Government defends the use of oil to subsidize electricity bills in the transition

The federal government is considering using subsidies, funded by oil money, to mitigate the impact of the energy transition on the electricity bill.

“We are studying alternatives”, Silveira told “Folha de S.Paulo”. “I don’t want to call it a subsidy, I want to call it how we are going to finance the impact that the energy transition [terá] in the account [de luz]and how we will be able to continue financing in a way that opens up space for us to continue advancing in the transition without losing strength in the economy”, he stated.

On other occasions, President Luiz Inácio Lula da Silva (PT) questioned how the electricity bill is distributed among Brazilians, claiming that the “rich” pay less than the “poor”.

The criticism refers to the free energy market model, in which the consumer buys energy from the generator and not from the local concessionaire. Previously restricted to large consumers, this trading environment was also opened to small and medium-sized companies this year.

In the free market, the price of energy does not include all the charges for the electricity sector, which are passed on only to consumers in the regulated or captive market. Therefore, the more consumers migrate to the free environment, the greater the sharing of charges among the “captives”.

The minister said in Davos, according to “Folha”, that Brazil will be the “decarbonization breadbasket of the planet” if the government has the resources to stimulate renewable energy sources without affecting the economy with an increase in energy bills.

The funding would come from oil, according to him. Although he says that “biofuels will be for Brazil what oil is for Saudi Arabia”, the minister sees the exploration of fossil fuels at the mouth of the Amazon River, which has not yet been authorized by Ibama, as a kind of “hedge ” in the energy transition.

The sum of subsidies paid on the electricity bill doubled in five years in Brazil. Between 2018 and 2023, the accumulated value per year jumped from R$18.8 billion to R$37.4 billion. The numbers are from the “subsidiometer”, a calculation tool made available by the National Electric Energy Agency (Aneel).

The minister also highlighted that last year Brazil expanded its generation park by 9 gigawatts (GW), of which 8.4 GW in wind and solar energy.

“Therefore, our country is already the great leader of the global energy transition. We are making strong progress in the decarbonization of the transport and mobility sector. We have Renovabio in Brazil, which is an example of encouraging the production of fuels with low carbon emissions. We also approved the increase in biodiesel from 10% to 14% in diesel. We know that the country’s great vocation, in addition to being the great storehouse of food for humanity, is also to be the great storehouse of clean and renewable energy”, said Silveira.