World Energy Outlook 2006

efining sector adds another $1.4 billion per year. These investments will be
necessary to maintain self-sufficiency. Cumulative gas investments are
projected at $48 billion, or $1.9 billion per year. Exploration and development
of new fields needed to reduce dependence on gas imports will account for over
half of total investment. Coal investment needs are negligible, because unit
capital costs are low and new capacity needs minimal. To meet projected
increases in biofuels demand, Brazil will need to invest some $31 billion over
the Outlook period. This sum will represent nearly 20% of global investment
in biofuels.
Required investments in the oil and gas sectors are lower in the Alternative
Policy Scenario. Oil investment is $132 billion; $6 billion lower but still over
$5 billion per year. Investments in the upstream oil sector will remain
the same, but refinery investments fall. Cumulative gas investments are
$47 billion over the Outlook period in the Alternative Policy Scenario.
Reduced gas demand generates lower investment needs in the upstream and
downstream sectors.
Lower electricity demand in the Alternative Policy Scenario reduces cumulative
investment requirements to $206 billion, $47 billion less than in the Reference
Scenario. Investments in transmission and distribution are considerably lower,
at $82 billion. Generation investments are $3 billion lower. In the biofuels
sector, some $6 billion more is needed to meet the demand expected in the
Alternative Policy Scenario.
Total projected investment in the energy sector in the Reference Scenario is
equal to around 1% of Brazil’s GDP. Financing will be difficult, given the
country’s poorly developed domestic capital markets. External financing could
account for a significant proportion of total capital flows to the Brazilian
energy sector, especially in the oil and electricity industries if the right
conditions were created.
On the demand side, the policies considered in the Alternative Policy Scenario
lead to considerable increases in the amount of investment needed for energy
efficiency improvements in the electricity and transport sectors. Cumulative
investment requirements for more efficient electric equipment are $46 billion
higher, compared with the Reference Scenario. In the transport sector,
investment requirements are $42 billion higher. 13
13. See Chapter 8 for a discussion of demand-side investments in the Alternative Policy Scenario.
Chapter 16 - Focus on Brazil 487
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