those areas.

But this will make an already expensive form of electricity generation even more so, said IEMA.

"You are choosing to insert more expensive energy into the system as a priority, (which means) in some cases the cheaper (renewable) ones will not be used," said Ricardo Baitelo, project coordinator at IEMA.

What does it mean for indigenous people?

The law backs construction of the Tucurui powerline, which would connect the Amazon state of Roraima to the rest of the country's grid, making it less dependent on fossil fuel to generate power.

The Tucurui line would likely reduce Roraima's emissions - but it would also run through land owned by the Waimiri Atroari, an indigenous community.

The law's support for the powerline means the Atroari will likely get little say on whether construction goes ahead or not, experts said.

"They fear this power line is the start of exploitation of their lands," said Ciro Campos, from Instituto Sociombiental, a non-profit that assists indigenous people in Brazil.

The Atroari are not necessarily against the Tucurui line - but the government now needs to start a dialogue with them and address their concerns, said Roberto Kishinami, energy coordinator at the Rio-based Institute Climate and Society.

If work starts without their go-ahead, the project could end up in the courts, he said, which would "complicate even further the construction of the new powerline".

How might the law impact power workers?

Between 2016 and 2020, Eletrobras cut its payroll from about 24,500 to 13,800 employees, according to a study by the Inter-union Department of Statistics and Socio-Economic Studies (DIEESE), a union body that works on labor statistics and research.

That trend is expected to continue when Eletrobras is privatized, said Nelson Karam, DIEESE's Just Transition project coordinator. In the long run Karam expects new hires will have lower pay than public-sector employees did.

"Historically, these jobs at Eletrobras have ... an average pay that is above what is practiced in the private sector," said Karam. "It's all but certain that this standard will not continue."

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(Reporting by Fabio Teixeira @ffctt; Editing by Laurie Goering. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)