A Tale of Two Countries

This is a tale of two countries.

The first is a global leader in petroleum, pushing aggressively to develop offshore oil fields. Thanks to recent new finds, it is poised to become one of the world’s top oil producing nations in the next ten years.

The second country is a global leader in renewable energy. In 2011 it derived more than 88 percent of its electricity, and over a third of its liquid fuels, from renewable sources. Wind is the fastest-growing source of power, and new policies are expected to provide a major boost to solar too.

Can you guess which countries these are? Here’s a hint: they are one and the same. Brazil.

Brazil’s approach to energy truly epitomizes an “all of the above” strategy. Remarkably, since enormous oil discoveries were made off the southeast coast in 2007, Brazil’s efforts to diversify its energy economy have only accelerated, creating exciting opportunities for energy companies of all kinds.

When fully developed, Brazil’s offshore deposits could vault the country into the upper ranks of the world’s oil-producing nations. Last year, Brazil was the 11th-largest oil producer; by 2020 it is projected to be in the top five. By that time, Petrobras (the state-controlled oil company) expects to be pumping 4.9 million barrels each day, of which 1.5 million will be exported. If all goes according to plan, the government stands to enjoy a significant spike in revenues.

Some countries facing such a windfall might ease up on alternative energy development. Brazil, however, has maintained a deep commitment to a diverse, and largely renewable, energy supply.

Biofuels are a great example. Brazil’s sugar industry produces enough ethanol to provide approximately 40 percent of the fuel consumed by its cars. (More than half of Brazil’s cars are “flex-fuel” – able to run on either ethanol or gasoline – a figure that is set to reach 90 percent by 2017.) And compared with corn, sugarcane is an environmentally-superior source of ethanol, yielding nearly seven times as much product for every unit of energy input.

Brazil is also a global standout in renewable electricity. 75 percent of its power comes from hydroelectricity, and another 6 percent from biomass (much of that also from the sugar industry). But the country’s fastest-growing power source is wind. Projections call for 8.5 gigawatts of installed wind capacity by 2016, and more than 15 gigawatts by 2020.

Other countries could learn from Brazil’s eminently pragmatic approach to energy. Even as the wind industry in the United States is withering due to Congress’ failure to extend a vital tax credit, Brazil has just passed nationwide net metering legislation to create incentives for distributed renewables. While the Brazilian people celebrate the recent oil discoveries – the president’s response was that “God must be Brazilian” – and hope they will be a boon to development, they do not view them as a reason to ignore other abundant sources of energy. By cultivating true energy diversity, Brazil is building a sustainable energy system for the long term.

Wyatt C. King is a Director at the Albright Stonebridge Group, an international strategy firm based in Washington, D.C.