Brazil could lose R$3.7 trillion in revenue and royalties if it stops investing in oil, says state-owned research company | Economy

The country could lose R$3.7 trillion between 2032 and 2055 in tax collection and royalties if it stops investing in oil exploration. The data was presented by the state-owned Energy Research Company (EPE) this Wednesday (24).

According to EPE director Heloisa Borges, of this total:

• R$2.91 trillion refer to royalties and special participations;
• R$824 billion refer to tax collection.

Furthermore, there would be a reduction of R$167.4 billion in the Pre-Salt Social Fund in the period from 2024 to 2055.

The Social Fund is maintained by resources owed to the Union for pre-salt oil production contracts, which are destined for social development programs and projects.

“The main theme here is that these oil and gas resources are essential to finance the energy transition”, said the Secretary of Petroleum, Natural Gas and Biofuels, Pietro Mendes.

The energy sector is responsible for around 4% of greenhouse gas emissions in Brazil. According to Borges, it is possible to double oil production in the country while maintaining the current level of emissions, with mitigation measures.

Parliamentary front will work for exploration in the oil area, which includes Amap

The Ministry of Mines and Energy intends to approve at the National Energy Planning Council (CNPE) a proposal to create the National Energy Transition Plan.

“We are taking a proposal to the CNPE so that we can have this set of measures that seek to organize the efforts we need to make in a structured and transparent way”, declared the department’s Energy Transition Secretary, Thiago Barral.

The proposal aims to integrate policies and programs linked to the decarbonization of the national energy matrix. According to Barral, BNDES, EPE, FGV and the International Energy Agency are partners in the project.

According to the ministry, the energy transition — that is, the replacement of polluting sources with renewable sources — must be driven by consumption and not by the reduction of production.

The logic is that as consumption from these sources is reduced, production will also fall. Otherwise, Brazil would run the risk of becoming an importer of oil, gas and fossil fuels to supply consumption that has continued.