Brazil fossil fuel subsidies outpace renewables: Study

: Crude oil, Electricity, Oil products
24/10/29

Brazil's spending on fossil fuels subsidies in 2023 was around 4.5 times larger than its spending on renewables subsidies, according to a study published by the institute of socioeconomic studies Inesc.

The country spent R99.8bn ($17.49bn) in subsidies for both fossil fuels and renewables in 2023, a 3.6pc increase from 2022, the study said. Of the total, R81.74bn were related to fossil fuels — a 0.5pc decrease from a year prior — while R18.06bn went to renewable sources, a near 27pc hike from 2022.

The slight fossil fuel subsidies reduction was due to the return of taxes on gasoline, such as the VAT-like PIS/Confins, the study said. "The government lost the chance of providing greater relief for public coffers as it decided to maintain exemptions for diesel," it added.

But while incentives to fossil fuel consumption decreased, those for exploration and production activities increased by R5.55bn.

Cassio Carvalho, a co-author of the study for Inesc, said the fossil fuels subsidies will harm Brazil's energy transition. "The study indicates that consumers are bearing the subsidies for renewables through electricity bills, while the oil and natural gas industry remains untouched," Carvalho said.

Ending subsidies to fossil fuels is an "unavoidable global commitment" laid out in the UN Cop 28 climate summit in Dubai, said Alessandra Cardoso, the other co-authored of the study.

"What is expected of the Brazilian government is that it recognizes the problem of production subsidies as a domestic problem, the solution to which involves global reform," she said. "Brazil needs to take on this agenda as part of its leading role in the global climate scenario, especially as it will host Cop 30."

Brazil will host Cop 30 in 2025 in Para's state capital Belem, on the edge of the Amazon forest.

By Lucas Parolin

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24/10/30

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Guatemala's power capacity tender opens tomorrow

24/10/30

Guatemala's power capacity tender opens tomorrow

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LatAm-China energy ties lurk for next US leader

24/10/30

LatAm-China energy ties lurk for next US leader

Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK budget falls short of lifting bitumen demand

24/10/30

UK budget falls short of lifting bitumen demand

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UK government consults on oil and gas scope 3 emissions

24/10/30

UK government consults on oil and gas scope 3 emissions

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