December 10, 2022

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Bolsonaro sanctions project that requires contracting coal-fired thermal plants until 2040. The cost will be R$840 million annually.

BRASILIA – The fuel being abandoned around the planet and considered one of the major pollutants of the atmosphere, coal in Brazil survived as a result of a project approved by Congress and approved by President Jair Bolsonaro on Wednesday night.

The text guarantees contracting for power generated by the Santa Catarina coal-fired thermal power plants. This becomes an incentive, in practice, because the trend around the world is not to rent this type of plant anymore.

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The Association of Large Energy Consumers (Abrace) estimates an annual cost of R$840 million for all electricity customers in the country.

The law specified the extension of contracts for the Jorge Lacerda Thermal Electric Complex, south of Santa Catarina, until 2040. Therefore, until that date, plants in that area will continue to generate power for the national electrical system.

The new legislation also ensures “fixed revenue sufficient to cover the costs associated with the contractual generation referred to in this paragraph, including costs associated with primary and secondary fuels, and variable operating costs, as well as adequate remuneration for the cost of capital used in the projects.”

Until 2025, these stations will continue to receive subsidies that are included in the electricity bill. After that and until 2040 this support is no longer available. The legal guarantee that it will be necessary to contract the power generated by the plant business as an incentive.

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Instead of planning the sector and renting cheaper and less polluting plants, it will be necessary to maintain until 2040 contracts with coal-fired plants.

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Turning off thermal power plants on fossil fuels, especially coal, is an ongoing process around the world as part of global decarbonization efforts.

Brazil, at COP 26, in Glasgow, pledged to neutralize greenhouse gas emissions in 2050.

Abrace says that the text “contradicts the energy transition, with significant environmental impacts, and extends to inefficient costs for all energy consumers”.

The General Secretariat of the Presidency of the Republic said in a statement that the law “will maintain the goals of carbon neutrality for the Brazilian economy until 2050, and deal responsibly with the economic, social and environmental impacts of phasing out.” of activism in line with the concept of climate justice.”

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A council made up of government representatives, workers and companies will be responsible for implementing the program and defining a plan for a fair transition. One of the proposed objectives is to identify resources for the development of activities needed to close coal mines, and to encourage a transition to other economic activities.

“The approval of the project will be important to promote the equitable transition of energy to the coal region in the state of Santa Catarina, taking into account the environmental, economic and social impacts and the valorization of energy and mineral resources, as well as to support public service concessionaires for the distribution of small-scale electric power,” the government memo states.

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The law also secures economic support from the Energy Development Account (CDE) to subsidize electricity consumption tariffs from distributors with an annual market of less than 350 gigawatt-hours (GWh). It is the small energy companies that will benefit at the expense of other consumers.

Abrace estimates that at this point, the law will have an impact of R$140 million on energy consumers. In other words, in total, the text approved by Bolsonaro will have an impact of R$980 million annually.