Generation of Electricity and Global Warming: Lessons from the Brazilian Electric Matrix

An efficient supply of electricity is a necessary condition in any development strategy. However, investments upon electricity infrastructure supply generate environmental externalities. Therefore, it is essential to analyze such externalities if one wishes that the expansion of a country´s energy matrix represent a sustainable option. This paper analyzes net emissions of greenhouse gases (GHG) from electricity generation in Brazil. Our main objective is to evaluate the contribution of the Brazilian electric matrix to global warming. Specifically, we answer two questions: (i) what is the actual dimension of negative externalities originated from the Brazilian electric matrix in terms of emission and sequestration of GHGs? And (ii) based upon parameters of emission and sequestration of GHGs from different generating sources, planned expansion of the Brazilian electric matrix will increase or decrease such externalities? Our results indicate that the Brazilian electric matrix has, contrary to usual believe, a net positive contribution for the national emissions of GHGs. Estimates points at a total cost of such externalities of approximately 0,21% of the Brazilian GDP in values of 2005. As far as prospective insights are concerned, our research suggests that there will be a growth in emissions over the next decade or so. However, this growth will be at a rate smaller than the rate of the Brazilian electric matrix expansion. This indicates that planned investments will occur on plants with smaller levels of GHGs emissions per unit of generated energy. It is expected, therefore, that such externalities will be equivalent of approximately 0,17% of the GDP by 2017.