Rystad:  Brazilian energy transition is progressing and demand for hydrogen could double by 2040

(PN) Brazil’s energy matrix offers technological opportunities that can place the country at the forefront of decarbonization in a wide range of demand segments. The analysis is by energy research firm Rystad Energy. According to the consultancy, the country has a head start in the transition to low-carbon energy compared to many other large countries in the Organization for Economic Co-operation and Development (OECD). The demand for hydrogen in the country, for example, could double by 2040, going from 2.5 million tons to 5 million tons. Rystad also recalls that Brazil was one of the first to adopt biofuels in transport, generates a large part of its energy from emission-free hydroelectric power plants and had moderate industrial activity – resulting in an emission profile different from countries where the industry and energy generate greenhouse gas emissions.

“Unlike most countries, Brazil’s main driver of emissions is not the energy sector. The country already gets half of its energy from renewable sources, compared to around 15% from renewable sources in the global energy mix in 2020. Looking at electricity alone, Brazil generated 83% from renewable sources in 2020, while the global average was less than 30%”, points out Rystad.

Still, the company points out that the country’s emissions are significant, mainly due to extensive plantation and livestock activity and land use, land use change and forestry (LULUCF) as a direct result of deforestation. Agriculture and LULUCF accounted for nearly 64% of the country’s emissions in 2021, compared to a global average of less than 20%. Over the last four years, CO2e emissions in Brazil have averaged around 1.5 gigatons (Gt) per year, or nearly 3.9% of the world’s average emissions, representing 7.2 tonnes per capita.

The analysis also states that the energy transition will imply a shift from the intensive use of capital and energy emissions, implying challenges for oil producing states. “Each regional economy will require a tailored approach to strategic actions to tackle climate change. The energy transition presents challenges and opportunities for oil-producing states,” he said.

Rystad says demand for fossil fuels is likely to decline as more countries adopt renewable energy sources. This could lead to lower oil and gas prices, which would have a negative impact on the economies of oil producing states. “On the other hand, the low-carbon segments present opportunities that oil-producing states can take advantage of to diversify their economies and reduce their dependence on oil and gas”, he evaluated.

Finally, the consultancy assesses that low-carbon areas in Brazil provide multiple benefits and synergies for the long-term sustainable development of the energy sector. Some of them, assesses Rystad, are also highly compatible with existing capacities, value chains and infrastructure due to the advancement of the oil and gas industry. “Sectors that are most compatible with the oil and gas industry and large enough from a potential market size standpoint to offset the decline in oil industry value creation will be well positioned for the future development of Brazil’s energy sector. – and will provide a ripple effect to adjacent sectors.”

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