Energy Myopia

When the president of The United States Barak Obama visited Brazil in March 19-20th, 2011 there was an immense expectation from both countries to sign a bilateral trade agreement on the energy sector. More specifically, in the oil sector. On Brazil’s favor, there was a strategic discovery of the world's biggest offshore oil reserves in the pre-salt area off its south-east coast. During his visit, Barack Obama pledged that "The United States would become a major customer for Brazilian oil in the coming years amid continuing unrest in the Middle East”.

The time went by, the world changed, sustainable energy systems gained momentum, global oil prices went up and down in the last decade, and only last week was Brazil able to bid its pre-salt area where billions of barrels of oil are trapped under a deep layer of salt. All winning consortiums already have oil and gas exploration and production contracts in Brazil. But the fact is that The United States do not care for Brazil's pre-salt oil anymore. At least not as a strategic energy source when its long-term agenda is taking into consideration.

Along with Shale gas as an available source of natural gas, the sustainable energies systems have become the main strategy to The United States to achieve the long-cherished dream of self-sufficiency in energy.

The global trend toward lower carbon dioxide consumption has rapidly become reality. Countries such as France, Ireland, and the UK have formalized their commitment to green power generation. They have banned sales of new gasoline and diesel cars starting in 2040. In the same direction, Germany has already shut down its nuclear thermoelectric plants and it is amazingly advanced in the production of solar and wind energies.

The streaming technology for personal and collective transports is of electric propulsion. Progress in this field is transforming vehicles on wheeled computers, leveraging the sector to new business models. Companies such as Uber and Tesla, reveal that a revolution described by Roland Berger is not so far away.

Pressured by regulations and more innovative competitors, traditional automakers rush to meet these challenges. Volvo has recently announced that from 2019 on all its models will have electric motors. Toyota and BMW are heading in that direction as well. GM and Ford have launched an experimental car-sharing service. And they are all involved with autonomous vehicle designs. Not to mention the Google’s own self-driving car service under an electric-powered vehicle.

I'm not a supporter of radical environmentalism such as the one which tried to legally cancel the pre-salt bid last week in Rio de Janeiro. But that makes me think about the excessive importance that the Brazilian government has given to oil as a strategic energy source to its development in the next decades. It is not a matter of mitigating the significance of the pre-salt oil reserve toward Brazil’s wealth aspirations, but to wisely calibrate what is a transition from what is future in the world energy perspectives.

If this current oil business fits into a broader and national strategic plan where the pre-salt financial results will do to build a smart transition toward a sustainable energy systems’ consolidation (wind, solar, biodiesel, hydro) in the long run, I tend to agree with most of this fanfare about more employment and foreign currencies to the country in the short run, even though I strongly believe automation and artificial intelligence will keep cutting off technical and low-skills jobs in every technological sector.

Nevertheless, when long strategic plans come into the picture, the Brazilian State is not the better example of management to the world. Especially when it is considered the myopic horizon of its politician class that does not go further away from an election term. I feel skeptical about the government’s competency to properly evaluate this once-in-a-lifetime opportunity and make the country a global sustainable power by changing its economic and social reality permanently.

A series of technical, institutional, regulatory and taxation actions from the Brazilian government keeps being mandatory to wisely boost the adoption and consolidation of renewable energies in the country. My perception is that the "blessing" pre-salt oil will procrastinate many of these crucial strategic decisions.

But at the same time, I feel optimistic when I see many key sustainable energies researches and private initiatives throughout the Brazilian territory on a small, medium and large scales. On the opposite side of the government's myopic oil vision, I believe that the daring companies and entrepreneurs with eagle's eyes are the ones who will pave the way for a key energy transformation. Their successes will keep putting pressure on both the energy agency and politicians to perform the necessary changes toward Brazil’s renewable technologies competitiveness.

The quotation from Sheikh Zaki Yamani, a Saudi Arabian who served as his country's oil minister decades ago keeps being very updated: "The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil".