Brazil’s Oil and Gas Sector: Navigating Energy Transition Amid Global Changes

The global oil and gas industry is evolving its approach to emissions reduction, with Brazil’s sector highlighting its commitment to a cleaner energy mix. IBP President Roberto Ardenghy emphasizes the unique role Brazil plays, representing a nuanced perspective on the rivalry between oil companies and energy transition. Amidst global concerns over U.S. policy shifts, Brazil aims to solidify its position as a reliable energy provider while expanding investments in low-carbon projects.

The oil and gas industry is evolving its approach to reducing greenhouse gas emissions, with an increasing focus on renewable energy investments. Some organizations, such as Shell, are reevaluating their commitments to green energy. This reassessment is expected to gain momentum, especially under Donald Trump’s administration in the United States, which holds the position as the largest oil producer worldwide.

Companies’ strategies to decarbonize vary based on their operational regions. While some are reducing hydrocarbon production, others pursue renewable generation, yet the momentum behind these initiatives appears to be waning. According to a study by the Brazilian Oil and Gas Institute (IBP), Brazil contributes to reducing greenhouse gas emissions due to its cleaner energy mix and less polluting oil.

IBP President Roberto Ardenghy highlighted that unlike many nations, emissions in Brazil predominantly do not arise from the oil and gas sector or industrial processes. He noted, “Brazil’s main emissions do not come from the oil and gas sector, nor industrial production or product transportation.” Presently, the oil and gas industry is responsible for 13% of Brazil’s emissions, while land use accounts for a significant 48.3%.

Ardenghy challenges the prevailing narrative that positions oil companies as adversaries in the energy transition, stating, “People tend to oversimplify the issue. They’ve created a rivalry between oil and the energy transition, which is not real.” He emphasizes that various actions are undertaken by the sector, including the production of lower CO2 concentration oil, which should be acknowledged in the conversation about energy transition.

He also asserted that energy transition varies by country and should not lead to a blanket criticism of fossil fuels. He explained, “Oil represents the transition in countries that still use more polluting sources,” pointing out that increased oil consumption in nations like China and India could lead to reduced coal usage.

The prospect of Donald Trump’s return to power has raised concerns globally about climate change initiatives, particularly following the U.S. withdrawal from the Paris Agreement. This move has prompted major financial institutions to exit climate alliances, creating a gap for leadership in environmental responsibility. Ardenghy urged Brazilian companies to maintain their commitment to climate initiatives, recognizing the essential nature of emission reductions.

Ardenghy posited that Brazil’s role as a reliable energy provider could be amplified due to the geopolitical shifts, suggesting, “Brazil increasingly has the opportunity to establish itself as a reliable energy provider, especially since it is outside global tension zones.”

The IBP’s study contends that hydrocarbons will remain an integral part of energy transition plans, asserting that consumption of oil will persist for various purposes even under optimistic peak demand scenarios. Additionally, they advocate for an organized transition that honors social and economic development, noting the essential role of the oil and gas industry in Brazil.

The increase in projects focused on energy efficiency and low-carbon sources in Brazil is noteworthy. From 2018 to 2023, the number of projects grew from 25 to 91, with investments in low-carbon initiatives skyrocketing from R$46 million to R$782 million during the same time frame.

In summary, the oil and gas industry is at a pivotal point in the context of energy transition, particularly in Brazil. While challenges persist due to geopolitical tensions and shifting policies, the Brazilian sector is positioned to continue reducing emissions and leveraging lower CO2 oil production. It is crucial to recognize the diverse roles that oil can play in energy transitions across different regions, reinforcing Brazil’s potential as a leader in both conventional and renewable energy. The ongoing investments in low-carbon initiatives illustrate the sector’s commitment to evolving alongside global energy demands.

Original Source: valorinternational.globo.com