Conclusion

The analysis of CO₂ evolution and abatement measures is still incipient in Brazil both in regard to energy and to land-use change. The creation of credible, systematic and internationally comparable 'abasement cost' curves for Brazil is still not possible. As a consequence there is as yet little basis on which to agree on specific CO₂ limitation targets. The problem is exacerbated by the wide range of uncertainty surrounding the prospects for economic growth. The work briefly described here is part of an effort to better understand the potential and economics of CO; abatement. In Figure 10.1, we summarize the tentative results of this study for the costs and abatement potential of measures to reduce fossil energy emissions. We identified about 13.7 MTC of technologically feasible and economically justified carbon abatement, relative to the SNE 'tendencies' scenario in the year 2000. This reduction potential amounts to about 16 per cent of the SNE reference projection for carbon emissions in that year. We did not allow for the more pervasive energy and carbon reducing effects of technological innovation in all end-using sectors; nor did we include the impact of shifts in the sectoral composition of the economy on our estimate of energy and carbon conservation. Moreover, as our bottom-up calculation is extended to other sectors, we expect to increase substantially the size of the carbon reduction potential above 13.7 MTC.

Figure 10.1 Cumulative annual carbon emissions avoided by 2000 for technology improvements in Brazil

Although the quantitative analysis is incomplete and preliminary, it permits some observations which are relevant for policy. It appears that substantial savings in CO₂ emissions can be achieved at 'negative cost' or very low cost (say, less than US$10/TC), both in energy and land-use change. These savings should be substantially cheaper than those of many measures being considered by the industrialized countries. However, the fact that these are 'no regress' sayings does not mean that they are easy to achieve. This fact is relevant for a possible policy of international resource transfers, which should be very attentive to 'no regrets' opportunities in developing countries.

In Brazil's energy sector, the major 'no regress' sayings involve increasing energy efficiency in all consuming sectors. As explained earlier, conditions and policies favouring greater energy efficiency are also likely to favour, and are associated with, higher medium term economic growth (low inflation, correct price signals, investment in modernizing processes and products, competition, etc). Energy efficiency itself should directly contribute to improved overall productivity and thus to economic growth.

With regard to land-use change, we argue that the trade-off between Amazonia's economic growth and reducing deforestation is not so acute as some suggest. However, a strategy is needed urgently to change the economic dynamics of Amazonia's frontier regions. The case of Amazonia also highlights the need for cost-benefit analysis to explicitly consider who pays the costs and who receives the benefits of policy changes aimed at conserving carbon.

The medium term potential for relatively low cost CO₂ abatement is probably much larger for land-use change than in the energy sector. This judgement does not mean that energy efficiency should be ignored, however. Many measures to reduce energy-related emissions are as cost effective, or even more so, than those to reduce emissions from land-use change. Moreover, energy is fast becoming relatively more important. Finally, as we have observed, energy policy can influence future land-use, especially in the Amazon region.

Using the technologies discussed in this chapter, the total amount of carbon abatement is approximately 13.5 million TC. In Figure 10.1, we plotted a total amount of 9.3 million TC, since we excluded the 4.2 million TC due to the use of alcohol at the existing output (as shown in Table 10.10) because we did not know the net cost associated with this technology. The opportunities identified in this chapter are not the complete picture. Other technologies exist, and with their full inclusion on the demand side of the Brazilian energy matrix, probably more CO₂ abatement than is forecasted in the official alternative scenario can be achieved.