Energy transition to be accelerated, says Lula

President Luiz Inácio Lula da Silva has said that Brazil’s energy transition to renewable sources will be “accelerated” with new public tenders for solar and wind energy. 

According to Lula, the new contracts will have an energy generation capacity equivalent to “the largest hydroelectric plants,” and that the country should become a “green hydrogen powerhouse.” The first infrastructure projects, including those in the energy field, should be announced by May.

The president also said that Brazil’s state-controlled oil giant, Petrobras, would fund research into renewable energy and receive investment to expand the fleet of ships operated by Transpetro, its subsidiary responsible for transportation and storage logistics.

“I never thought of Petrobras as an oil company. Petrobras has always been more than that. It is an energy company. It is the company that has historically invested the most in research in the country. It is the company that has invested the most in innovation in this country,” Lula declared, in a speech commemorating the first 100 days of his government.

Last week, Mines and Energy Minister Alexandre Silveira said that Petrobras will adopt a new pricing policy that will take into account the dynamics of the domestic market, instead of pegging oil prices to trends in international rates, as it has done since 2016. Mr. Silveira claims that diesel prices at the pump in Brazil could be more than 4 percent cheaper.

The announcement was not well received by the markets. Petrobras shares fell more than 4 percent in early trading on Wednesday. Prices recovered only after Petrobras told investors in a statement that it had received “no proposal” from the ministry to change its pricing policy.

The next day, Lula rejected the minister’s remarks. He said that the pricing policy was still being analyzed by the government and would only be changed “with a wealth of criteria.” During the election campaign, Lula argued that the state-owned company’s prices should be “Brazilianized.”

Gas prices have a strong impact on people’s lives in Brazil, as they are reflected in the price of food and basic consumer goods. Last year, rampant price hikes hurt the image and re-election campaign of former President Jair Bolsonaro.

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