President Lula launches National Energy Transition Policy, expected to bring BRL 2 trillion in investment

On Monday, August 26, President Luiz Inácio Lula da Silva launched the National Energy Transition Policy (Política Nacional de Transição Energética/PNTE), approved at a meeting of the National Energy Policy Council (Conselho Nacional de Política Energética /CNPE) which he led, alongside the Minister of Mines and Energy, Alexandre Silveira, who is Council chair. Brazil could receive an estimated BRL 2 trillion in investments towards the green economy over ten years.

"We are not going to throw away the meaning of the energy transition. This country has already thrown away too many opportunities. We cannot throw away opportunities. We need to bear in mind that we have everything. We have everything that nature has given us. We have skilled labor — we still need more. We have technically qualified people. In the energy sector, we have hundreds of excellent people in this country. We can do whatever we want," said the president.

Lula said that Brazil is already a world leader in clean energy adoption, but there is room for progress. "People respect us, because we can go anywhere and say: 80% of our electricity is renewable and 51% of our total energy matrix is already renewable and we can reach 100%. Who would have thought, 30 years ago, that we'd be talking about biomass, biodiesel, ethanol, that we are going to make the energy transition, that we are going to have wind, solar and green biodiesel?"

NEW ECONOMY — The PNTE will articulate and coordinate the energy transition in Brazil, creating synergy between government policies — such as the National Climate Change Policy and the Ecological Transformation Plan (Política Nacional de Mudança do Clima) and the Ecological Transformation Plan (Plano de Transformação Ecológica) — to strengthen the new global economy with job and income generation in the country, promoting a just and inclusive transition.

"Brazil is going to lead the world in  the new economy, the green economy. Wind, solar, hydro, nuclear, biomass, biodiesel, ethanol, green diesel, carbon capture and storage, sustainable aviation fuel, green hydrogen. It is the rebirth of Brazil's industry on a sustainable basis. It is adding value to Brazilian products produced with clean, renewable energy, an opportunity to boost the use of our local content.” emphasized Alexandre Silveira.

Silveira informed that the New PAC already has BRL 700 billion in planned investments in energy transition and recalled that President Lula sanctioned the legal framework for green hydrogen this month. "We already have 27 gigawatts of hydrogen projects registered with the Ministry of Mines and Energy, which will bring in BRL 200 billion in investment. With the projects that we are making feasible and that are not in the PAC, we will increase this number even more and present it to Brazil," he said.

Finance Minister Fernando Haddad stressed the potential of the energy transition to boost national development. "The Ministry of Mines and Energy, together with the Ministry of the Environment and Climate Change, the Staff Office House, and the MCTI, is taking care of the heart that will pump blood to the new Brazil. A new Brazil that will be born from a process of ecological transformation, based on the energy transition, and that will radiate a new energy that will allow the countryside to do better, industry to do better, and in a business environment favored by the reforms that are underway in the National Congress. One of them, the most essential of all, is tax reform, which will change the quality of Brazil's economic growth," he affirmed.

TRADING — On Monday, the CNPE deliberated another six proposals aimed at creating new opportunities for sustainable economic development, mainly in the oil and gas sectors. A resolution was approved that establishes additional guidelines for the Union's oil and natural gas trading policy. The rule creates conditions for the Union's natural gas to reach consumer agents more closely, defining that PPSA, a state-owned company linked to the MME, will now be able to contract the flow and processing of the volume of natural gas that falls to the Union in production sharing contracts.

The aim of this resolution is to optimize the use of inputs from production sharing contracts, boosting industrialization and strengthening security in the national supply of energy, oil inputs, nitrogen fertilizers and other chemical products.

"What we have approved today is the effective result of the efforts of the Gas to Employ Program. We are balancing the national gas market, offering increased availability and moderate prices to the end consumer," said Alexandre Silveira.

DECARBONIZATION — Another measure authorized by the CNPE is the resolution that establishes guidelines aimed at decarbonizing activities of  oil and natural gas exploration and production in Brazil. The rules include fostering technological development, minimizing natural gas flaring, maintaining routine zero flaring and promoting the sharing of installed infrastructure, among other points.

FUELS — E In another decision, the CNPE approved a resolution aimed at updating the strategic guidelines for the development of the fuel, biofuel and oil derivatives market in Brazil. The document provides for the strengthening of national processing capacity, which currently faces challenges with significant imports of derivatives. Among the strategic guidelines listed in the resolution are the search for an increase in biofuel production, the expansion and modernization of the refining park and the promotion of the energy transition.

It was also decided to set up a Working Group (WG) to carry out specialized studies on the waterway fuel, aviation fuel and liquefied petroleum gas (LPG) markets. The WG, coordinated by the MME, will be made up of 17 institutions and should establish guidelines of interest to the National Energy Policy on the subject.

PRODUCTION — The CNPE also approved two resolutions on oil and natural gas exploration in new blocks. The first defines Petrobras' expression of interest in the Jaspe block, which will be tendered under the production sharing regime in the next Permanent Offer Cycle. The resolution also establishes that the company must be the mandatory operator of the block, with a minimum stake of 40%. It is estimated that revenues from signature bonuses will generate BRL 401 million.

The second resolution approved the technical and economic parameters of the Rubi and Granada blocks for bidding under the production sharing regime, in the Permanent Offer system. The measure reaffirms the importance of the exploration and production of oil and natural gas in the Pre-Salt Polygon, which is responsible for most of Brazil's production. The parameters for the bidding process estimate signature bonuses that could generate revenue of BRL 118 million. More than BRL 60 billion is expected to be invested, which could generate more than 280,000 direct and indirect jobs, as well as government revenues of around BRL 119 billion over the lifetime of the projects.