Brazil extends coal use to 2040 under new 'just transition' law

by Fabio Teixeira | @ffctt | Thomson Reuters Foundation
Thursday, 6 January 2022 18:55 GMT

Reversing earlier plans to phase out coal subsidies and use in Santa Catarina state will hurt consumers and the climate, with renewable power cheaper, analysts and industry groups say

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Move to reverse plans to phase out coal in Santa Catarina state will hurt consumers and the climate, with renewable power cheaper, analysts and industry groups say

By Fabio Teixeira

RIO DE JANEIRO, Jan 6 (Thomson Reuters Foundation) - Brazil will continue to use and subsidize coal as an energy source until at least 2040, according to a so-called "just energy transition" law published on Thursday, which policy experts said goes against the climate and consumers.

Broadly, "just transition" is a process aimed at ensuring the benefits of a green economy shift are shared widely, while supporting those who may lose out economically, whether nations, regions, industries, communities, workers or consumers.

But Brazil's new law - far from promoting the adoption of climate-friendly clean fuels - benefits coal producers in southern Santa Catarina state by prolonging the activities of coal-based power plants in the region for a further 18 years.

Under previous policies, Brazilian subsidies for thermal coal-powered plants were supposed to end by 2027, and the authorization for three large plants in Santa Catarina to operate was meant to expire in 2025.

The new law reverses that, stating the government must buy, at a set cost, energy generated by a group of thermal plants in Santa Catarina. It mandates 80% of the energy be produced from coal mined in the region.

"This is bad news for consumers and the environment," said Ricardo Baitelo, a project coordinator at the Institute of Energy and Environment (IEMA), a Brazilian non-profit.

Nearly half of Brazil's electricity currently comes from renewables, including wind and hydropower, with the rest from planet-heating fossil fuels, government data shows.

Today, coal produces about 3% of all power in Brazil, noted Baitelo.

According to Abrace, an industry group of big energy users in Brazil, the new law will cost consumers an extra 840 million reais ($147 million) per year because coal in the country is more expensive than clean energy like solar and wind.

When the bill was approved in the Senate on Dec. 13, Abrace and other industry bodies wrote in an open letter to Congress that it was "on the wrong side of the movement towards energy transition, with significant environmental impact, extending inefficiency costs to all energy consumers."

Santa Catarina politicians, however, celebrated the bill as a reprieve for the coal industry.

Its author, Senator Espiridião Amin, said in a social media post that Santa Catarina had made "an important achievement" as the bill "creates a policy to help the coal sector".

JUST TRANSITION?

The law is part of a recent trend of politicians interfering in national energy planning to benefit more expensive and polluting forms of power generation, said Baitelo.

Last year, a bill privatizing Brazil's main power company, Eletrobras, mandated it should buy energy from natural gas power-plants in several regions for more than 15 years.

That will require Brazil to build new fossil fuel power plants, experts say, which would boost carbon emissions from the energy industry by at least 25%, according to an estimate by the IEMA.

Under the U.N. process to tackle climate change, Brazil has pledged to cut its total greenhouse gas emissions by 50% by 2030, and to become carbon neutral by 2050.

"(Electricity) was seen as a predictable sector, with clear rules," said Baitelo. "But this is being subverted right now."

While boosting market demand for coal, the law also establishes a "just energy transition council" to work on a plan to shift the Santa Catarina region away from coal.

The council, however, is set to be formed by government agencies, companies and unions that are all pro-coal, said Nelson Karam, a just transition project coordinator at DIEESE, a union body that works on labor statistics and research.

If all coal-related activity were to shut down in Brazil, DIEESE estimates that about 40,000 jobs would be lost. This would disproportionately impact some cities in Santa Catarina state where coal is still a big employer, said Karam.

Employment in the industry should decline anyhow because most processes are now mechanized, said Karam, who believes the law appropriates the concept of "just transition" to delay discussion of an effective move away from coal.

"A real just transition needs to be built ... by presenting alternatives. There has to be a heavy investment in that," he added.

($1 = 5.6986 reais) (Reporting by Fabio Teixeira @ffctt; Editing by Megan Rowling. 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)

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