Brazil as a Testing Ground for Cleantech

Monday’s successful conclusion of the A-3 Energy Auction in which Brazil sold wind development rights worth $1.5bn serves as reminder that Brazil is as a model for sustainable development. Even some failures in the Brazilian renewable energy sector can be seen more as projects whose time have not yet come. For example, the solar energy projects that were up for auction on Monday went unsold due to prices that did not provide an adequate return on investment. Though this might appear as a failure the fact that these projects were included in the auction for the first time indicates that Brazil feels that there is a market for them. It is not unreasonable to think that these projects will sell in the foreseeable future. The emergence of the Sustainability Network (an opposition party that has recently partnered with the Socialist Party and will likely have increased political clout even if they do not win the election in 2014) also indicates that increased support for renewable projects is likely.

The success of Monday's auction is a positive sign when compared to set backs in oil projects. The Pre-Salt (deep-water oilfields) auction on October 21^st  was a disappointment. Only 11 firms participated compared to 71 firms in the previous auction. In the end the Libra deep-water field was auctioned off to a consortium dominated by state run Petrobras but also representing, Royal Dutch/Shell, Total, China National Petroleum Corp., and China National Offshore Oil Corp. No American energy companies bid. In fact the consortium's bid was the only offer and it only provided Brazil with minimum profits (41.65%). The auction was also met with protest from unions and other stakeholders who resented natural resources being sold to "foreign capital" at "fire sale" prices.

The focus on sustainable development that will come as the Sustainability Network gains political power combined with the foreign investment which Brazil's energy auctions bring in could result in projects that might serve as templates which could be exported. It is important to note that Brazil's diverse ecosystems allow for many different types of projects to be developed and fine tuned. For this reason the country can be viewed as a testing ground where developments in Cleantech should be monitored closely.