Economy & Energy
Year III - No 12 Jauary/February 1999
Brazilian Energy Matrix
Optimism in Times of Crises
Exegertic Analysis of Agriculture
Following the Brazilian Economy:
Brazilian Public Debt
Thursday, 10 July 2003.
Matrix for the year 2010 with extension to 2020
Economia e Energia e&e - NGO, (Economy and Energy
e&e/ NGO) a Non-Governmental Organization, intends to make the projection of the
energy matrix for the year 2010 with extension to 2020.
The Internet publication Economia e Energia - e&e - Economy and Energy, which for
two years has been presenting analysis and projections in the economical and energy areas,
will disseminate at Internet the intermediary results ( http://ecen.com
). The participants (enterprises and organs that support the program) will have access to
detailed reports of the results and to special softs, will participate in the intermediary
discussions and may request for the analysis of an alternative scenario.
Motivation for the study
Since investments on energy production, conservation and even use have a
maturation period of around five years it is indispensable for the private sector and the
government to have a view of the offer and demand in the future. This is considered as a
strategic input by all countries that face the future with responsibility. Large projects
have a typical horizon of more than one decade. On the other hand, it is an investment-
and price-intensive sector that has been unstable in the last three decades. A failure in
offer projections may cause serious problems for the development of the country.
In the past, this evidence was used with a certain exaggeration by planners subject to
corporative pressures and low modesty whose predictions of elevated demand were
systematically denied by reality.
Certainly, most of their mistakes were due to optimistic economical scenarios, external
to energy planning, that did not come true. These scenarios reflected in most cases
political wishful thinking of economical growth.
During some time, various economical scenarios with different growth rates were used
but they were of little practical use since the resulting demand diversity did not clearly
orient the investments.
Another error of the past was the planning by sector (electricity, petroleum, alcohol,
etc.) which, in most cases resulted in a final addition of the parts that overrun the
total accepted by each of the sectors.
Methodology of e&e
The methodology proposed for evaluating the energy matrix intends to avoid most of the
above mentioned problems. It combines the projection methodology by energy equivalence,
developed by the specialists who presently are members of e&e for the then National
Energy Commission of the Ministry of Mines and Energy (MME), with economical projection
model which is able to detect restrictions to growth by extrapolating economical macro
variables from the past.
The methodology uses:
An economical model that takes into account the limitations to economical growth;
The economical sector structure adopted is based on that of the Energy Balance from MME,
which emphasizes the more relevant sectors in energy consumption;
The projected sectorial growth considers the historical evolution of the participation of
these sectors in the economy, the global growth and the projected annual rate.
The coefficient useful energy (or energy equivalence)/product for each economical sector
is used to connect economical activity to energy demand;
The participation of each energy source is inferred from historical evolution and from the
competitiveness among energy sources; different sub-scenarios may be considered;
A balance of offer versus demand of primary energy sources and its products at the
national level is used to revise the relative participation of the energy sources.
The economical projection model
The methodology was presented in the book Brasil: O Crescimento Possível (Brazil: the
Possible Growth) whose coordinator and various authors also belong to e&es
The evaluation of economical growth is made using our own model that takes into account
the inertial behavior of some variables along the last 50 years. The temporal anchor has
proved to be very useful in a relatively recent past (last 4 years), since it permitted
the model to detect the restrictions to availability of investment capital, the importance
of the Brazilian external trade limitation and the relevance of the internal debt.
The temporal anchor allows as well to prevent the influence on planning of conjunctural
factors, avoiding the possibility of optimistic circumstances such as those
prevailing when the book was published or pessimistic like those prevailing
at the present crisis to produce unrealistic scenarios that might be detrimental to
In the economical projections, the historical experience of about 50 years - national
accounts - and 30 years - the sectorial composition - are used. For energy demand data
from BEN are used the 30 years period and for primary energy, those relative
to the last 50 years.
The economical sectorial structure of considerable inertia along the time is
projected by extrapolating the historical tendencies and supposing that the future
composition takes into account the present structure of the developed countries but
considering some national peculiarities.
Energy demand model
The energy demand uses the useful energy concept. The useful energy balance, elaborated
by the MME determines for each economical sector the use of. the energy source and the
efficiency of its use. In the uses where there are several energy sources it is possible
to establish among them a substitution equivalence.
Evaluating the sectorial demand in energy equivalent allows to discuss demand of different
energy sources using alternatives that are coherent with global demand. For example, one
can determine the demand in the transport sector in equivalent gasoline liters. Taking
into account utilization and production limitations, it is discussed the specific demand
of alcohol, gasoline, diesel, compressed natural gas and even LPG, taking into account the
relative efficiency of these fuels. One can work with different hypothesis for final
demand for each fuel (or other energy source) without loosing coherence in global demand.
The same can be made in each industrial sector relative to heat demand, which is expressed
in fuel oil equivalent, considering the average equivalence. Specific demand of one energy
source, in this or other use, are considered by establishing a minimum use of each energy
source by sector. Furthermore, the specific or almost exclusive uses of electricity are
considered, according to their identification in the useful energy balance.
The useful energy demand by product is one "well behaved" variable in
many cases, approximately constant along the time. Variables of this type are
attractive for projections and allow for associating energy demand and economical
The participation of different energy sources is extrapolated from past experience where
the possibilities and limitations were tested in the vigorous substitution programs that
occurred in Brazil , mainly after the second petroleum chock.