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Brazil is the 10th largest energy consumer in the world and the largest in South America. At the same time, it is an important oil and gas producer in the region and the world's second largest ethanol fuel producer. The governmental agencies responsible for energy policy are the Ministry of Mines and Energy (MME), the National Council for Energy Policy (CNPE, in the Portuguese-language acronym), the National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the National Agency of Electricity (ANEEL). State-owned companies Petrobras and Eletrobrás are the major players in Brazil's energy sector, as well as Latin America's.
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Reforms of the energy sector
At the end of the 1990s and the beginning of the 2000s, Brazil's energy sector underwent market liberalization. In 1997, the Petroleum Investment Law was adopted, establishing a legal and regulatory framework, and liberalizing oil production. The key objectives of the law were the creation of the CNPE and the ANP, increased use of natural gas, increased competition in the energy market, and investments in power generation. The state monopoly of oil and gas exploration was ended, and energy subsidies were reduced. However, the government retained monopoly control of key energy complexes and administered the price of certain energy products.
Current government policies concentrate mainly on the improvement of energy efficiency, in both residential and industrial sectors, as well as increasing renewable energy. Further restructuring of the energy sector will be one of the key issues for ensuring sufficient energy investments to meet the rising need for fuel and electricity.
Electricity
Power sector reforms were launched in the mid-1990s and a new regulatory framework was applied in 2004. In 2004, Brazil had 86.5 GW of installed generating capacity and it produced 387 Twh of electricity. As of today 66% of distribution and 28% of power generation is owned by private companies. In 2004, 59 companies operated in power generation and 64 in electricity distribution.
The major power company is Centrais Elétricas Brasileiras (Eletrobrás), which together with its subsidiaries generates and transmits approximately 60% of Brazil's electric supply. The largest private-owned power company is Tractebel Energia. An independent system operator (Operador Nacional do Sistema Elétrico - ONS), responsible for the technical coordination of electricity dispatching and for the management of transmission services, and a wholesale market were created in 1998.
During the electricity crisis in 2001, the government launched a program to build 55 gas-fired power stations with a total capacity of 22 GW, but only 19 power stations were built, with a total capacity of 4,012 MW.
Hydropower
Brazil is the third largest hydroelectricity producer in the world after China and Canada. In 2007 hydropower accounted for 83% of Brazilian electricity production. The gross theoretical capability exceeds 3,000 TWh per annum, of which 800 TWh per annum is economically exploitable. In 2004, Brazil produced 321TWh of hydropower.
The installed capacity is 59 GW. Brazil co-owns the Itaipu hydroelectric power plant on the Paraná River located on the border between Brazil and Paraguay, which is the world's second largest operational hydroelectric power plant with installed generation capacity of 14 GW by 20 generating units of 700 MW each.
Due the Brazil's dependence on hydroelectric power and lack of investments in transmission, the reserves were being used for several years, which led to the dams having a low level of water. Then after another bad year of rain, in June 2001, the government was forced to ration electricity usage, this ended in late 2001. Since then, due to the new rules of the sector, new power lines were built as were new power plants. While the load is even bigger than it was in 2001 the system is much safer.
Nuclear energy
Nuclear energy accounts for about 4% of Brazil's electricity. The nuclear power generation monopoly is owned by Eletronuclear (Eletrobrás Eletronuclear S/A), a wholly owned subsidiary of Eletrobrás. Nuclear energy is produced by two reactors at Angra. It is located at the Central Nuclear Almirante Álvaro Alberto (CNAAA) on the Praia de Itaorna in Angra dos Reis, Rio de Janeiro. It consists of two pressurized water reactors, Angra I, with capacity of 657 MW, connected to the power grid in 1982, and Angra II, with capacity of 1,350 MW, connected in 2000. A third reactor, Angra III, with a projected output of 1,350 MW, is planned to be finished by 2014 and work has been paralyzed due to environmental concerns, but the licenses are being approved and the heavy construction work will start in 2009. By 2025 Brazil plans to build seven more reactors.
In February 2008 President Lula da Silva signed a nuclear cooperation agreement with Argentina.
Solar power
The total installed photovoltaic power capacity in Brazil is estimated to be between 12 and 15 MWp, of which 50% is for telecommunications systems and 50% for rural energy systems. It is less than 0.01% of the energy in Brazil.
Wind energy
Brazil's gross wind resource potential is estimated to be about 140 GW, of which 30 GW could be effectively transformed into wind power projects. Currently it generates about 54 GWh per annum. According to a Nov-07 award for Brazil's Proinfa program, current capacity is 237 MW, of which 208 was added in 2006; agreements for 1,423 MW are to be in operation by the end of 2008.
Biofuels
Due to its ethanol fuel production, Brazil has sometimes been described as a bio-energy superpower. Ethanol fuel is produced from sugar cane. Brazil has the largest sugar cane crop in the world, and is the largest exporter of ethanol in the world. With the 1973 oil crisis, the Brazilian government initiated in 1975 the Pró-Álcool program. The Pró-Álcool or Programa Nacional do Álcool (National Alcohol Program) was a nationwide program financed by the government to phase out all automobile fuels derived from fossil fuels in favour of ethanol. The program successfully reduced by 10 million the number of cars running on gasoline in Brazil, thereby reducing the country's dependence on oil imports.
The production and consumption of biodiesel is expected to reach to 2% of diesel fuel in 2008 and 5% in 2013.
Brazil's peat reserves are estimated at 25 billion tonnes, which is the most in South America. However, no production of peat for fuel has yet been developed. Brazil produces 65 million tonnes of fuelwood per year. The annual production of charcoal is about 6 million tonnes, which is used in the steel industry. The cogeneration potential of agricultural and livestock residues varies from 4 GW to 47 GW by 2025.
Oil spill off the coast of Rio de Janeiro
Starting from 8 November 2011 Chevron had spill of crude oil off the southeastern coast of Brazil. 416,400 liters oil leaked in two weeks from undersea rock well in the Frade oil project 370 km off the Brazilian coast. Prosecutors in Brazil demand $10.6bn in the legal suit. Chevron's activities are suspended until the cause of the oil spill is clear.
Critics
The Munduruku indigenous group in Para state faced problems by the authorities to build hydropower plants on the Tapajós river without their permission.